Here’s something I learnt the hard way;
So, most businesses are consumed with growth which means investment. That can be infrastructure, people, etc. When I launched out on my own, I signed a lease for a VERY expensive office. I thought it would help me get clients.
A few years into starting my New York-based business I decided to open an office in LA. We did a ton of business there and I thought this would help me get clients.
Unfortunately it never did. Then when the 2008 downturn happened and I had a big staff I resolved to keep everyone on, even though we were haemorrhaging money.
Bottom line – big lesson learned. Don’t overextend. I didn’t need a fancy office; I didn’t need an office in LA, and I should have let a few people go. Never nice but necessary.
Business is always going to be a dance. How much do you need to invest to grow? Is the growth too expensive to warrant the investment? What margins make sense for you? Are you risk adverse, and/or do you have the resources to pull yourself out of a tricky situation with minimal damage? And the big one – if things go pear shaped do you have the internal stamina to pull through?