How Not to Grow a Business
Updated: Jul 20, 2021
Let’s talk about your business in the context of a financial portfolio.
You work with a fiduciary advisor to develop your strategy.
Your investment allocations range from low, moderate to high based upon your risk tolerance. Your advisor monitors and reallocates funds that aren’t performing. There’s no way your wealth manager would invest one-hundred percent of your money in high risk.
Logan, my client, sat silent. Her core business has skyrocket potential. But like all creatives, she’s seduced by the ideas that flood her mind. Building one new business is difficult enough. It requires every ounce of your energy. It sucks up money like its water. For every business you start, with scattered focus, thousands of entrepreneurs are hustling twenty-four seven, three sixty-five to make their business succeed with laser like focus. Throwing enough shit against the wall to see what sticks is an expensive and risky proposition. Starting five new businesses is like taking 100% of your money and investing it in high risk.
It’s hard to believe, right?
You’d be amazed at how often I see this scenario with highly creative, intelligent and hardworking entrepreneurs, like Logan. Yet, she struggles with areas that are critical path to building business infrastructure. Look. If there’s anyone who believes in potential, possibility and the super powers of creative intelligence, it’s me. In fact, I’ve been called out in the newspaper for championing a reconstruction project everyone and their brother shrieked, “Impossible!” Epilogue. The state is funding $17MM dollars for this project and construction is anticipated for Q4 of 2020.
For the record, are there some who’ve hit a grand slam with an idea, a business and revenue out of the gate. You bet. For the remaining 97% the road to a successful business with consistent revenues and growth can look different.
On money, I’m not being psychologically “thin.” Under the quest for money, lies a feeling you want to feel as a result; freedom, benevolence, security, the power to choose etc. Applause goes there. But if a business isn’t generating revenue, it’s not a business. It’s an idea. On their own, ideas don’t make payroll, never mind fueling growth. Knowing your company is knowing your financials. What better way to know them than to truck your company balance sheet into an accountant. It’s like stepping on the scale. You can hop on the scale backwards or close your eyes. But the numbers don’t lie.
Logan squirmed. You see, she’s a creative who functions best in a realm that is free. I get it and entrepreneur’s like her. They’re brilliant at their craft, genius in fact. But they avoid conversations about money, operations, employee performance or any topic that anchors them to reality, like the plague.
I’m not dissing creativity and imagination, not on your life. I am a creative. The imagination is my workshop. There’s nothing more alluring than tapping into the field where the visionaries play. To pluck an idea from the imagination, make it real, successful and profitable takes specialized skill. As an advisor, I prepare business owners with the tools to do exactly that. So, there’s a lot to be said for focus on “direct line to revenue,” goals. I’m not talking about autocratic narrow-minded focus. I toggle between creativity and strategic pragmatism which is to focus on the core business to generate consistent revenue. Liquidity is a good thing, especially when you want to fund new verticals and ideas.
On ideas without implementation. Take a listen to my conversation with a private equity CEO from the Financial Policy Council in New York City. “I don’t fund ideas, they’re a dime a dozen. Show me the sales figures and profits. It’s okay if the line on the sales graph zig zags slightly, but it has to have an upward trajectory. I look at the founder and management team’s experience and their intangible skills.” I’ve had this conversation with clients’ countless times. Analysis, statistics and formulas provide market viability, yet VC’s and investors have an eighth sense. They smell success or not. Are they 100% correct 100% of the time? No. We’ve all heard the stories of an entrepreneur jilted by an investor who went on to become a Fortune 500. However, to deep pockets, talk is cheap. They scrutinize actions. They know the market speaks through focus, talent and company sales. There’s more on this topic. Remind me when we chat.
Logan is too intelligent not to get it. And it’s why I ask tough questions. Her success is my success. How can you gain momentum and upward growth when you’re working on five startup projects that scatter your energy? It’s like trying to douse a raging inferno with a kiddie sprinkler. You’re cheating the core business of focus and the revenue it needs for growth. Looking at the balance sheet to evaluate performance on every line item, and to reallocate funds from the non-performing areas, startup ideas included, is to your business what investment reallocation is to generating wealth.
Don’t get me wrong. I love brilliant Ideas. And cash is still king, with it, you can fund anything you want.
Paula M. Parker (C) Originally published in