Are your business assumptions stunting your startup’s growth? Vanessa Nornberg shares what she learned from standing in her own way.
It’s Not Too Expensive if It’s Right
I am now a firm believer in spending money the right way. This means making an expensive purchase if it’s for the right item, even at a time when finding the money is difficult. I once deviated from this principle when it came down to upgrading our accounting software; I tried to save money by sticking with the original software that had served us very well in our first few years in business because it was only $395 per year. The software to replace it was going to cost $1000 per year—a big increase for a small company still struggling to survive. Then our product count grew from 800 to 4000 items, and our customer base had
quadrupled. The old system was handling the load, but slowing us down on everything from invoicing to receiving our incoming merchandise shipments.
The delays seemed to grow daily until the moment of truth happened: one of our sales representatives lost a sale because the software froze while she was entering a customer’s order. I finally decided enough was enough and took the cash I had earmarked for something else to buy the new software. We launched it and watched in awe as we were able to perform all of the needed functions at full speed—and simultaneously with other team members! It was both a revolution in our output capacity and in our thinking: Saving a penny to lose a dollar is never the way to go.
“Borrowing” Is Not a Dirty Word
Initially, I was determined to be self-financed. We pooled funding money from friends, family and our own bank accounts. However, we grew fast, and needed more money in order to continue expansion. At first, I was nervous to take on debt, but we received several large orders from prominent retail chains all at the same time, and the float time between delivery and payment was soon going to tie up our capital and choke our growth if I didn’t get comfortable using outside money. I took the plunge, got a line of credit and moved the company forward, all the while feeling nervous about owing money.
Don’t be afraid of debt. If you’re borrowing money, do so with a specific project or goal in mind. If you know you can repay the amount borrowed because of future payments or increased revenues from the growth you are borrowing for, go full speed ahead. Also, maintain a great relationship with your lending bank. Doing this has allowed us increases on our credit line as needed, complete with a lot less misgivings about borrowing each year.
View Hires as They Are, Not How You Want Them to Be
Hiring decisions are tricky. Even if you have a stellar recruitment process and think you know what you’re looking for, you can sometimes make the wrong choice. For example, I sometimes project my expectations onto potential hires: In one instance, I failed to acknowledge a red flag and assumed that a potential hire’s behaviour could be controlled with the proper training; I also once elevated someone to a role I knew he was capable of but for which he had little motivation. In each of these instances, the error was not so much in making the wrong choice, but in failing to correct it quickly.
Now, I address possible hiring mistakes immediately and offer road maps toward success.
If the employee is receptive and takes the initiative to implement the suggested changes, we can fix things. If the employee does not acknowledge the problem and express a desire to work on it, there is no second conversation. There is only an exit process, affording the misplaced employee the time to find a better fit–and allowing my business to move ahead.
Vanessa Nornberg is the founder and owner of Metal Mafia, a wholesale body piercing and costume jewelry company. Nornberg attributes Metal Mafia’s rapid growth to the company’s commitment to doing business in an ethically and morally correct manner. Metal Mafia was included in the 2009 Inc. 5000 list of the fastest-growing private companies in America.
The Young Entrepreneur Council (YEC) is an invite-only nonprofit organisation comprised of the country’s most promising young entrepreneurs. The YEC promotes entrepreneurship as a solution to unemployment and underemployment and provides its members with access to tools, mentorship, and resources that support each stage of a business’s development and growth.
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