October 28, 2016

A Lazy Approach to Business Can Work if Physical Laws Are Respected

While optimizing your potential for “hammock time” can be an admirable objective in today’s topsy-turvy world, many small business owners mistakenly slip into this slower-paced philosophy without attending to the tasks that will support this mode of behavior.  At some point in a new venture’s early development stage, luck and good timing can play a big role in establishing a base of momentum that can carry the firm to the next level of success, hopefully, one that includes profits and ample cash in the till.  In this example, the laws of physics are already at play and should be addressed if the CEO expects to take a leave of absence from the daily humdrum of hard work.

The above scenario happens more often than most CEOs realize.  The “trap” is more an “ego” issue than anything else.  It is quite easy in these circumstances to make the intellectual leap that one’s supreme business acumen was the key factor that led to the young company’s apparent success.  This type of “mental laziness” is rarely rewarded unless the CEO has already performed his real duties well before his enterprise ever gained steam and began to accelerate.  The correct mental posture is to accept that energy can neither be created, nor destroyed.  If the CEO is to back away, or remove energy from the “system”, then the “system” must have reserves that will step forward to cover the energy shortfall as it occurs.

For those with memories that stretch back more than a decade, we can easily remember the “crazy” nineties when investors would throw millions at an idea alone, without even a prototype to confirm its acceptability by the market.  New age valuation techniques justified a number of ill-fated IPOs.  Many investment managers got extremely wealthy with a few lucky bets, and immediately assumed that they were brilliant appraisers of untapped potential.  Unfortunately for many of these capital managers, the “irrational exuberance” of the period encountered reality when the Internet “bubble” burst.

For the managers that survived, many are still licking their wounds and what money they are able to raise is going to support existing holdings in their withered portfolio, rather than providing the capital that new business ventures so desperately need in our economy today.  As a result venture capitalists are acting more like private equity firms, searching for safe bets by buying control of companies well past the early development stage.  Angel investors have also become more risk averse, leaving a large vacuum for capital providers that will jumpstart innovation in our domestic markets.

Today’s modern company must focus on keeping overhead down.  Independent contractors work out of their homes, all key production activities are outsourced, and the virtual “cloud” is the marketplace, connecting clients and suppliers instantly.  Under this backdrop, securing the most prudent assortment of talent is the CEO’s real responsibility.  Understanding where the talent “gaps” are and then filling them is the preparatory work that must be done right early, if the owner would really prefer to “get lazy” or move on to another creative pursuit.

What are the critical “intellectual” assets that must be acquired early on to enable adequate “hammock” time down the road?  Revenue generation is key.  An accomplished sales and marketing person must be onsite at the beginning to ensure that your product or service can actually be sold.  One given is that whatever you sell will go through a number of iterations before the correct formula is discovered.  Secondly, a high-level financial type that sets up the records to signal what adequate cash reserves are necessary for basic operations, growth, and working capital needs and allow enough time to locate funding sources well before the survival of the firm is at stake.

Assemble your “energy” reserves early if you want the laws of physics to support your desire for rest and relaxation down the road.

The article is contributed from SmallBusinessLoansDirect.com.