Is Your Business Under-Capitalized?

If you operate a small business in a competitive arena, your business is under-capitalized.  Somehow this statement is so difficult to understand.  Your business is under-capitalized.

I repeat that statement, again...your business is under-capitalized.

A statement made like this one is worth a lot of debate, but it still does not eliminate how your business is under-capitalized.  It is under-capitalized.

Now that we know what problem your business is facing what do we do about it?

We treat your business like it is under-capitalized.  That is what we do.  We do not get crazy or loose about how we "materialize" expenses.  We see deeply how governments make this silly mistake.  They see a problem, "materialize" the money that is needed to solve the problem and then they begin working to manufacture how the problem needs to receive its repair.  Your business will fail if it practices these steps to try and succeed.  Period.

Working your business from this type of approach will only run your costs up beyond what the revenues can support.  You can operate in this fashion for a very long time, but the pain you must endure to survive your debt management methods will eventually wear you and your supporters down.  Your business model will never feel like a good business, because it is not.  Manage your small business as if it is under-capitalized, because it is.

Your great ideas are likely larger than your wallet can afford.  there is nothing wrong with thinking big.  Big thoughts help you to generate good dreams that are wonderful benchmarks for the aim you place in front of your business work.  You need to think big.  You need to practice dreaming big.  You need to build a business model that plans to solve big problems.  Good businesses do those kinds of things.  Big businesses do those kinds of things.  It is necessary to think big if you want a big business.  By all means, think big...try to solve big problems with your business model.

However, thinking big and spending big are two completely different responsibilities.  Do not spend big because your thinking operates big.  Spending is governed by what you can or cannot afford to do.  You must spend little as you think big.  Get used to this idea.  It will always be one of the most important aspects you inject into your business model.  "Tight-wads" build good businesses.  Become a very tough 'tight-wad.'  Watch your pennies, not your millions.  If you do not steward a dollar bill well, you will not accidentally steward a million well.  The stewardship process of one is exactly the same as it is for the other.  The amount has nothing to do with the beauty of practicing the process correctly.  Managing money well is a process.

Your business model will need you to pay closer attention to the money than anything else you do successfully.  You need to respect your business model well enough to accept that it will operate its problem solving efforts as a small business that is under-capitalized.  You will need to become very creative in how you spend money to develop the machinery your business manages.  Learn how to accept this truth and learn how to love the frustrations this process will deliver.  Learn the art of how to make your under-capitalized business a fun challenge to manage day in and day out.  Then one day you will look back upon the trail your business made and discover how large it really is.  You need to understand how this concept will be the main concept you practice and manage.  It will be one of the key components to your business success.

Steward your spending with tightly closed gates while opening up the mental gates all the way to your big dreaming.  How you manage these two processes will likely determine how successful your business becomes.

I am not sure where it all started.  I do remember how I used to save my Halloween and Easter candy from year to year.  I would store the candy that had longer shelf life and ration how I ate some of it throughout the coming year.  I would hide it from my brother and sisters.  I made sure I had candy from time to time, but never ate enough of it so I could have some for months to come.  When the Easter basket came full on Easter morning, I discovered that it looked like a lot of candy that could be distributed evenly throughout the year.  If I could successfully hide it and it was able to be stored without losing its flavor...I decided to make that happen.  I am not joking.  I know that this amount of candy did not happen to me every day.  I knew and accepted this fact.

I was so surprised at how much candy came on one single event that I could not compute why I had to eat it all at once and kill the opportunity to enjoy it longer.  I wondered how I could make this great event last longer.  I loved chocolate.  I loved sweets.  We were not a very wealthy family so we did not get these type of treats very often.  In fact, looking back we were given these type of treats rarely.  These once in awhile calendar events like Easter and Halloween were times when I was shocked by how much candy we got.  I was so amazed.  I did not want the treats to disappear as fast as they arrived.  I began building a quiet little storage process to string out the time I could enjoy this great receiving.

I knew if I shared my storage plan with my brother and sisters I would need to share some of my takings with them.  I did not want to do that.  I knew that if I got caught eating candy in front of them later, I would be asked to learn how to share some of my candy with them.  I knew my Mom and Dad would take the opportunity to teach me about sharing.  I had seen that process a few times before.  I knew I needed to protect that process from happening.  I needed to hide the candy better than they could ever expect, and I did.

Once in awhile, I would get caught eating a piece of candy.  I have been caught eating a small handful of Easter jelly beans in mid-summer and my brother wanting to know where I got them.  I was careful in how I answered him.  I would tell him the truth, "It is none of your business."  I would say it with firmness.  I would emphasize the word 'business.'  "It is none of your business!"  Saying it that way would help scare him away from asking more questions.  I could then keep on hiding my candy for later enjoyment without revealing what I was doing.  It usually worked.

As time went on, my candy hoarding methods became part of everyone's knowledge.  I was then labeled a candy hoarder.  I did not care.  I had candy from time to time when nobody else had some.  It eventually became an accepted process in my family structure.  They all knew I would hide it and savor it in small rations, from time to time.  It was often a joking item when future discussions would include subjects about saving.  My candy hoarding process would surface in those discussions.  I did not care.  I had what they wanted.  It was a good feeling.

To this day, when someone gives me a ten or a twenty dollar bill it can stay in my pocket for weeks before I spend it.  What's more, I will never spend it all at once.  Never.  I will make it last.  I hope to have some of it still in my pocket when the next ten or twenty are given to me by someone.

Your small business needs to adopt this type of mental protection you give to the money you plan to spend.  Your business is truly under-capitalized.  It cannot afford to do the things your dreams have materialized in your mind.  The things you need to do to make your business hum properly cannot be afforded.  You will need to learn how to improvise well and make the best out of what you have to spend to make the best things occur.  Get used to it.  Your business model can do many things well with a limited budget if you learn how to creatively think.  You can make displays look like a million bucks without spending a million bucks.  You can produce million dollar advertising campaigns without spending a million dollars.  You can develop million dollar efficiency systems without spending a million dollars.  Do not 'materialize' your great business ideas with more money than is necessary.  Be a good steward.

I do not advocate saving Easter candy from year to year...but I do advocate saving money from year to year.  The process is the same.  Teach yourself how to save.  I need to go now.  It is time for me to go eat the ear off last years chocolate bunny.

Until next time...