Wednesday, May 4, 2011

Basic business challenges

It can't be a surprise that the business environment is especially tough in most industries in many economies.

Last night I enjoyed watching the BBC's latest edition of "Britain's Next Big Thing" (It's so much more positive, encouraging, practical and informative than the gladiatorial Dragons' Den). I'm sympathetic to the enthusiasm that causes entrepreneurs to invest money as well as time in their projects; but mystified as to why you'd build up large quantities of inventory (stock) without having firm orders to turn the goods into cash quickly...

I'm about to view possible additional office venues: the space will be nice, but we've held off on any decision until the lack of facilities has begun to hamper business operations. It's still not a given that we'll commit to additional rent unless we can be convinced that what we spend will add positively to the bottom line in short order.

It's the same with staff: common sense says to hire if the person will save more or make more than they cost and/or if hiring can help to meet a strategic goal. For that reason, we prefer to buy-in services as they're needed until it becomes definitively cheaper to add a cost that's almost fixed.

Basic stuff, but easy to miss in the enthusiasm of expansion.
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