So many new business ventures die on the vine. Statistics vary, and we’ll keep the details of the debate to a minimum here. Let’s say that 1 in 20 make it. Let’s define the “Making It” as either having a profitable company after five years of existence or selling to a larger firm for a wealth-creating sum.
We meet a lot of serial entrepreneurs at the Studio. They have grown startup after startup, and sold company after company. We befriend them, soak in their experience and hard-earned wisdom, and take in their stories. Their insights and actions defy most conventional B-school lore. The oral tradition holds true in business. We learn lessons from those who have talked the path before.
The primary lesson: pay yourself first. This is a very simple fact of nature, yet so many companies forget it. If you don’t eat, you will not survive.
Make no mistake. You will be tested. There will be periods where cash flow will trickle to a mere drop no matter how well you are capitalized. Accounts receivables will be spoken for by bills from the utility company, credit cards, partners, vendors, contractors, IRS, and the list goes on and on and on.
If you stay alive, all of these fine organizations and people will prosper. If you go out of business, declare bankruptcy, and take the downward spiral into shame and hiding, no one wins.
Therefore, the advice of the winners is to feed yourself first. Stay alive. You cannot reach the mission or vision of your company if you starve into oblivion. As the brave hero in Greek Mythology plugged his ear to keep from hearing the sirens’ song, plug your ears. Keep the bill collectors at bay until you are in a position to make it right.
Once you reach a cash flow positive position, make it right, and then count the profits. Stay alive. Feed yourself first. It’s that simple.
Jocelyn Atkinson and Michael Graber run the Southern Growth Studio, a strategic growth firm based in Memphis. Visit www.southerngrowthstudio.com to learn more.