Running out of Steam

[Sampharo]

Dear Experts,

This is my first post to this forum. I have been in business for around two years now. I believe very strongly in myself and my ability to grow my business and that some day I will have created a group of companies that provides so many innovative products and services to different communities.

I managed to start a business from only $50,000 that today brings in more than double that every quarter, but I am in need of guidance and help in understanding how to stabilize the company and how to move forward with my goals without the taxing stress I am under right now, which makes me feel I may not be able to continue.

The problem it seems is that the inflow just barely keeps matching the outflow, and when I sit and work the numbers I just keep slamming my head against the wall at how the money keeps running through. The business is based on online service provision, so my variable cost is practically zero. Everytime I spend on advertising or marketing activities, we get charged by the truckload from the agencies and then have zero to show for it. And then we have to go through a crunch and work through our teeth to break even again, only then we breath and wish to invest in more marketing through different sources, and again the same result.

If I apply the same thing again I'ld be stupid to think I'll get a different outcome, so I know that there is something wrong with my budgeting or mode of thinking. Right now however we're coming to another crunch as rents here are charged annually and I don't think we have the cash for it. Survival mode is kicking in and that's not good. Credit is not an option that I can get even if I want it, as business loans to service companies are practially a dream.

My question is that supposing I do get through the next two months and dodge this bullet, how do I stay OUT of the way of such situations, and how do I progressively grow the company? I am not an accounting expert and can't afford an experienced CFO right now, but is there advice on how to get things so far in the black so I CAN afford one along with everything else the company needs to grow?

Thanks,

Sam

[F360]

Do this!!

Go to your libary or bookstore, and get hold of the book "E-Myth" but Michael Gerber. Then read it.

Do it, and come back and tell me when you got it It is what you need to read.

[NeeJam]

Firstly, you need to get a new deal with the agencies. If not try and outsource a new agency or supplier.

Secondly, you need to try an make a deal with the people you rent the space off, tell them your situation and ask them can you delay payments or pay over installments.

Thirdly, F360 sounds to have a good opinion on this, i have never read the book so i don't konw if its good or not but hey its worth a try.

[NeeJam]

Firstly, you need to get a new deal with the agencies. If not try and outsource a new agency or supplier.

Secondly, you need to try an make a deal with the people you rent the space off, tell them your situation and ask them can you delay payments or pay over installments.

Thirdly, F360 sounds to have a good opinion on this, i have never read the book so i don't konw if its good or not but hey its worth a try.

[GriZzly]

Sounds to me like reading books is the last thing you need to be doing and no doubt you are screaming at the computer when you read those suggestions. If you PM me with more information about you business I will be more detailed in my suggestions.

The problem seems to be that you need to find a more cost-effective way to advertise your services. The suggestion about changing agencies was a good one. It sounds like they are happy to take your money but aren't too concerned about the success of your advertising campaigns. Always be on the look-out for cheap (or free) opportunities to promote your business. If you aren't regularly visiting or displaying at trade shows/events then you should be. Trade shows are the best place to find the people who would be interested in your product.

And lastly don't panic, atleast you are still breaking even, there are plenty of businesses making heavy loses out there, you are still in a strong position to recover.

[F360]

If it was me in that situation, I'd be wanting to learn as much about business as I could, as it is clear he is having difficulties and needs to learn.

Up to you whether you read the book or not. Even if you only read to page 50. Shouldnt take more than 30 mintues. I did it while waiting for a plane. Its a good book, and if its too late to save this venture, it will make your future ones much easier.

[akula]

just having had a cursory glance at your post, here's some general feedback

you are looking for advice on a forum

you have cash flow problems

to fix this, you need to build a team so you can cease trawling through forums and have the resources to correct the difficulties you are having.

direct answer to your question: to do a turn around, i'd need to look at your financial statements, trailing ratios, have extensive discussion and then commit a group of people to a 12 month plan.

your venture isn't scaling because you haven't put the people in place to make it scale. you need an executive team, a board and advisers.

[GriZzly]

If it was me in that situation, I'd be wanting to learn as much about business as I could, as it is clear he is having difficulties and needs to learn.

And you think that reading Gerber book will make his business successful? There are plenty of motivational books out there and surprise surprise, the business failure rate hasn't been dented much. To fix a business you need to stop reading books and start looking at what options you have to solve your problems.

[F360]

I think it would help him in getting out of the situation, and if he had read it before starting the business, possibly avoided the situation entirely. Yes there are plenty of motivational books out there, and I personally cant stand them. The book im recommending is a business book with a focus on "why most small businesses fail, and what to do about it". I would guarantee that the chance of business failure is lower for people who have read this book than those who havent.

Anyway, mayby we could start a "should you learn more if your business is failing, or try to fix it?" thread to continue this :P Lets get back to helping the guy in trouble.

[GriZzly]

Helping the guy is exactly what I was trying to do, instead of trying to sell him books. F360 there are two types of people in business, those who plan and those who do. The planners spend all their time reading the latest motivational books and novels planning elaborate ways of improviding their business using over-the-top business terminology straight from the glossary at the back and finding ever more complicated ways to explain something that could just as easily be said in one word. Planners never do.

Now am I saying planning is not important to a business? No of course not it is essential, but there has to come a time when you actually put the planning to use, not all situations can be resolved by reading a book.

In this case sampharo just needs to put more work in, and possibly seek the council of a business advisor to advise him on specifics of his situation.

Either way it doesn't look like sampharo is returning to read any of this, so there is no point in arguing.

[F360]

I didnt think it was arguing, just a debate. I hope I didnt sound like I trying to argue?

I understand what you are saying, but you seem to think I want him to read read read all day. I have nothing to gain from him reading this book, so im not trying to sell it to him. I just highly recommend it as it is directly written for people in the same situation as him.

I have met the type of people who plan for years, then talk, then plan and never do anything, and thats not what im suggesting. I suggest he takes a look at the advice offered in this book(because he wants advice, thats why he came here to ask questions) and it will give him a better understanding out the problem he is in.

He came here for help, and I simply say go there for help.

"Either way it doesn't look like sampharo is returning to read any of this"
Great, looks like we can continue our debate here then

[nado]

You're paying for online marketing!?

[adamg]

to sort out the short term problems cash flow you need to go through your list of exisiting clients and sell extra services to them make more cash.

Long term you need to slowly ditch the agencies or make them reduce thier fees, find out what they do and copy them yourself.