How Small Companies can Compete with Large Enterprises- Part 2
2021-04-20
Prepare For The Future With Strategic Investments As Much As Possible During The Early Years
2021-04-20
Prepare For The Future With Strategic Investments As Much As Possible During The Early Years
Small, young companies can be fragile things; achieving stable revenue and healthy cash flow can be a massive challenge. Making large investments early on may therefore feel like a risky bet. That being said, my approach as a business owner over the last 15 years has been to make early investments in business infrastructure and capacity that may exceed near term needs, but allow companies to reap significant long-term dividends.
A classic example of forward thinking investments is enterprise management software (ERP or CRM). Many companies wait until they are experiencing major inefficiencies before they implement a solution to manage their data and processes more systematically. This is understandable, because business management systems typically require a significant investment of time and capital. However, if you expect your business to grow over several years, it’s easy to predict that future inefficiencies will become inevitable if you keep on running your business on excel. My view has always been: why wait until you are in pain to deal with the problem? Isn’t it best to invest in systems now to mitigate future growing pains?
Apart from anything else, at one stage in their growth, most fast growing businesses will experience challenges on the service delivery side, especially if their infrastructure and systems can’t keep pace with after your sales team signs a whole bunch of new contracts. I myself have experienced this to a degree; there were a couple of months where we stopped bidding on new contracts so that we could concentrate on fulfilling our service commitments. However because we invested in good business systems that allowed us to implement new business processes and controls quickly, we were able to deal with bottlenecks on the delivery side in quite a short period of time and return to continued business growth.
Investing in the future may seem like a risky bet. But not investing in business systems and other infrastructure is an even greater risk, in my opinion.
