04/ 19/ 2006
by Jeffrey Moses
People always want their start-up company to be immediately profitable, but sometimes a little struggle at the beginning can be the best-case scenario.
Why? Because when things go too smoothly right from the start, two dangers can emerge:
1. Owners and employees may become complacent, thinking that it will always be as easy to make sales and maintain profitability. Then, if the economy or specific industry changes and sales drop or profit margins grow thinner, it can be tough psychologically to put in the extra effort suddenly required to achieve what once came so easily.
Today’s real estate market is a prime example. The market has been exceptionally good for the past five or six years in many areas of the country, with scads of buyers and lots of quick sales. Sales agents who began their careers during this period often made tremendous incomes without having to put in long hours searching for buyers. Listings sold quickly, and often the biggest problem was getting in a timely offer.
Things are changing, however, as the real estate market slows in many areas. To be successful now, most agents need to get back to basics, such as paying attention to their farm area, sitting at their phones hoping prospects will call and becoming creative to sell listings. The problem is, many new agents have been spoiled by the easy times––and may not even be skilled in some of the fundamental sales activities they'll need for success in the new market.
2. A company may not have the incentive to streamline operations and strengthen the fundamentals of the company to maximize chances for long-term profitability. A new company becomes strong by squeezing costs to a minimum, making the most of employees, securing the best terms from suppliers, negotiating tough terms for leases and loans, learning how to analyze expansion, adding new products/services, making the most out of every marketing dollar and all the other factors that can allow a company to weather future changes.
If things are too easy right from the start, a company can become downright flabby. When times are great, a few extra employees or a thousand dollars falling through the cracks once in a while doesn't mean so much. But when sales are harder to find, this flab can be hard to shed.
The laws of nature often set up somewhat difficult conditions for new plants and animals, making them stronger so they can thrive later. Plants, for example, may not put down deep roots if there’s an overabundance of rain when the plant is young. This shallow root structure may mean fast, easy growth, but it can leave a plant vulnerable to strong winds. A shortage of rain, on the other hand, forces a plant to send down deep roots that eventually provide great stability.
The same can be said of a start-up business. When things go too easily, a company may not be forced to set up highly efficient, cost-effective operations. In the long run, this could weaken it when hard winds blow. So, if your new company is running into difficulties, look at the problems as small blessings in disguise. By meeting them straight on, you can weatherproof your organization to maximize future stability and growth.
