As a small business planning firm one of the consistent questions that business owners ask us is, “I have limited financial resources for my business where should I invest them?” This occurred recently when one of our clients, a heating and air conditioning contractor said to me, “George I want to expand my business significantly this year, what actions do you suggest?”
We then had about a two hour discussion on the 15 to 20 items that he was considering in order to grow his small business. By the
end of our discussion he had crossed off a number of items from his immediate to do list. The items that were removed from his list either did not have the assurance of a significant payback to his small business or the timeframe of receiving a benefit from these actions was way down the road. His final action list for this year was boiled down to these 7 items:
- Significantly increase his advertising
- Add an additional inside salesperson
- Do the research to determine if he should carry a different brand of heating and air conditioning systems
- Do the legwork of trying to find a source for the financing of his customer’s purchase of their of heating and air conditioning systems
- Add a two more installation trucks and two additional installers
- Send his installation and maintenance staff for additional training
- Invest in a new computer system that would enable him to run his business in a better and more efficient way
As we chatted about these various actions he could take I asked him if he had calculated whether he had the resources to do all these things at the same time or a close succession to each other. He said, “It would be quite a stretch but I think I can financially afford these efforts”. I shared with him every business has limited resources and you have to choose which initiatives you are going to tackle and the order in which you will undertake them.
A Large Business or Small Business Has Limited Resources of Time, Money and Talent
When the question of having enough “resources” is considered small business owners many times strictly look at their financial resources, however a business actually has three resource limitations:
1. Time
2. Money
3. Talent
Time – This includes the business owner’s personal time and the time that the employees of the business would spend on a certain project or a certain area.
Money – This is the resource that business owners most often consider and this financial resource can come from the business owner themselves, loans from outside sources is or it could involve internally generated capital.
Talent – Talent consists of and involves the focused thought, energy and skill sets of the business owner and the employees that are involved in the effort.
These three resources of time, money and talent are limited in both the total amount it can be spent as well as the timing of the expenditure of this time, money and talent. What we have found that assists small business clients in making these decisions is to take a step back and look at the things that you as a small business owner must absolutely do in order to be successful. See Small Business Planning Steps for Growing Your Business for related resources.
This involves determining the things on which you must focus your business’ limited time, money and talent in order to create a successful business. Otherwise it is easy to fall into a knee-jerk reaction and undertake actions that might solve some short term pressing issue, but in the long term may not move a small business owner closer to their goals for their business. See The Payoffs and Payback of Small Business Planning for more information on this topic.
Besides the money that an initiative will utilize consider how much of your personal time the action will take start and to supervise through its completion. Next take into account how much time that all of the tasks related to the initiative will consume from your employees workday. Also, determine how the project will affect your small business’ overall focus and how much of your business’ global energy will be expended. Lastly, ascertain if you and your employees have the skill sets to successfully complete the effort.
As a small business planning firm we have found that urging a business owner to consider how a possible action would consume their business’ limited time, money and talent can greatly assist a small business owner to ferret out and identify the initiatives that will truly be beneficial to the business owner as compared to just using up their resources.
