Building Your Business By Investing In People Rather Than Stuff
You’ve just started your business or had a brilliant idea for one you want to start. After some research and planning, you’ve figured out what you need to setup and launch your business and you’ve got a list of things you need to purchase.
Now throw that list away and read this.
There are two main areas where you can invest your start-up capital. The first is in the infrastructure or “stuff” you need to operate your business. The other is people.
One road is easy and largely ineffective. The other road is challenging and leads to powerful results.
Buying All The Stuff You Didn’t Know You Didn’t Need
There are a lot of caveats in investing too much into building your business’s infrastructure too soon. Most people start buying the stuff on their list and as they go along, end up whittling the list down because the cash starts running out quickly. Or, they buy cheaper stuff.
Didn’t really need a Porsche to start a couriering company did you?
The reason this happens is because stuff doesn’t sell anything. It doesn’t go out and knock on doors. It doesn’t even produce the goods you’re selling without people at the helm. Without people, stuff is an expense that brings in no revenue.
And if you buy stuff before you know enough about your business, the market, the competition and the emerging technology trends … you’ll probably buy the wrong stuff. Now you’ve got all this useless stuff!
And no capital.
How To Invest In People Instead Of Stuff
Sure, you need some stuff. But by investing your capital more heavily into people rather than stuff, you’re building a company with a foundation and a good measure of the best resource every new business can hope to have. Brain cells.
Consider these things:
- Managing is hard. Buying stuff is the easy way out of what you really have to do which is build and lead a team of people that can make things happen.
- Managing is really hard. Not only do you have to find the right people, you have to keep them. There are going to be people that you hire that you have to fire. There’ll be others that just don’t stick around very long. It takes time to build a great team and you need great people to grow a company and move forward.
- ROI. The more stuff you buy, the more sales you have to get to pay for it. And the less time you have to do that before you run out of capital.
- Scalability. When you first start your business, outsourcing the work as you need it to get done means you’re paying as you earn. You’re only paying to fullfill the needs of each sale as you get it. If you buy a whole bunch of stuff, you need a certain amount of sales to pay for all the monthly expenses on that stuff. It might be rent on a large building or a loan payment for equipment. Don’t assume you’re going to get sales you don’t have yet.
- Expertise. Stuff is stupid. You’re going to run into problems that you never considered or dreamt of. The more brain cells you’ve got to work on the problem, the faster you’re going to find a great solution and move forward.
- Flexibility. A box packing machine packs boxes. A warehouse management system counts boxes. A person can do both. Just a little slower. Until you know exactly what you need, and how big or how much, flexibility will allow you to juggle a lot of different things. You can automate with stuff once you have enough experience to know exactly what you need.
Follow The Business Chain
The right things in the right order make a successful business. Break the chain and you break the business. But if you do the right things in the right order, you’ve got a better than average chance of success. The chain goes like this:
Idea > People > Plan > Sales > Capital > Purchasing
You purchase stuff. It’s at the end of the chain. But luckily, you threw that list of stuff away.