There are so many different levels of entrepreneurship, but from Tech to Mompreneur most of the business issues are common. For a starter, we all love growth. After all sales are the solution to all of our problems- at least on the surface. Patience is not an entrepreneurial forte. Increasing your top line feels good-it builds momentum – it motivates your team- it validates your idea. Maybe.
Buying market share is a losing strategy for a startup. It might work for an established company with deep pockets but even that is questionable. If you sacrifice margin to gain sales nothing else you do will produce a good result. It’s like starting a marathon twenty miles behind everyone else. You can run faster and work harder but you can’t win. Healthy sales growth comes from a unique product, a better product or superior service, successful entrepreneurs will find that better way. Sometimes we don’t know enough so study results and understand your numbers particularly margin. Regardless a loss leader reflects poor leadership and it’s still a loss. In the startup phase you can’t sustain losses for long. Plus losses are demotivating. There is nothing worse than working long hours only to find out that you are gong backwards. It undermines your leadership and your credibility. Your team can become demoralized. A loss from slow market penetration can be understood. One incurred in the midst of the chaos of rapid growth is difficult to comprehend.
It’s far better to run a lean ship, keep your costs down and build your top line on merit. Perhaps that’s old school but it’s prudent. Risk is part of the equation but reckless risk is overrated. You may know your product is exceptional but it takes time to prove it in the marketplace, especially when you’re immersed in all the challenges involved in your start-up. Your customers don’t care. If you down price they don’t expect it to be fatal for you. They assume that you know what you’re doing and besides it’s a short term benefit for them. It’s pretty simple: you’re expendable.
So hang tough on your margins and put yourself in a position to succeed. Otherwise you will become that storied “busy fool” and we all know there is no other fool like that one.