CEO Blues

A blog type thing


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Steven Garrity -

This is especially true our our industry, where our product is intellectual. If we needed a factory, I think the situation would be a bit different.

Peter Rukavina -

<P>The best book on this subject I've ever read is Growing a Business by Paul Hawken. Here's a quote from the introduction:</P>

...many experts say that young businesses go under most often because they lack sufficient capital. I believe that, for the new and growing business, <I>too much money</I> is a greater problem than too little.

<P>He goes on to elaborate. It's a worthy read.</P>

Dan James -

Steve, you're right. Big businesses (factories and the what not) may have different needs. Maybe I should have called this "small business myths".

John Hawbaker -

We're all about the revenue based growth! It's not glamorous, but I can't imagine going into large amounts of debt to start this type of business. In fact, I'm still working another job until we get to the point where the business will match or exceed my current income. I can see how business debt could easily become a dangerous cycle (just as can personal debt), and I learned a lesson or two from working for a dot-com that went under even after millions of dollars in VC funding.

Jake -

I also run a small (7 person) revenue-funded operation. I can second the recommendation of Paul Hawken's book: it had a profound effect on how we do business here.

I don't have much experience in other sectors, but the web application + consulting gig is pretty ideal for slow, predictable growth. Start with one cup of consulting, over the next few years slowly add applications to taste.

If the recepie works out, you end up with little consulting income and a good sustainable web application side. Yummy.

Rob Paterson -

Grwing naturally seesm to be an emerging rule in the Dan James Group Model. Growing too fast or in a silly way as a result of over capitalization is a risk that I think we are agreeing on. Another driver for doing silly things is having to meet a high cost hurdle rate. If you have to make the rent, you might have to push too hard too early.

I have paid as much attention to keeping my structural costs down as in working the revenue. I have found it helpful to see costs as being both cash and time. After all we bill for time. Working from home was key for me. No direct office costs but instead deductions! No commuting costs or time. Running a car is about 6K a year at least.

All the admin stuff is huge in terms of time and can also drive direct costs at accounting rates. So I have found that having a really good admin system saves again direct and indirect costs. Having a great accountant was a good start for us. Not only do we have a book keeping system that is easy and quick to run but year end is a 30 minute deal. All our business expenses are on one credit card. We download it into our accounting system and bingo, we have our months expenses set up in 5 minutes. All our business bills are on the card as well - phone etc so we spend no time on paying bills either. We have set it up so that nearly all my time is available for customer work,R & D or fun.

Using the business structure to augment your flexibility and to lower your own personal costs is a good thing as well. You are all so young but kids are the big costs in your life. Having your children as shareholders is a great way to save cash. Instead of paying for their costs out of your after tax income, you can dividend up to 23K to each child - the tax rate is the corporate tax rate which is usually lower than your personal rate.

Rob Paterson -

Paul Hawken wil be coming to PEI

Wednesday, August 13, 2003

University of Prince Edward Island
Amphitheatre, Duffy Science Building
550 University Avenue, Charlottetown, PEI

7:00 pm - Public Presentation by Paul Hawken
- Moderator: Wade MacLauchlan, UPEI President
- Introduction of Speaker: Dr. Harvey Mead, Chair of the National Round
Table on the Environment and the Economy

8:30-10:00 pm - Reception and Entertainment at the W.A. Murphy Student Centre, UPEI
- Cash bar
- Entertainment: “Crowbush” (to be confirmed by Doug Deacon)
- Informal continuation of the discussion