(insert your choice here)
Which one is correct? Well, it depends on a lot of things, like speed, budget and even why you are going…. Are you walking to Sydney on fitness or political campaign?
It’s easy in to judge strategy from the sidelines, especially when we don’t understand the constraints or objectives.
In startup land our paths will differ. What matters is if we get to Sydney, and if we did it in the manner which suited us.
Steve – rentoid.com
“…I would have, but I’m not very good at maths”. How many times have we heard that? I love quadratic equations and differential calculus as much as the next guy…
Good news bulletin: Simple Maths rules the business world.
If you’re familiar with the following symbols you’ve got all the number skills you need.
+ – x / % < >
You only need grade school math. But, you’ve got to be quick with your numbers, know which ones matter, understand industry averages and which ratio’s to look for – top of mind. The most important of all these symbols is %.
Everything that matters is represented as a percentage:
Rates of interest
Return on investment
Price earnings ratios
Debt to equity
Get to know your key financial indicators. Simple tools used on the share market are your best friend even for a small start up. Fundamental analysis is always based on ratio analysis.
Your company will only ever be what it earns and remember these two things that entrepreneurs often forget:
- Revenue must exceed expenditure
- The crocodile always gets the biggest piece!
English football savant George Best was once asked what happened to all the money he earned as the worlds greatest player. In classic Georgie style he responded:
“I spent a lot of my money on booze, birds and fast cars, the rest I just squandered.”
If we’re in an early phase start up or we’ve just made bank, the principles don’t change. If you can control your spending, you can control your business and your life. It’s easy to justify expenditure at either end of the business spectrum. A start up can convince themselves they’re investing for growth. Likewise, a booming business with big profits can fly first class and hire private yachts to impress clients themselves.
Quite often over spending is due to a real lack of creativity and an inflated ego.
Startup blog advice is this: Cash flow is vital and by being creative we can ultimately conserve cash flow, yet generate similar results.
Sometimes we convince ourselves in the early days of our start up that the fun stuff is most important. Yes it’s seriously important, and it’s partly why we decided to leave the cubicle.
But the biggest reason we left cubiclesville was because we wanted to win. We wanted to do something, change something, prove something and achieve success which other corporate plankton couldn’t claim on our behalf.
That said, we ought ask ourselves this:
Is what we are doing Game Changing?
Will what we are spending investing our time on today be the thing that ensures we win the game in our web domain, category or industry?
Fact: When Youtube launched there was over 450 other video sharing websites. Youtube won video sharing for these reasons:
1. They had the simplest user experience
2. They had the most videos uploaded
So – are we investing our day on Game Changing activities, or just passing time?
Well, why not behave the same way in which wealthy countries do. It’s a very simple formula:
Invest in health care & education.
The 3 wealthiest countries in the world by GDP per capita – Luxembourg, Norway & Switzerland, have outstanding healthcare and education systems which are largely government funded.
The two most valuable assets you can ever have are your health and education. If we’re healthy we can do anything. If we educate ourselves, we can always find ways to generate income.
For those about to argue about about wealth not being ‘economic’…then please refer again to what these countries invest in. Financial wealth is the outcome, not the driver.