When to take the next step?

lainypips

I'm looking for your thoughts and advice.

Myself and my partner started a business in May of last year in an industry that neither of us had any experience in. Before we started the business we spent as much time as possible researching and finding the right suppliers etc before launching. As a result, the business is growing steadily. Both our turnover and profit have increased each month with the exeption of January and it's an industry where the scope for bigger, better work is certainly available. We live and work in Galway where there are just of few companies in the same business as us and as a result we constantly see Dublin companies in working out here on what would be considered big jobs.

The problem is this, we are currently working from our house. We've managed ok so far but as the business is growing, so is the amount of space we need to work comfortably. We would like to move to an industrial unit but our profits would not yet cover rent and rates for the size premises we would need. We are also struggling to find the time to market the business as I'm only available a couple of hours a day (we have two small children) so I generally manage the website, accounts, correspondence and my partner does all of the manufacturing, installations etc. Ideally we would like to take someone on part-time to free up some of our time so that we could focus on sales and marketing but again, currently our profits will not cover this expense.

We do have money that we could invest in the business ourselves which would cover the cost of the premises and a part-time employee for at least a year. To date we've invested approx 20,000 and have made most of that back but I'm worried about whether or not it's too early to be taking a leap into rent/rates/employees when our profits are just covering the business costs and our cost of living (just about). We do feel that the work is out there and growing the business is possible if we take the right steps but it's taking that leap of faith and possibly risking the last of our savings that's making the decision extremely difficult.

Has anyone been in a similar situation? Are there certain questions we should be asking ourselves? I'm worried that if we don't take the next step that the business will stagnate as there'll be no room to grow.

Any information or advice would be greatly appreciated.

jimmii

Question you should probably be asking yourselves is what do you want to achieve with the company? If you have the funds to move work out how long you think it will take for revenues to be enough to cover the additional costs and decide if you are willing to take that risk (and cost). If you plan on running this business for a while and really growing it then it sounds like you will probably have to move sooner or later anyway.

Are you currently having to reject jobs as you don't have the staff/space to be able to complete the jobs or are you already taking on everything being offered? If its the former then will the new premises mean you can immediately start taking these jobs on?

Try and find a premises with a flexible landlord who will allow you to insert a release clause into the lease that way if you do move and it doesn't work out you aren't stuck there for years on end! A lot of the time they will be happy to get the units let and will allow 12/18 month release clauses.

Nappy

I'm reading a book called e myth at the moment. There's some great advice in it for small businesses.

jimmii

Nappy wrote: »

I'm reading a book called e myth at the moment. There's some great advice in it for small businesses.

This?
http://www.e-myth.com/masterybook/

Nappy

It's called e-myth revisited, that book is from same series

jimmii

Nappy wrote: »

It's called e-myth revisited, that book is from same series

link?

Nappy

http://www.amazon.com/The-E-Myth-Revisited-Small-Businesses/dp/0887307280/ref=sr_1_1?s=books&ie=UTF8&qid=1394660215&sr=1-1&keywords=e+myth+revisited

jimmii

Nappy wrote: »

http://www.amazon.com/The-E-Myth-Revisited-Small-Businesses/dp/0887307280/ref=sr_1_1?s=books&ie=UTF8&qid=1394660215&sr=1-1&keywords=e+myth+revisited

Cheers. Did you get it from Amazon or is it available anywhere?

scwazrh

Just to clarify , So youre in business as husband and wife team and started 10 months ago.You invested a total of 20,000 and you're only working a few hrs a day but your husband is full time.In the first 10 months your business has since paid a cost of living wage to you both and returned the 20k investment.

Is this right?

lainypips

Thanks Jimmii for the advice. I think our 'vision' for the business is definitely something we need to discuss further. Whether we want to have a larger, more successful business with staff etc and the stresses that come with that or if we're better off keeping it small and ticking over so long as it's providing us with a decent income.

Thanks for the link Nappy. I've downloaded the ebook and look forward to reading it.

Scwarzh - Yes we're a couple (unmarried). My partner is a sole trader and I'm not officially employed by the business as yet but it's on the cards. We invested 20,000 initially for equipment and have made the majority of that figure back in profit. Some of which has been reinvested. The business is only recently providing my partner with a conservative income.

scwazrh

lainypips wrote: »

Scwarzh - Yes we're a couple (unmarried). My partner is a sole trader and I'm not officially employed by the business as yet but it's on the cards. We invested 20,000 initially for equipment and have made the majority of that figure back in profit. Some of which has been reinvested. The business is only recently providing my partner with a conservative income.

To get your initial investment back within the first year is very good for any business.If you feel you can continue that level of profitability I would suggest you reinvest and continue to grow the business.

Nappy

jimmii wrote: »

Cheers. Did you get it from Amazon or is it available anywhere?

I got it on amazon but you should be able to get it in Easons.

jimmii

Nappy wrote: »

I got it on amazon but you should be able to get it in Easons.

Will take a look. Seems to get mixed reviews but those seem to be from experienced business people coming at thinking they might learn something new which I guess really isn't the point of the book.

Peterdalkey

OP, yours is a very positive story and you seem to have made a really great start to getting the enterprise off the ground and cash-flow positive in jig time!! Running a business is all about taking risks, while at the same time minimizing the downside if it does not go as planned. You are wise to be questioning everything related to taking the next big step and financial risk.

I would most strongly urge you to get a good retired accountant type to guide and help as a mentor. Your local Enterprise Board will assist you with this. Having this type of expertise available will make a huge difference to you in evaluating your growth strategies and a formulating a proper business plan.

Yes Peter is correct, the decision on whether to do this is in the numbers. What are the realistic projections with these upgrades in place and is that enough profits to justify the expansion

lainypips

Thanks Peter for the advice. As promising as the business seems, I don't want our inexperience and possibly unrealistic expectations to send us in the wrong direction so a mentor could definitely help us there.

Thanks El-rifle. We're only going to invest what we're prepared to lose so we're going to have to sit down and really crunch the numbers on this.