(From Aidan Directors Blog, 20 April 2009)
If your business doesn’t make money, you fail in business.
People who just started a business often get sidetracked early on. The first thing they do is making their business looks good. They print custom envelopes, custom letterheads, custom forms, custom business cards, custom store signs, custom this and that. All of these unnecessary and a waste of money.
I saw this error committed enough times among my friends who had just started their businesses. They focus on making their businesses look good, not making their businesses profitable. Please, it doesn’t matter if it looks good or not if nobody is looking. Don’t buy the hype about “building brands”. Worry about it when you have money to pay rent and meet payroll.
For company letterhead, you can embed your company header in Microsoft Words, so it’ll appear when you print out documents. This way is cheaper than printing company stationeries you rarely use. You don’t need custom envelopes. The prettiest envelope in the world gets thrown into the wastebasket after it is opened. As for forms and stuff, you can download templates for all kinds of documents (invoice, form, receipt, quotation) online.
The only things you need to establish your business identity are 1) a rubber stamp and 2) a stack of business cards. A cheap one will do; wait until you make your first hundred thousand before you get glossy business cards. Using glossy business cards when you’re not making money is like putting lipstick on a pig. The cost of buying a self-inking rubber stamp is RM40 and the cost of printing a business card is about RM30 per 100 cards. And you can get cheaper if you shop around a little. That’s all the “brand identity” you need, if you’re just opening shop.
They (people who have yet to make a single dollar from their “business”) hire graphic designers to create a smorgasbord of “corporate identities”: company logos, company fonts, brochures, website designs. Might as well throw the money down the rubbish chute.
They also insist on top-of-the-line business machines. They buy new desktop computers, full color laser printers and photocopy machines. Unless you are opening a photocopy store or a law firm, it’s cheaper not to have a photocopy machine in your office. The extra time you saved by doing photocopies in the office rather than taking a walk to the nearby photocopy store, is not worth the money you spend to lease or buy a photocopy machine.
Let’s not get started with the furniture. With expensive full sofa set in the reception area (why they even need a reception area is another mystery) to serve a grand total of two guests per month. With expensive ergonomic leather chairs and brand new business desks. With teak wood cabinets to store business supplies and files (but not invoices, because there are none). Waste of good money that should go into product development and hiring cheap labor to get it done.
You don’t need accounting software if you make fifteen transactions a month. Learn to use Excel. You only need accounting software if you run a business with large inventory and frequent sales (for example, if you run a pharmacy). Other than that, managing books by hand is more efficient and reliable.
Rent cheap office. Don’t rent an expensive office just because you think the address will impress people. They won’t. Choose your office based on practical considerations: is it easy to find by my customers, are there parking spaces nearby, is it close to a restaurant / masjid / photocopy store, is it accessible by public transport.
The main reason why people go out of business a short time after they started out is because a huge sum is thrown away to buy things for the office which are not essential to the business of making money.
Go cheap, people. Make money first.