So I started my own business ...

[Great Asp]

Congrats on starting your business! Very liberating and yet terrifying all at the same time!

E

 

[gimmie11s]

you are ASSUMING only 20% return. How do you know your business won't double, or even triple profit ? If the demand if there, you respond accordingly. Simply denying more business is ridiculous .... the same goes for a business decline, in which case you would lay off workers.

You talk like a large Corporation.

The small businessman doesn't want the overhead associated with 8, 9, and 10 figure top-line revenues. The idea of "if youre not growing, youre dying" is ridiculous at best. A smart small businessman that has found a nitch in his field can exploit that nitch and maintain 30+% profitability (or more) for decades if he is competent and sought after in his space.

The variable costs of a billion dollar business are relative to labor and capital intake and often can actually increase disproportionately to revenue.

Anyone who has managed a large P/L knows this. Sure costs can be cut to improve EBIT or EBITDA but you'll eventually get to the point of diminishing returns and your product will undoubtedly suffer at some point.

 

[earico]

you are ASSUMING only 20% return. How do you know your business won't double, or even triple profit ? If the demand if there, you respond accordingly. Simply denying more business is ridiculous .... the same goes for a business decline, in which case you would lay off workers.

I've run the numbers. I've been doing this 20 years and know my field. Yes I could make a little more but I currently make plenty at home in my PJs. What your suggesting requires an office and much more overhead. No thanks. That's exactly why I'm now on the development side of this industry. That's where the real money is and that move is going to be a huge payday 10 years from now.

 

[SonicDTR]

Conversation has totally derailed, but I have to agree with those saying know when to turn down work. I've had to drop my support for plenty of small businesses over the years because they grew fast, kept taking work, and quality tanked. Not every business is scalable, and not everyone wants a bigger business.

I'd say the #1 thing in the case of taking on more work, is being 100% up front and honest with your customers! Our shop(BMW/Euro performance) got way booked out because we didn't want to say no to a customer, BUT we were always up front with them about the lead-time as it got longer with each new customer. At the time we'd rather rack up the work and set expectations of 4-6+ weeks than say no. Thankfully we had some very patient folks without a timeline, but it taught us an important lesson on not taking too much work at once.

 

[JMann2380]

Dont hire employees. Haha

Sent from my potato using Tapatalk

Ha, x2. Very good advice!