Spark Consulting

Reinvesting For Growth

A few years ago we found ourselves invited to admire our most senior employee’s brand new bedroom set. It was lovely. Believe us, we were delighted for her. But at the time, it made us wonder if her grass wasn’t just a little greener than ours. For example, at that point in time, we both happened to be sleeping on box springs – sans fancy bedroom sets. How was it that our employee was having sweet dreams based on her paycheque while we were still juggling the need to grow our business with the cash we were taking out personally? When we founded our personalized blanket company, Admiral Road Designs, almost 10 years ago, one of the first things we did was build a financial model. Like we learned in business school, we took our best guess as to what our sales would be as well as what we imagined our growth would look like. In this way we determined that if could sell “X” number of blankets per week, we would be able to meet our financial goals. The good news is that we surpassed that sales target early on and are thrilled by the way our company continues to grow. Here’s the bad news: When we hit our sales goal, we weren’t drawing the salaries we had hoped. How did this happen? Really, it was a variety of reasons, none of which we considered on day one of the business. When we made our initial projections, we didn’t factor in that making more blankets would cost more money. Back when we sold 500 blankets a year, we could manage most of the process on our own. We cut all the appliqué ourselves, packed up every single blanket and brought each box to the post office. Fast forward a few years and we have to pay a lot more people along the way because we simply can’t manage every aspect of the process by ourselves. We also did not map out how much money we would re-invest in the business. Yes, we’ve been profitable since our first year in business, but some of what we have earned we’ve thrown back into the business to facilitate growth. You can build it, but it’s going to cost you to make them come. We don’t regret any of our business decisions or how we’ve gotten to where we are now. It just would have been helpful to consider at the outset that it costs money – often more than you think – to start making money. Have you been surprised by how much money you’ve had to re-invest for growth? This post originally appeared here on Yummy Mummy Club.