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Wednesday, October 25, 2006

Problems During Start-up Can Mean Success Later

"Some wizdom from my rear view mirror"

People always want their start-up company to be immediately profitable, but sometimes a little struggle at the beginning can be the best-case scenario.

Why? Because when things go too smoothly right from the start, two dangers can emerge:

  1. Owners and employees may become complacent, thinking that it will always be as easy to make sales and maintain profitability. Then, if the economy or specific industry changes and sales drop or profit margins grow thinner, it can be tough psychologically to put in the extra effort suddenly required to achieve what once came so easily.
  2. A company may not have the incentive to streamline operations and strengthen the fundamentals of the company to maximize chances for long-term profitability. A new company becomes strong by squeezing costs to a minimum, making the most of employees, securing the best terms from suppliers, negotiating tough terms for leases and loans, learning how to analyze expansion, adding new products/services, making the most out of every marketing spend and all the other factors that can allow a company to weather future changes.


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