Starting Lean and Mean

I’ve been learning a lot about business over the past year and a half. I started Sunrise Energy Solutions in November of 2014 and now have recently started Auto Haus Designs in April of 2016. They are about a year and half apart from each other as well. They are both very different and have unique challenges in their industries even though they are almost two arms of the same industry. They are both very much window tinting companies at the core of their identities.

The thing differing them is their intended use. One is for commercial and residential buildings and the other is for cars.

One thing I’ve seen that is essential to the success of any new company is staying lean. Staying lean is what I mean by the ability to function and survive on very low costs and also being able to change things quickly to adjust to needs as the business is figuring things out and changing.

One thing that can be a very high cost is physical space and rent, which is why many people who are starting companies start it out of their garages. It’s more a general phrase to a very important idea of starting with as low of a cost as possible and a physical office space is one of the larger ones.  Fancy office space at the beginning of a company’s birth is not essential and should be put off as long as possible.

Payroll is also another very high cost for businesses. There are key people in any new company but they need to know that at the very beginning of a business people need to stay lean with costs or else the cash flow will not work out with the capital that you have currently. This is also why it’s a very good idea if you have limited startup funds to give some equity to your essential co-founders. If the start up fails, you won’t have lost too much money, but if it succeeds, everyone is happy, especially those who invested their time and energy in the beginning for that equity.

Another thing you need to think about is what type of business you’re offering. Do you need to sell something that you need to keep in stock? Or is it service oriented? Think hard about what are the costs related to what you’re selling. If it’s software, then the cost is more associated with your workers and how much you have to pay them to produce the software since once they’ve made it you can sell it over and over again. If you have something physical, then you need to start becoming aware of the logistics of your inventory and the flow of these products. You need to have checks in place to see how much you have, how much you’re using and how often it’s being used. Or else you could have a lot of waste and just think it’s normal.

One of the things a new business owner should do is go through each of your costs and see how you can decrease them. That’s something I’m currently going through and need to continually do in order to lower our costs and increase our profit margins. Just thoughts in the life of a small business owner.