Part Of Learning How To Make Money Is Learning Not To Spend It!

Seems obvious right? Wrong. Most people setting out in business will spend more time in the early phases spending money rather than making it.

I will admit that in the first year of Severn Delta we spent a whole bunch of money we didn't have to. That just made the first year loss even bigger than it would have been if we had exercised a little more restraint. Like most CEO's at the helm for the first time I had to learn this lesson the hard way but learn it I most certainly did!

I visited a company in the Valleys about a year ago. Or rather an ex company as it had gone under. It was beautiful. The cleanest factory I have ever seen. A gleaming state of the art laboratory. A £350k production line with a packing unit on the end that had three times the packing capacity that the line it was bolted to needed, and which cost more that the line feeding it! They had newly decorated offices with the latest Dell's in front of all the staff they had hired. They had spent and spent and spent setting up their company and had burnt all the money they had borrowed to set the company up plus the same amount again in grants from the Welsh Development Agency (or rather from you, me and the rest of the Tax paying millions!). They had been so busy spending money they had forgotten to make any. The factory was completely uncontaminated by production and they had no customers. No customers means no sales. No sales means no income so when the cash pot ran out the game was up.

Repeat after me: You are in business to make money not spend it.

Another thing I did a year ago was hire a Sales Director for the first time in our history. This enabled me to focus on other things. The man in question was astonished at the fanatical cost control and cost attrition that is an everyday staple at Severn Delta. He had worked for bigger companies and for similar sized companies and he quoted examples of whole departments in some places who were little more that spending machines contributing little to the overall drive of the business but lobbying for bigger and bigger budgets every year.

We don't have departments like that. We don't really have departments. We have two open plan offices full of people with different specialties working together towards a common goal and all constantly looking for ways to not spend money or to cut costs wherever possible. It is in the DNA of the company now, but I keep a paranoid close eye on it anyway.

I know we can spend less if we try. We just haven't worked out exactly how yet, but we are working on it.