Critical Mass: To make it, you have to stay in business.

Josh has written more commentary on MWI's 2006 financials on his Don Loper blog.

critical-mass.gifHere's what Josh feels he's learned lately:

In looking over the financials for the last year, I started thinking to myself "Ok, if I hadn't done that, I could have saved $20K, and if I hadn't hired that person I could have saved another $50K and we probably would have gotten by ok..." etc. When I totalled everything up, there was probably $120K worth of expenses that were a total loss as far as return on investment, or could at least be debated as being a total loss. What else could I have done with that $120K?

I've heard, and I can't remember where, that the number one reason businesses don't last is that someone doesn't keep them in business long enough to turn the corner.

A business is very much like any investment that accrues compounding interest over time. Skills, networks, clients... all of these slowly gather momentum and aggregate over time. You know better what you're doing. You make better decisions. Your staff is trained. You don't waste as much money.

The analogy I use comes from the board game Risk. When I was in college we used to play with two boards. The games would take 8-10 hours with tiny incremental position changes. When someone looked to be gaining an advantage the other players would team up and take turns attacking the leading player.

But then a change would come. A subtle shift would benefit a player and advantages would multiply until, at the end, it was a completely one sided affair that ends in minutes.

If you're going to enter a business, better plan on staying in business.