Entrepreneurial Tip: Scale Your Business Plan in Stages to Fit Your Finances

This is one of several entrepreneurial tips I’ve developed, featuring shared experiences and wisdom from my successful career as a global entrepreneur that I outline in an easy to understand tip format with a brief story/snippet from my own experiences as well as a current anecdote about how this tip applies in today’s business environment.

Entrepreneurial Tip: Scale your business plan to fit your ability to finance it. If funds are limited, carry out your plan in stages.

Most small businesses have one overwhelming need in common: cash to grow. It’s better by far to work with what you’ve got than to bite off more than you can chew. Plan your business growth in stages, to match your cash reserves. Slow and steady often wins the race. As you develop a proven track record, it is easier to raise additional funds—making each successive phase of your business plan easier to finance.

From the Jack Nadel Archives

Most of our catalog sales in direct mail for the company I founded, Jack Nadel International, were based on a picture of a single sample of a given product we were selling. We did not inventory the merchandise until the actual sale was made. We simply ordered the product after we received orders through the catalog and made sure the delivery time was within the promised window. That way, we never depleted our cash reserves, and we never had an inventory problem.

How Does This Tip for Entrepreneurs Apply Today?

The restaurant business is one of the toughest in the world, especially in New York City. Therefore, it is especially important to pay attention to your costs and keep an eye on the road to profit. To see this at work, look no further than the war of two meat vendors in Manhattan. In 2011 and 2012 respectively, Currywurst Bros. and Meatball Obsession opened within blocks of each other. Currywurst Bros. sold currywurst, a German fried pork sausage dish, from a high- priced storefront. Meatball Obsession sold meatballs in a cup from a stall right near a train entrance.

Not surprisingly, Currywurst Bros., which had a monthly rent of $16,000, didn’t even make it a year before it had to close its doors and shut down the business due to cash-flow problems. Meatball Obsession, meanwhile, was still going strong months after opening—and if sales continue, who knows? The business might just expand to a nearby empty storefront.