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One of the hardest things to do when you’re starting a business is to dream big while living within your means. If all you do is fantasize about tomorrow, you’ll run out of cash before you can fulfill your vision. If you dwell too much on your modest circumstances in the beginning, you’ll get depressed, think small and be tempted to get a job.
The trick to making it through the start up years is to straddle one foot in dreamland and one foot in reality.
Robert Barnard is CEO of DECODE, a Toronto-based boutique consultancy that helps large organizations understand and engage the youth, young adult and young family markets. He started the business 15 years ago and has been growing it steadily since. Barnard and his team recently decided to open a U.K. office. His goals for the U.K. business illustrate an entrepreneur living modestly and, at the same time, maintaining a big vision: “Year one for us in the U.K. is all about three things: getting the core team of three or four set up in London, meeting as many ‘useful’ people as we can and breaking even. By year five, I see London as a full 10-person office working on truly influential projects that engage young people as consumers, employees and citizens. By then, it will be a part of a three- to four-office global network.”
Intelligent entrepreneurs operate with one foot firmly planted in reality. They live within their means, guard their equity with their life and finance the bulk of their growth out of cash flow.
At the same time, the intelligent entrepreneur needs one foot in dreamland. To attract a buyer, you need to communicate what is possible with your business should the buyer choose to apply his or her considerable resources to your business. You need to sell the vision of the vastness of your company’s opportunity, if the right company came along to help you exploit it.
I asked Barnard why he chose to open an office in the U.K. in the depth of the country’s worst recession in a generation. "I think entering the market in a down economy really helps the cost side of the sheet. Great people are a bit cheaper, and business service companies who specialize in start-ups are looking for business. Hotwire and ‘hotdesks’ make life easier than when we started DECODE 15 years ago. It certainly helps that the Canadian operations are doing very well, even in a tough economy, so we decided to fund from cash flow versus going outside for investment."
Plod along with both feet in reality, and potential buyers will label your business “a lifestyle business” and pass on the opportunity to invest. Plant both feet in dreamland, and pesky little things like payroll will become a challenge. Intelligent owners run their business in reality while dreaming in Technicolor.