MISTAKE #37: You’re really testing the strength of a shoestring

Are you operating all or part of your business on a shoestring budget?  Do you readily admit or even apologize for the areas you know you should be investing more in?

Are your days dictated by what fire is most likely to get out of control?  You know you’re juggling too many balls or spinning too many plates or…you pick the metaphor…that is about to drop.

You’re trying to operate a kick-ass business but most days feel more like an ass-kicking

SHOESTRINGS AREN’T A GOOD BUILDING MATERIAL

By definition, a shoestring refers to something that is considered under-sized or inadequate.

Operating this way is viewed as a temporary and necessary evil.  Business owners justify this by promising to do it right once they get their first big purchase order or reach a certain sales threshold. 

However, it has been my experience (and I think most business books would reinforce) that sales growth and big P.O.s are the results of doing things right from the start.  Few companies are given the chance to start doing things right once they’ve achieved success.

THE CONTAGION OF SHOESTRING SYNDROME

The compounded challenges of operating on a shoestring come from living in ignorance and forming bad habits.

Ignorance:   

Operating on a shoestring tends to lower lots of standards along with it.  It is the excuse to make the unacceptable acceptable.

The definition of excellence becomes qualified, as in “that is really great work considering the limited time and money we put into it.”

Companies either no longer realize or no longer recognize excellence.  But the marketplace will always be the great truth-teller.

Packaging or advertising or content a company sat around a conference and considered kickass will come back to give them an ass-kicking in a marketplace that couldn’t care less about how well they were able to stretch a shoestring budget to create it.  The market doesn’t consider these qualifiers.  It rewards excellent products and sends the rest to the clearance aisle.

Shoppers don’t buy mediocre coffee or beauty products because it supports a charitable cause.  They’ll buy damn good coffee or great beauty products and donate a couple of bucks to something they care about.

Shoppers will quickly bale on poorly produced and overly-long product demo videos or uninspired ads before you even get to the reason to believe.

Shoppers won’t even notice bland packaging on a store shelf.

Bad Habits: 

 If you’re operating on a shoestring, you’re probably not only under-resourced but working against unrealistic timelines all in some convoluted formula for success. 

You’re trying to get twice as much work done in half the time.  And are surprised when the work is one-quarter the quality of what it should be.

For some reason, lack of money and lack of time often go hand-in-hand.

The longer this goes on, the more it becomes standard operating procedure.  Doing more with less is a great start-up plan, but it is easy to confuse this moment-in-time need with the unspoken mantra “do more and more with less and less.”

I, too, spent many years working on my own shoestring budgets.  And I, too, caught myself adopting the ‘do more and more with less and less’ mentality.

I’ve shared the mistakes I made as a homebuilder, and I know I hurt the stability and delayed the growth of my shopper insights business with a similar obsession with being frugal.  When given the opportunity to invest $10,000 to gain $100,000 in business, I chose to keep the money in the bank.

As my business grew, I continued to operate like a one-man-show on a shoestring budget.  I didn’t waste money, but I sure wasted a lot of time and a lot of opportunities before I was able to break some of these bad habits.

DON’T LET YOUR SHOESTRING STRANGLE YOU

The whole point of this article is to be aware of the potential consequences of operating on a shoestring.  It is sometimes a necessary evil.  And many businesses have only been able to start and initially survive thanks to a shoestring budget.

 But even good private label companies, the ultimate low-cost model, know when and where extra investment is justified.

If any of this hits home, don’t take it as a nail in the coffin. 

Just don’t start convincing yourself that shoestring budgets deliver excellence.  And, unless your value proposition is solely based on being the lowest price, shoestring budgets don’t deliver sustainable competitive advantage. 

Take time to determine if ignorance or bad habits are creeping into your organization.   If you’re concerned that your perspective might be too biased from your insider point of view, let us take a look.

We’d be happy to evaluate the products and programs you’re working on or where you’re choosing to make (or not make) investments and share any consequences we see coming on the horizon.