In smaller companies it get worse than that. They are subject to violent external swings, and very often there is little correlation with how good you are and the business results you get. So sometimes it is very difficult to prove that what you are telling everyone about quality actually does lead to business results. Sometimes it doesn't and that doesn't mean that you were wrong.
In the end, however it is a simple and clear cut fact that you cannot actually run a business by focussing on the bottom line. Because the bottom line is the end result of too many variables. Too much is hidden. Improved profit can only come about through improved processes, and you cannot improve processes if you do not understand them. So that means getting into the habit of measuring all sorts of stuff, and then knowing what to measure and what not to measure and how to measure it in the right way. And the traditional methods of accountants are not always the best ones.
Then you have to make a ruthless decision. What things am I going to ignore so that I can concentrate on the important stuff. And then - by what method will I decide what is important? And that depends on who the customers are, and what they care about, and what's the state of affairs at the moment and in what processes. And that's where the vision bit comes in.
Its a system thing, again. The system can't work unless everyone in the system understand the aim, and understand the part that they have to play.
And then you have to ask "how will I know before I get to the end if this is improving or not" and "and how will I test my assumptions along the way". Without these things the so called "bottom line focus" is hardly more than reliance on luck, or worse, a way of pressuring or blaming people who are only doing their best and in dire need of leadership.
Do you know why steel is outlasting aluminum in cars and even regaining ground?
Steel is more environmentally friendly to produce! Just ask the folks behind the Ultra-Light Steel Auto Body project. Steel releases a lot less CO2 during its manufacture than aluminum. Once again, established big industry maintains its edge over new fangled competitors.
Because a desktop machine is not well-suited for producing the entire side of a car in a single stamping operation from steel sheet and repeating that 300 times an hour. Big, messy industrial processes replaced cottage industries for a reason: they're cheaper in the long run.
As desktop manufacturing gets cheaper, so do the big industrial processes. A desktop machine that can produce some make believe "diamondoid" economically can also produce a lot more steel even more economically and easily! Operating temperatures are lower, formability requirements are lower, ability to rework the steel product is higher, etc. And since steel does the job just fine, why switch over to a more expensive, troublesome, low production rate material like diamondoid?
They're not called "vulture capitalists" for nothing. They'll squeeze you for
every last bit of stock and control possible. So, before you begin talking to
them prepare yourself! I would try and take my project as far along as
possible before selling any shares to these people. If you want more detail
on just what I'm talking about visit the bootstrapper's website which will
show you how to do this. Remmember the more sales you have the stronger your
negotiating position will be.
I have to disagree that Venture Capitalists will "squeeze you for
everything." Unlike many in the "those that can't do--teach" category,
I've actually done venture capital deals. I've also done private
offerings (equity financing sold to individuals), bank financing and
debentures (privately held debt) -- as well as non-traditional methods
of raising cash.
At different stages of growth, different types of capitalization are
appropriate. In my experience, Venture Capital is most appropriate after
you've gotten a start-up off the ground and built a management team
(which can be as small as two people).
Besides going for Venture Capital mid-way into your growth pattern, you
need to have a business that can realistically offer very high growth.
If you have a less explosive business, private offerings can work --
they can be successfully sold if the folks get 2-3 times their money
back.
Other options include setting up a non-profit entity alongside your
start-up, assigning a charitable or socially helpful role to it, and
seeking grant monies from private foundations or corporate foundations.
The grant money can help offset operating costs for your for-profit
start-up by paying you a salary and covering some office expense and
equipment.
Still other methods for raising capital include piggybacking with
established businesses. For example, a publisher can get an endorsed
promotion of a book or booklet from a large association, the association
solicits orders for the book via its members' newsletter, you split the
revenues with the association, and generate substantial incoming cash.
Slashdot Mirror
An interesting resource guide to what the major media companies own.
In smaller companies it get worse than that. They are subject to violent external swings, and very often there is little correlation with how good you are and the business results you get. So sometimes it is very difficult to prove that what you are telling everyone about quality actually does lead to business results. Sometimes it doesn't and that doesn't mean that you were wrong.
In the end, however it is a simple and clear cut fact that you cannot actually run a business by focussing on the bottom line. Because the bottom line is the end result of too many variables. Too much is hidden. Improved profit can only come about through improved processes, and you cannot improve processes if you do not understand them. So that means getting into the habit of measuring all sorts of stuff, and then knowing what to measure and what not to measure and how to measure it in the right way. And the traditional methods of accountants are not always the best ones.
Then you have to make a ruthless decision. What things am I going to ignore so that I can concentrate on the important stuff. And then - by what method will I decide what is important? And that depends on who the customers are, and what they care about, and what's the state of affairs at the moment and in what processes. And that's where the vision bit comes in.
Its a system thing, again. The system can't work unless everyone in the system understand the aim, and understand the part that they have to play.
And then you have to ask "how will I know before I get to the end if this is improving or not" and "and how will I test my assumptions along the way". Without these things the so called "bottom line focus" is hardly more than reliance on luck, or worse, a way of pressuring or blaming people who are only doing their best and in dire need of leadership.
Do you know why steel is outlasting aluminum in cars and even regaining ground?
Steel is more environmentally friendly to produce! Just ask the folks behind the Ultra-Light Steel Auto Body project. Steel releases a lot less CO2 during its manufacture than aluminum. Once again, established big industry maintains its edge over new fangled competitors.
Because a desktop machine is not well-suited for producing the entire side of a car in a single stamping operation from steel sheet and repeating that 300 times an hour. Big, messy industrial processes replaced cottage industries for a reason: they're cheaper in the long run.
As desktop manufacturing gets cheaper, so do the big industrial processes. A desktop machine that can produce some make believe "diamondoid" economically can also produce a lot more steel even more economically and easily! Operating temperatures are lower, formability requirements are lower, ability to rework the steel product is higher, etc. And since steel does the job just fine, why switch over to a more expensive, troublesome, low production rate material like diamondoid?
They're not called "vulture capitalists" for nothing. They'll squeeze you for every last bit of stock and control possible. So, before you begin talking to them prepare yourself! I would try and take my project as far along as possible before selling any shares to these people. If you want more detail on just what I'm talking about visit the bootstrapper's website which will show you how to do this. Remmember the more sales you have the stronger your negotiating position will be.
I have to disagree that Venture Capitalists will "squeeze you for everything." Unlike many in the "those that can't do--teach" category, I've actually done venture capital deals. I've also done private offerings (equity financing sold to individuals), bank financing and debentures (privately held debt) -- as well as non-traditional methods of raising cash.
At different stages of growth, different types of capitalization are appropriate. In my experience, Venture Capital is most appropriate after you've gotten a start-up off the ground and built a management team (which can be as small as two people).
Besides going for Venture Capital mid-way into your growth pattern, you need to have a business that can realistically offer very high growth. If you have a less explosive business, private offerings can work -- they can be successfully sold if the folks get 2-3 times their money back.
Other options include setting up a non-profit entity alongside your start-up, assigning a charitable or socially helpful role to it, and seeking grant monies from private foundations or corporate foundations. The grant money can help offset operating costs for your for-profit start-up by paying you a salary and covering some office expense and equipment.
Still other methods for raising capital include piggybacking with established businesses. For example, a publisher can get an endorsed promotion of a book or booklet from a large association, the association solicits orders for the book via its members' newsletter, you split the revenues with the association, and generate substantial incoming cash.