It was the first year of full-time existence of AIE, remembered as “the Basement Year.”
We stared at each other a lot. We had 2 of the 3 necessary ingredients for productivity – time and labor, just no capital. So, as it is with most rock-bottom start-ups, we had to leverage our way into capital. That situation meant being wise AND conservative with our dollar.
In some ways the decisions were easier.
Every dollar spent had to have direct results by creating more dollars. Since the entire world seems to be moving toward a recurring payment scheme, we knew that each additional dollar spent on outgoing monthly payments must create more dollars coming into the coffers on a monthly basis. I guess that is Business 101 for the most part.
The scary part was that we did not really have room for error.
Decisions to purchase anything back then required a half-day committee meeting. Since then, our decision making has become quicker, but also has become more susceptible to failure. This is a natural outcome as time becomes more valuable or scarce as the case may be, and capital becomes more abundant, or less scarce. That consequence is probably Economics 101 to most people.
The long-term benefit to eating dirt in the early years is that your thought process and attitude towards the time, labor and capital shape your later years of business, whether in good times or bad. I imagine this would parallel the attitudes of the Great Depression or Go-Go 90’s business people.
Now, with 20/20 hindsight, we can easily point to the good and bad parts of those attitudes.
Our start-up business habits will shape our future for better or worse. I can see there may be a time that I will need people around me that are more used to leverage or risk-taking during certain periods in AIE’s future.
This is all to say that every business will lack time, labor or capital at all times.
The real difference in success versus failure is the entrepreneurial spirit and grit that it takes to make-up for the lack of the resources.
For us, capital was the scarce resource in the early years, and so we had to get creative with our time and labor. Jeremy would help install networks as a technical person and I had to do the best I could at sales. It may not have been our first choice, but it turned our time into capital!
Our advantage was having two of us from the get-go.
All small businesses in their founding face the difficulty of having available resources to keep up the demands for both front-line production as well as back-end operations. This is the inevitable challenge of many IT moon-lighters or one-man shops in our industry. They are capable of delivering the support to their customers, but lack time to adequately handle accounting, marketing, sales, operations, customer service, documentation, as well as opportunities for keeping pulse on marketplace trends through involvement in industry-targeted seminars and trade shows. As such, the ceiling for growth is almost guaranteed to be stilted at one man.
This one difference was the key factor in our early success.
In order to be able to scale our business adequately, we knew that two were better than one. Two of us with completely different skill sets fulfilled the front-line production and back-end operation with very little overlap — maximizing our limited people resources.
Our other major challenge was revenue — and not all revenue is created equal.
Without capital infusion, we knew cash flow and capital were going to be our Achilles' heel. In order to survive out of the gate, there was a sense of urgency in obtaining project work over recurring services. The projects brought in larger capital infusions (our “survive and thrive” money), while in the background, we continued to acquire customers for whom we could provide ongoing support.
Over time, we grew into a much more balanced approach, with our ongoing support soon outpacing our project work. Finally, we were creating an annuity of cash flow which allowed us to invest in more tools and to hire more people, which in turn accelerated our growth and improved our deliveries.
“You are only two people big. How can you possibly support us?”
Very early on, we constantly faced this question. It didn’t take long for me to recognize that our customers didn’t really care how big we were, or how many resources we had.
The bottom line is that they truly only cared that we could deliver the service to meet their needs, both immediately and in the foreseeable future.
We were able to do this effectively from the beginning because we maximized the advantage of two people. This understanding and track record give me the confidence to continue moving forward with each new opportunity, knowing that our resources will rise to the occasion.