What next?

[redcat]

My situation is as follows:

Trading 2.5 years
Just me and an irregular part timer
T/O increasing steadily qtr to qtr
Profit increasing qtr to qtr
Sales growing slowly but steadily, built on word of mouth - nil marketing
Sales starting to exceed production

The problem:

I seem to have hit a ceiling of the amount of revenue generating activity I can carry out in any one month. i.e. about £6000 per month.

The sales growth as it is will not support taking on a full time member of staff without being over resourced and under funded for an unacceptable period of time.

A part time member of staff is no longer really acceptable as there is a lack of continuity.

New person will probably cost around £2500 per month and will really need to be generating £9000 revenue each month if all they do is production.

Sales then need to ramp up to fill in the holes left with increased efficiency and the increased cost.

My plan (probably flawed) is to use a telemarketing company to generate new leads for me to close. This to start as soon as, maybe sooner than, the new member of staff is taken on.

My assumption is that new sales in month one will be next to nothing, increasing in months 2, 3 and 4. Revenue should start to come in month 4 onwards.

Cost of telesales will be in the order of £600 per month with an initial outlay of £300 to cover sales material to support the telesales activity.

Obviously, I can predict the worst outcome as far as costs are concerned. What I can't predict is the revenue stream generated from the telesales.

I need to put a plan together to see the bank to get some help in funding this growth and was hoping for someone to pull a rabbit out of a hat and tell me what I should be thinking about doing next.

Any ideas gratefully received.

Cheers

Andy Jacobs

[theplanner]

Hi Andy

And welcome to the forum

I think there may be an alternative.

As your business has grown organically (and very successfully by all accounts) why not continue this way and back fill either through your irregular part-timer or sub contract some of your work out to others you can trust.

Maybe split your work up - say, you do the design and someone else does the coding.

Then as your sales reach your £9k goal you can start to think about employing someone.

Employing your first member of staff is a huge leap in your business (and don't forget you'll need to pay national insurance, probably need other insurances/ cover, there's more paperwork and you'll need to spend some of your time supervising)

ThePlanner

[louise]

Do you really want to put yourself in a worse situation?

If you are serious about growing your business then do it slowly and carefully - you don't want to take someone on only to lay them off again

[redcat]

Hi 'theplanner'

The problem with subbing work out is that you tend to spend a great deal of time project managing, especially when people are working remotely. the part timer I have at the moment is probably not right for the full time role so I would end up taking on another part timer to do the other half.

I've factored NI, etc, into the equation already. The person would probably need to be on £2k per month with an additional £500 per month allowed for other expenses like NI, possibly leasing extra equipment, etc.

As I've just got back from being wired up to a cardiograph and am now on beta blockers, the time is right to try and relieve some of the stress. I know employing people brings it's own stress but I've run a team of 10 people before so I'm part way there.

Louise:
I'm not convinced I would be in a worse position. It's always going to be a leap of faith and the start will be as hard as when we all gave up our comfy jobs to 'live the dream'. Unless you're lucky, you'll never build a business with you alone. You have to find people if you ever want the company to be it's own entity and be more than just you. But then I guess it depends on your motives. Me, I want to build a company that will be something even when I'm not there.

Regards

Andy

[peterjhale]

Hi RedCat

Sorry to hear about your situation.

Seems like you need some help fast.

First off, go and talk with your bank and explain the situation - you can always phone them up for an inital discussion.

I think you have a good case because you have an existing stable business.

You'll need to prepare your finances with the extra items (show them all in a different section) and see what you need to cover the additional expenses and to pay the loan back.

You'll need a good marketing plan.

If most of your work comes from referrals then you have been lucky (but you make your own luck) You'll need some other avenues for leads.

Here are some suggestions :

1) Member get member - works everywhere - ask your client base to refer you and they get something back in return (maybe 5 new pages or something)
2) Target some ads where your current type of customer will see (are they small businesses? Then target small business websites - like this one ) - it's a natural progression after starting a small business
3) Target hosting companies - I've just changed host but they didn't offer a webdesign service - again, a natural progression
4) Target existing businesses that have poor websites - I'm sure you've seen loads!

Don't do spam email - we all hate that.

You can start all of the above straight away and see what it brings in (just start with (say) a quarter of your customers as a test.

The telesales thing will probably actually bring you in tons of work - so just test this initially and see how it goes.

Peter

[redcat]

And as if by magic...

I was talking to one of my clients today. They are huge in terms of company size, about average in the amount they spend with me but I'm always doing bits and bobs for them. The marketing director almost always closes converations with "Is there anything that I can do for you?".

Anyway, today he called and we were chatting. I explained that I was going to go and talk to the bank about funding. He's told me that he wants to talk to me before I do anything like borrowing money from the bank. I'm not sure what his plan is yet but, reading between the lines, it sounds like he might want to invest (either personally or through the company).

He's going to give me a call over the weekend so it's fingers crossed for the moment.

Andy

[redcat]

Originally Posted by peterjhale

1) Member get member - works everywhere - ask your client base to refer you and they get something back in return (maybe 5 new pages or something)

This is something I'm going to be trying.

Also, I've just joined BNI. It's probably not for all people but I like the structure. I can honestly say that it's one of the best things I've done. It's taken my business from 'ticking along' to where I am now with enough business to think about expanding in about 4 months.

Andy

[peterjhale]

Best of luck

Let us know how you get on

[louise]

Yes, please let us know how you do

Good luck

Lou

[peterjhale]

Hey Redcat - any news at all ?