Outsourcing vs In house
short cuts with IT. – outsourcing vs inhouse - George Deligiannoudis and Ron Haywood founded Wireless IP Technology providing wireless hardware and software for mobile sales teams. They outsourced their IP development – Deligiannoudis says it was a mistake. "It was a very difficult task to distil our passion and vision for the technology to a development team that was not part of our day-to-day team and culture." This caused frustration and errors in the development plans.
To outsource, one needs a clear written vision of what one wants developed otherwise the outsourcing company will keep requoting for the job, he says. "So it becomes a never ending story of expanding costs and time."
Too reliant on one client
consultancy Hot Magna, Henry Okraglik, says the biggest mistake his company made was to become too reliant on one client. The business was based on his business partner's relationship with Toll Holdings and grew to satisfy Toll's growing needs. When Okraglik joined the business 18 months ago, it still only had Toll as a client. "I was responsible for growing the customer base. Having a dependency on one customer is not a healthy thing for any business. You never know what a customer is going to do. A change in personnel at Toll could have been disastrous for us."
Not enough marketing
The founder of Careers Australia Finance and Accounting, Owen Firth, says his biggest regret is not actively marketing his business to potential clients sooner. "We were naive about the need to get the story out there,". I kind of thought it would be easier to attract people to us rather than have to go out to them." Newsletters , visits
Too much strategy vs getting on with your business
- John Maher of Calyptech Not talking about the things that really concerned us today, like winning more business and bringing in more revenue to give us the ability to expand."
Long-term strategy meetings should be held outside business hours. "That way, we are not getting interrupted by telephone calls. And we are not ignoring calls, and the long term is getting looked after as well ... We now know we need to look after our back yard before we conquer Europe."
Expanding too quickly
Expanding too quickly is another mistake that start-ups make. Says Ivan Kaye of Business Strategies International, “we made four acquisitions in one year stretching its cash flow to the limit.” We should have made sure there was enough capital or debt to make acquisitions.
What to avoid
- Trying to apply MBA theories to a small business. Big-picture theories may have little relevance to a cash-poor start-up.
- Conversely, getting caught up in day-to-day administration and not planning at a strategic level can mean missing opportunities.
- Burning cash too quickly from the outset can mean trouble for the business if optimistic forecasts do not come to fruition.
- Being too under-funded and under-resourced to take advantage of opportunities when they arise can mean missing opportunities for growth.
- Failing to do enough marketing and assuming word-of-mouth referrals are enough to expand the business can mean growth is slower.
- Taking short cuts with IT can be more expensive in the long term if systems have to be replaced.
- Expanding into the international market too quickly can over-stretch resources and damage the business at home as well as abroad.
- Allowing the business to grow through having just one customer leads to dependency that could threaten survival if the client changes policy or personnel.
- Opening offices interstate too early can waste money and management time with little return if it is too early in the company's development.
- Hiring poor quality staff, or not hiring senior people with specific industry operating experience sooner can hold the company back.
- Making staff relationships too personal and doing business with family members.
- Trying to do business outside the company's core operations.
Author: Jacqui Walker
Date: 31/03/2005
Source: BRW
Publication: Business Review Weekly
Section: News and Features