Why I wish I started small

Dan Matthews, author of ‘The New Rules of Business’, explains why not spending money at the outset is the best foundation for your business, even if your goal is to hit the big time.

Of all the advice I’ve received from countless successful entrepreneurs over the years, by far the best is simply this: Start small.

When Kanya King launched the MOBO Awards, today the premier event celebrating black music, she did so from a spare room in a modest terraced house. Lord Bilimoria founded the Cobra Beer empire from the driving seat of a clapped-out van.

But when I started my publishing business three years ago I bought new computers (though I already had a laptop), rented an office (albeit in a cheap business incubator) and paid a sales guy a full salary.

By the standards of many established businesses my overheads were puny: to put a roof over our heads was a few hundred a month, the new tech was a modest outlay, while staff costs were kept to what the management considered to be a minimum.

But even this now seems decadent and luxurious compared what was absolutely necessary. Our rationale was that to be taken seriously we needed a Central London postcode, business cards and 0207 phone numbers ? what rubbish.

Our business’ revenue streams come from advertising, so it’s vital to attract the right users (in this case small business owners and start-ups) to our site in large numbers. Nothing in that model screams the need for big-screen monitors.

If you’re not convinced, consider this: almost every business that went the distance changed direction when it was growing up. Some underwent wholesale changes to product lines or delivery systems while others tinkered around the edges.

But spend big at the outset and you might not have enough left over to make the changes that secure your company’s future.

It’s understandable that many fledgling entrepreneurs worry about coming across as ‘tin-pot’ when contrasted with their competitors, but the fear of ‘looking small’ is a hangover from an era when anything that didn’t sparkle was not worth looking at.

Business in the 1980s ? and to an extent the 90s too ? was typified by a Wall Street mentality. It was kill or be killed and greed is good. But in 2010 this sentiment is laughable; you don’t have to puff out your chest to prove yourself any more.

If anything, the reverse is true. The fall-out from globalisation has (rightly or wrongly) put international companies on the back foot. They are forced to spend millions every year propping up tarnished brands.

Why would anyone want to emulate that?

Today, small is the new big. Be proud of your home office and the fact that your meeting room doubles as a place to hang your washing. The smart money is spent only on what brings a return, the rest is just window dressing.

Dan Matthews is author of The New Rules of Business available now.