"Now, there's an important point about all this. I'm saying that, after critical mass, growing the business becomes a matter of choice. That is clearly a huge change from before -- a predictable one, and a good one, but a change that has major consequences. It opens up a whole world of possibilities that you couldn't even think about during the start-up phase. As long as you're surviving on external capital you really have to focus on building the business you started to build. You have to be very careful, for instance, about experimenting with new products or services, at least until you've expanded your basic business as far as it can go. You can't afford to experiment. You don't have the time or the money. It goes back to those rules I talked about, all of which stem from the fundamental fact that you're living on limited capital. You have to do everything you can to reach viability before your capital runs out.
"Take away that fact, and the whole picture changes. You're no longer playing with your savings or with bank loans or with capital from other investors. After critical mass, you're living off your own internally generated cash. You have profits to put in the bank. You may decide you want to invest some of them back in the business, and I think you should. It's important to explore new avenues, especially if you have a strong customer base. You might even take on some additional debt, which you can pay off out of profits. Yes, it's a little more risky, but you have the luxury to take more risks, to try some experiments, because you're playing with your own money. If you invest intelligently, you have the chance to help yourself and your customers and strengthen the business. And because you've reached critical mass, you can take the chance without putting the business in jeopardy.
"Not that you can get reckless. Unfortunately, many entrepreneurs do become reckless when they hit critical mass. Often they get there by some combination of luck and instinct, without ever understanding the dynamics of their business or coming to grips with the sales mentality. They make it anyway, and the sales mentality runs wild. A whole new set of emotions comes into play. The fear fades, and they feel excitement, elation, enthusiasm bordering on euphoria. They throw caution to the wind. They want to jump on every new opportunity that arises.
"And if your basic business is strong enough, you can get away with that for a while. Sooner or later, however, you're going to wind up in trouble unless you stick to the rules and stay on top of the numbers. Because the numbers help you balance your emotions. They keep success from going to your head. They remind you that, while your cash may be self-generated, it is not unlimited, and it can still run out.
"So you have to keep yourself from getting carried away. You have to learn how to avoid making emotional decisions. Listen, that's a very long process, but it's important. Because in business, you have to try to be objective, to be as clear as possible about what you're doing and why, and about what the likely consequences will be. You can use the tools of business to help you do that, to help you gain perspective. In the end, you may decide to go with your emotions anyway, but at least it's a choice.
"And that's pretty much where Bobby and Helene are today. They have a bunch of choices to make. How fast do they want to grow? How big do they want to get? Do they want to keep working at home? Do they want employees? It's up to them. I just hope that, by now, they have the tools they need to make those choices wisely."
* * *
Helene and Bobby Stone are sitting on a couch in the basement of their Long Island home, which doubles as the headquarters of Data-Link Associates. The basement has two sides and two separate offices, one for each of them. At the moment they're on Bobby's side, which is neat as a pin. There's a stereo nearby, and along the walls are shelves with cassettes and CDs individually labeled and arranged in alphabetical order. Both of the associates look relaxed and comfortable in their jogging suits. They should be. They ended last year with total sales of $482,000, up from $162,300 in 1992. Their gross margin on computer supplies held steady at 39%. They're in good shape.
"It's funny how things have changed," says Helene. "A few months ago Bobby asked me, 'What would we say if I was offered my old job back?' I said, 'Absolutely not.' I never want to be at anybody's mercy again. Why should we give our talents away? We're smart enough to take care of ourselves. Besides, I think we have more security now than we ever had before."
"Anytime you work for someone else, it's total insecurity," says Bobby. "It really is -- especially the way things are today. Look at all our friends who've been laid off. I said to her, 'That will never happen to me again.' And I felt very good about it."
"One thing Bobby always said, and he turned out to be right about it," says Helene. "He said, 'Security is not the job. It's the confidence you feel in yourself. . . . "
"Yeah, I said, 'There's no such thing as job security anymore. The only security is your own sense of self-worth and your knowledge about how to earn a living."
"Even when he was working for someone else, he said it," says Helene. "I always thought it was just one of his optimistic little sayings. But you know what? It turned out to be true."
