Not in Kansas Anymore

In the 1939 movie, "The Wizard of Oz", Dorothy says to her dog, "Toto, I've a feeling we're not in Kansas anymore.". In our own movie, let's make Kansas the time it takes to raise venture capital and the "...not anymore..." the actual running of a business after a successful venture capital raise. Dorothy's quote exemplifies that we have entered a place or circumstance that is unfamiliar and uncomfortable. Welcome to the world of running a small business day in and day out - for many founders it is an uncomfortable and unfamiliar place.

Raising investment capital is the easy part although most owners who have raised capital may laugh at that statement. If a successful raise is achieved, survival is assured and the horizons are unlimited. That is when the real work of day-to-day operations gets underway: someone calls in sick; a supplier raises the price of an important component; supplies get stuck in the supply chain somewhere; employees demand higher wages. All of these things are happening now and wages aren't keeping up with inflation. These are just a few examples. Looking back at the days of raising investment capital now suddenly looks like a piece of cake. Most owners are really good at or highly qualified for the tasks and needs of their actual business concept. The business is founded on a passion and the owner is determined to make it succeed. However, business is like a football team. In football, success requires blocking and tackling - the stuff that hurts and isn't fun - but without which a team is unlikely to succeed. This is the "Kansas" that is gone forever.

There is also the business environment that the founder enters after the capital raise. It may be a period of generally stable economic activity, or a period of unusual economic problems such as we are experiencing now. It may be that the projections created when raising the venture capital are not as favorable as they originally appeared. Sales and/or profits may be lower because of the slowing economy. It may mean operating the company in a different environment that requires different skills. These things can happen and not many people will talk about the reality of running a business and what happens on the "morning after" raising investment capital. Once you get into operation, you may wake up and find that you are not in Kansas anymore. How are you going to handle it? Where are you going? And Toto?

Source: Doug Carleton, 'Small Business Should Know'. Contact at sbaloanspecialist@comcast.net.