Million-dollar babies

Home Office Computing, Feb, 1998 by Lisa Goff

Start planning your marketing on a percentage-of-sales basis and think about devoting 10 percent of your annual earnings to marketing. Invest in tools or equipment (high-speed data lines, scanners, networking organizations) that will keep your company growing.

You've got a lot to lose now: Develop some contingency plans. What would you do if...a key employee left?...someone sued?...your biggest client folded? Here's hoping you never need to implement these plans.

$250,000

Hire another person every time your sales go up $100,000. With each hire, add another computer.

Get hardnosed about cash flow. With this much money flowing annually, you can save thousands by accruing immediate interest on every dollar earned and paying bills just when they're due.

Look into a sweep account at the bank that will post interest every night on the money you leave in your checking account. If you get lots of small checks by mail, consider a lockbox arrangement, in which the bank automatically opens and deposits the checks in an interest-bearing account.

$300,000

Do you have more than a dozen employees? If so, you're right on track and ready for another milestone: Hire a layer of middle management, so that you don't spend all of your time solving problems for your employees.

$350,000

Still using an of-the-shelf accounting package like Peachtree Complete Accounting? You may be ready to upgrade again to an accounting system customized for your business.

If you haven't moved out of your home office by now, it's probably time to do so. Or at least build that addition you've been pinning for-and deserve.

$500,000

Consider a more formal corporate organization if you've been operating as a sole proprietor until now. You'll want a structure that can protect your business assets when your personal holdings.

Create a board of directors, which may or may not be composed of the people on your advisory board.

Look for big money: If you're after a lot of cash to move your company up a notch or two, you for a venture capitalist interested in buying a piece of your business.

$1 million

By now you have complete programs for advertising and public relations plus a four-color brochure.

A corporate name and image that people relate to should be in place.

There's a real person answering the phones--not an answering service but an employee of your company.

You have a solid benefits package including retirement, health insurance, vacations, sick leave, and more for you and your staff, plus an employee manual.

$3 million

You know all those services you've been outsourcing? It may be time to bring them in-house. Hire you own bookkeeper, advertising executive, personnel manager, computer expert, and more. You're busy enough to keep them busy working for you.

$10 million

Look into O.P.M. (other people's money).

Still doing this all on your own dinner? It may be time for a public listing and shareholders who can come to annual meetings and give you more free advice than you thought you needed.

Writer Lisa Goff, former managing editor of Crain's New York Business, may never make a million bucks, but she has a lot of fun talking to people who have.