Founders

What are the differences between scaling a small business vs. scaling a VC funded business?

they/them, candlemaker at 🕯️humankind🕯️, seemore.tv/humankind, hosting /samantha and /humankind

Having grown up in a small business (funeral home), then ran a music school in my 20s, and 2 VC backed companies since… the difference in how cash is treated is the main difference. 

In VC backed, post product market fit anyway, every month’s sales and marketing spend (X) should create greater than X amount of new revenue the following month (dR). If dR > X, growth machine is activated. Keeping the ratio above 1 while X is as big as possible is a VC industry dream scenario.  

Small biz, you know… cash rules everything around me.  Profit or💀 

Week 1 Revenue > facilities cost.
Week 2 Revenue > inventory cost.
Week 3 Revenue > people cost.
Week 4 Revenue = Profit!

Independent Power Networks @Aston // astonlabs.co.

Thanks for the question!
My favorite corollary to the small business costs on each week for those who must build but don’t want investors is:

If you can’t cover facilities, run your business from home, coffee shop, car, bike, or on foot.

If you can’t cover inventory get customers, raise prices or modify step 1. 

If you can’t afford people, you’ll have to do it all or modify steps 1 and 2. 

If you don’t have profit, improve on steps 1 through 3. 

But in all cases… build.

Don’t know how I missed this. Thank you for such the thoughtful response and the last bit on costs for each week haha. I appreciate it!