The Crossroads of Profitability: What Now? For entrepreneurs, finally getting into the black is a huge accomplishment. But it can also be a stressful problem.
By Adina Grigore Edited by Dan Bova
Opinions expressed by Entrepreneur contributors are their own.
As you may have gathered from the title, I am alluding to profitability. Let me just open with this: I know what you're going to say when you read through this: "Psshh, good problem to have, Adina." Don't get me wrong: I want you to know that I am aware of the privilege, luck, excitement and accomplishment of profitability. But this sort of small-business growth does also happen to be a stressful problem.
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Early this year, my organic skincare company S.W. Basics became cash flow positive. This has happened before, but not to this extent. For the first time, we had sustainable profitability in sight. We had spent months working really hard with our amazing CFO to make it happen and to succeed was almost surreal. Also, in consumer-packaged goods, it's actually pretty rare to become profitable at all. Many companies are still in the red when they become acquired, and the acquiring company works to reverse the losses. It is far from common for a small brand that is growing to also be making money, which is why it's such an achievement.
So yes, go us. But this is where the tricky part comes in. I have already had calls with investment teams who are super excited about this, which is incredibly thrilling. We are in a really good position to take on more money (we have completed two raises in the past, both for equity). We have growing revenue and demand. It's beautiful timing really. But at the same time, we also have cash. So for the first time, we're staring at a bank account that could fund the company's growth. So do we take the cash influx and go full speed ahead or continue at a slower pace, without the help from anyone else?
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We have no idea what to do. My co-founder (also my husband) and I debate this issue almost daily. On the one hand, slower growth using the company's cash helps us maintain control and keeps outside input to a minimum, which helps us maintain the integrity of the brand. Plus we don't feel like we have bosses, which is a huge perk of keeping your investment team small. On the other hand, more money equals faster growth. It's really that simple. Shouldn't we take advantage of our momentum? Shouldn't we seize the moment, raise a really comfortable amount of money and focus on growing the business as much as possible, without worrying about cash constantly (something that sadly stays with you even when you become cash-flow positive)?
Honestly, we don't know what to do. This question feels so deeply personal that I even wonder if founders like me deal with it differently than CEOs who weren't there from day one.
What about you? Have you had the magical, wondrous, terrifying experience of seeing true profitability on the horizon? What did your company do—and how do you feel about it now?
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