Small business, big mistake: Losing sight of the mantra that ‘cash is king’

By Becky O'Neil

My previous education and business experience were limited to the technical side of doctor’s offices, so I didn’t think I was prepared to be an entrepreneur.

Still, I wanted to have my own business, so experience aside, I decided to jump in with both feet.

I did my research, wrote my BUSINESS PLAN, and hung out my shingle. Suddenly, I was a professional pet sitter with my own small business. I provided daily dog walking services for busy professionals and pet-sitting services for owners when they went out of town.

My business grew organically, and within six months, I had more business than I could handle on my own. I solicited advice on how to hire employees from the Community Business Partnership in Springfield and took the plunge.

Not long afterward, I had a small staff that could provide most of the pet care services for our clients, and I was free to spend most of my time growing the company.

I had no outside investors, which worked fine in the beginning. We would spend a little money, grow a little, spend a little more and grow a little more.

I stuck to that system because early on a mentor had told me that the most important thing to remember in business is that “cash is king.”

I stuck closely to that mantra, and it worked. I only INVESTED back into the business the money that it could afford at that moment.

However, as we grew, we needed some additional infrastructure — and that required some additional INVESTMENTS. I needed administrative help, for example, as well as some help with staff management.

I got caught up in our growth cycle and our success, and my mind-set changed to: “If I build it, they will come.” In other words, if I build the business up to be able to handle a lot more clients, the clients would naturally present themselves.

I started developing the infrastructure in the way I thought would be best, not skimping on ideas for lack of cash. I HIRED field managers to help me manage the field staff. I hired an office manager to take care of many of the day-to-day office tasks. I hired a marketing manager to help bring in new business.

Of course, once the staff was in place, they needed equipment to work. I needed to invest in computers, phones, office space and furnishings.

As I spent more on infrastructure, the business did INDEED expand — but not nearly as fast as I was spending the cash. I quickly found myself in a deficit and may have gone out of business except for a QUICK LOAN from my fabulous mother.

Still, I was reeling, trying to figure out how my financials had quickly changed from black to red.

When I started investigating, I realized that I had simply spent too much too fast. The additional staff was pure overhead, and my added expenses were draining my cash away. I realized that I had lost sight of my first principle of business.

I immediately started cutting expenses, and my company moved forward with only the essentials. I took a fresh, more conservative look at my numbers to see what our current income could pay for and how much additional income we would need to add the things we were cutting back on. Then we went to work to bring in that cash.

I would recommend to all fellow entrepreneurs that you respect your cash flow statements and never lose sight of the age-old adage: Cash truly is king.

Becky O’Neil is the president and chief executive of Becky’s Pet Care, one of the largest professional dog walking and PET SITTING companies in the Washington region. Started in 1998, the company now has offices in Alexandria, Woodbridge and Sterling.