Sep 2, 2022 | Growth & Scale

How can I resolve my chicken-or-egg dilemmas?

Q. Dear Zenagos, I am running a business that offers workspaces for large-installation artists like sculptors. It seems like I am constantly caught in chicken-or-egg dilemmas. For example, the bank wants to examine the space, but I can’t get real-estate people to show me spaces until I have the financing lined up. How can I resolve all of these issues?
If you feel like everything is a Catch-22, you have discovered one of the great challenges of business: Everything is linked to everything else. When you are first starting the business, the dilemmas surround how to build your product before you have funding. How can you build the prototype, which would give you something to show potential investors, without having some initial investment? How do you find time to work on your business without quitting the job that is your only source of income? These problems become circular.

The dilemmas don’t stop once your product or service is up and running with actual, paying customers. A constant refrain from small business owners is that they don’t have time to hire the people they need because they are too busy doing the work that they would need the new hires to do. This is one reason that growth stalls in a small organization.

Why is this so challenging?
The reason running a business is so hard is that a business is a complex system. Like the human body, each part of the system is connected to every other part. A major change in any part of the system can have a domino effect across other parts of the system. For example, if you make a decision about staffing, that affects how much you can produce, which affects your maximum revenue, which affects your staffing budget! If you find yourself caught in loops like this, it is not a sign that you do not know what you are doing. It is evidence that in small business, decisions tend to spiral into one another. Give yourself a break. If running a business were easy, everyone would be doing it.

Get the FACTS
At Zenagos, we have a model for the small business system (the “body” of a small business) that we call FACTS. The letters stand for Financial, Acquisition, Competition, Team, and Sales.

The acronym and the diagram remind us (and the entrepreneurs we support) that when we make a major decision, we need to consider the impact of that decision in every aspect of the company.

For example, entrepreneurs often make major changes to their main offering (product or service). These “pivots” are a normal part of the entrepreneurial process. However, when they make these pivots, most entrepreneurs do not go through all of the FACTS. One common mistake is to just assume that the Team that runs the operation has the ability to roll with the pivot. However, leaders who were hired for one model may be completely unsuited to a new model. Another typical error is to assume that the company can make the pivot using its current Financial approach. However, when you make a pivot, you need to completely re-run your numbers. Often, you will need to go back to your investors and fund the pivot, or risk failure.

So, what do I do?
As you well know, there is no magic wand for solving the many dilemmas of a young business. As the entrepreneur, you just need to get in there and start trying. Use the same approach as you would when untying a knot. Start pulling gently in one spot – specifically, choose one aspect of the problem to address and try something – and see if that loosens up another opportunity, creating more room to work on some other part of the knot. If you interview great entrepreneurs, you will discover a common theme – they are determined problem-solvers. They just won’t quit. They aren’t satisfied until they have found an answer. So, rest easy in the knowledge that you are doing it right, and then keep hammering at the problem until you win. You can do this. Believe it!


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