When is the "next big thing.' not always such a great thing for your business? When does innovation cost more than its worth? Its a tough call, and a recent piece in L&NW reminded me of the balancing act owners need to play when pursuing new business Opportunities.
I'm referring to an article published in September on Amcor Flexible.. a company that IS teaming up with ICON IQ Drinks to provide a new, flexible packaging of still water. The drink, which is designed for sporting events, is in a flexible pouch, which allows for practical, easy consumption. It also boasts an environmentally friendly design, as it has a lower carbon footprint and produces less waste.
I like the innovation and the great design and it looks like Amcor Flexibles is a smart company. They're a perfect example or bow selecting a niche can result in huge business opportunities. A visit to Amcor Flexibles' website reveals die company has approximately 33,010 employees, 300 sites and supplies a wide range of products to the food, beverage and healthcare markets. It's a solid company that has resources to innovate.
So how does this relate to you? I'd like to use Amcor to illustrate A financial quandary that many business owners encounter every day: the cash trap. A cash trap occurs when there is not enough cash flow to cover the cost of new equipment. generate a profit, and maintain your position in the competitive marketplace, all without incurring too much debt. I'd like to use Amcor's new products in a hypothetical situation to illustrate how cash traps can cripple your business.
CASH TRAP #1: TAKING ON THE BIG PROJECT
Let's assume you are having a decent 2012 in your respective niche, printing labels for food products. You have a pretty decent market share, and your sales are good. Not great, but very good.
One day, a representative from Amcor Flexibles calls. Thanks to the great article in L&NW, the demand for their Tim water pouch has skyrocketed. In fact, the Boston Marathon has decided to use the product alone for the entire race, and the company needs help. Even for an organization the size of Amcor Flexibles, this demand will put a tremendous strain on their production capacity, and they need to work with a partner on the product.
Immediately, you start salivating at the numbers being thrown your way. This is a big job, and it will definitely boost your yearly income. But you'll need to buy a special press for the job and add more staff. Because of the tight...