David versus Goliath: How to outsmart the competition without big money
4 mins read

David versus Goliath: How to outsmart the competition without big money

I have often been asked how I’ve managed to successfully lead a non-VC funded company to compete with the big guns like IBM and HP. The ability to not only survive but thrive in a world teeming with giants is a formidable challenge, but it is not impossible. And my biggest advice to entrepreneurs seeking to do the same is to not get distracted by factors like size or reach — rather, they should focus on creating bleeding-edge innovations with the potential to disrupt traditional business models.

Of course, the vast majority of founders don’t find success solely by following their dreams. It’s necessary to have complete strategic oversight of your company’s near, mid, and long term goals, and this is especially true if you’re intent on building a successful emerging company. So from a practical standpoint, there are a few pieces of tactical advice I can offer that will help pave the path for the long road ahead.

Earn a dollar, spend a dollar

This might sound straightforward at first, but you’d be astonished how easily overlooked it is: run your company like you’d run your household. When you think of the money as “your own,” you’re more likely to make better choices about where to invest and how to optimize. It’s very much like managing finances for a family in that you should prioritize your spending based on your earnings, make sure you’re meeting basic needs, and allocate anything leftover where it will have the most impact.

The personal finance world has a popular system that fits this strategy very well, and it’s called the “envelope method” — every dollar that you earn is given a specific job, allocated into envelopes based on categories such as groceries, rent, and gas. A business can use this same principle to distribute its cash into various departments or specific campaigns, clearly defining your budget. With this method, you’ll know exactly where every dollar was spent, and be able to better strategize how to spend it.

One of my mentors, Peggy Taylor (then President of Peoplesoft Investments) once told me how during the early days of Peoplesoft, they were stretching every dollar such as sharing hotel rooms and optimizing travel costs. While building a culture of that sort can be tough, it makes every dollar count so that you’re not running at a loss — a stark contrast from what we see made popular by shows like Silicon Valley. I believe in building a business that makes money, meaning profit/loss positive, and cash flow positive.

Re-allocate to optimize

Things will inevitably change as your business grows, so it’s important to look for opportunities that can optimize your budget. Remember to evaluate often, based on your company’s real needs and business objectives; you don’t always need to be a lemming to so-called “best practices”.

This type of insight can be gained by looking at the data your business generates and collects through the various software and tools you use to run your company — whether it be your accounting software, CRM, project management apps, or marketing tools. You’d be surprised how much useful data you didn’t even know was sitting right under your nose.

For example, while most companies tend to hire a slew of salespeople, I realized that I could optimize my marketing pipeline to maximize our sales potential. I decided to put the extra spend into marketing instead so that my team could focus on driving higher-quality leads. I was thus able to get by with fewer but all successful. This approach truly paid off, saved me money on new hires, and increased my revenue opportunities.

As your company expands, giving every dollar a job may become a micromanagement issue — this will be a good time to start hiring talent that can help your company best optimize its cash flow so that you can focus on the higher objectives. However, in the early stages, keeping a focus on how and where your company spends money will help pave a clear, goal-defining path that welcomes innovation.