DEREK STOLTZ

Partner, Embree & Co. L LP

Platy pi Designs Inc. founder Tan ya Riemann is facing a similar dilemma that many entrepreneurs experience when an unsolicited offer to purchase appears out of the blue. Too much energy is placed on “what if ?” Even if a Letter of Intent to purchase is received, it could take months to sort out the details of the transaction, not to mention that the very important employment contract, which should be tied into any agreement to purchase, is often overlooked. Furthermore, although the initial growth of the target company appeals to outside rs, most purchasers would want to structure a pay out based on retention of clients. This does little to assist with Riemann re paying her business debt obligations quickly.

Since Riemann has reservations about being part of a larger company, she should focus directly on smaller contracts with quick turnover. The more time Riemann spends away from project development to manage staff and over see projects, the more it limits her creative spirit. Where I see the start of the end for most startup business owners is when they spend too much time on something that does not generate any cash flow.

Riemann built her business on keeping things small, but we are all told to dream big. Here’ s the question: Is it better to take home $50,000 on $75,000 of gross sales or gross $500,000 in sales, but only take home $50,000? How you answer will determine your path. However, managing a book of business at $500,000 is a lot more intensive administrative ly than managing $75,000. Furthermore, the $75,000 book will likely grow slowly, but remain just as profitable.

Overall, Riemann should keep things straightforward and manage able by focusing her efforts on smaller contracts where she can continue to establish stronger business relationships and, ultimately, become more profitable. This path will require less capital, but business will be tough over the next couple of years since most profits will have to be reallocated to pay off the business debt incurred when she was dreaming big.