Dialed in

Don’t invest all your money

When you’re growing quickly, it can
seem like you have the golden touch. It’s
easy to get distracted from your core
competencies and think that you can get
your hand in more things. But, before
you put a big investment in a new path,
Arias wants you to consider some good
advice: Don’t chase every deal that
comes through your front door.

“We’re probably one of the leaders in
our field, and a lot of great ideas come to
us that will make sense in the future, but
we need to be able to sort out and pick
the right ones that make sense for us at
that moment,” Arias says.

Sometimes that even means turning
down what seems like a great idea to
prevent yourself from overdoing it.

“It might be great ideas and great product, but we have to be realistic and focus
on the one that we can do,” he says.

Look: Everyone knows it’s hard to turn
down what looks like a sure thing, but if
you want consistent growth, you have to
take measures to grow safely and soundly. All it takes is one time overinvesting to
bury a company, so Arias recommends
that you drill this into your senior leaders
constantly by asking them to weigh the
pros and cons of every project they bring
before you. If they have something where
a major con is investing heavily, then tell
them to wipe that off the table.

To set that standard, he says he asks
his leadership team basic questions
about investing, and then he gives the
team a simple summation of where the
company is at financially.

“(Ask) how long is it going to take to
implement it, what’s it going to cost and
when will we see our money,” he says. “I
think we can do 10 times what we do; it’s
just how much can we afford. If you
make $10 and you need $7 to pay today,
you now can’t invest more than $3 in the
future. That’s always the issue.
Sometimes you do jump too far, and you
pay dearly for it to compensate, so that’s
always the challenge.”

It may sound like Investing 101, but
Arias says it has to be part of a process
where you create a priority for growth.
Though the equation won’t be as simple
as Arias’ $10 example, you need your
people to understand how much is available for growth at any given time and
make them realize anything beyond that
can bend the company too much.

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