Why You Want To Run Lean Business
Why You Want To Run Lean Business
66: Cash flow likes lean operations.
Let’s take a small company or startup for example. What good happens when the massive hiring starts? Nothing. Often it’s a one-way ticket to creating a big monster that will lose all the glamour it had in the early days. Is it unavoidable to head in that direction? Yes. If we are talking about big visions and million-dollar deals. There is no other choice but to turn into a slow giant.
The idea here is not to turn it into a business article. But instead to help you understand that the days of glamorous hiring and running big teams are gone. Better said something we can only wish for… What about those who are currently in the process of building their business?
What Use To Work
Before we dive into what is currently working. Let’s go over the old corporate status games. We could all agree that back in the day one way to show power was through multiple useless hires and to a certain extent it still is. Creating multiple positions without adding any real value to the company - simply because things are going great. A few years later in the late 80s and early 90s, they successfully sold an idea of grinding hard and putting in more reps than anyone else in the company. Creating a whole hustle culture that is still popular today when it comes to 9-5 corporate jobs.
We could argue that it was one of the best moves done, putting a carrot in front of the donkey. Two huge factors worth mentioning played a role in the whole unnecessary hiring and status game. Consumerism movement in the 80s and 90s. Where a lot of individuals turned fully into chasing status goods. The best part of it was that the average corporate worker could obtain status goods without getting into any debt and still having enough money left to go on vacation with family. We did research on the Rolex Datejust model and the math behind it - for fun purposes. We found that the average corporate worker salary back in 1985 was 30k, while the average cost of Datejust was around 1.5k. Now almost 40 years later, the average corporate salary in the US is around 50k, while the average Datejust costs around 7k. To put this into perspective back in the day you could obtain 20 Datejust watches with an average salary.
Today? An average corporate worker can afford around 7 Datejust models. Consider that we chose one of the simplest examples. The point we are trying to make is that it was not hard to sell the idea that working hard and pushing things will allow you to live a better life - because it was true. When you compare with how things are today… No doubt it was better in that aspect - making it easier to sell the story. Since we are done covering the material part and how things used to be back in the day. The final straw that made the whole multiple hiring thing was a dot com bubble back in the late 90s. The Internet did a lot of damage in that sense. Now combine the material good chasing, economic boom, and the internet. Result? Unnecessary hiring became a big thing. In the 80s already there were signs that things would go that way. The late 90s confirmed it without a doubt.
Creating unnecessary departments and roles that should not exist in the first place. No doubt over the years and with several recessions until now there were few resets. Mostly wiping out those useless roles and departments. But as always with the business cycles and good economic times those same roles appear - under different names and “functions”. The whole point behind this is to get into reader’s minds that running big operations was mostly a status game or one where “decision makers” got too much into the ego game. At the same time running a big business is impossible to do without massive hiring. There is not a single person who can deny that. If you want to grow your business you must hire. However, it’s mostly still based on status games inherited from the earlier days - trying to go for that headline on the news portal. Showing off how good you are at running the business and how good a leader you are. Social proof will always sell and this is one of the ways to go for it.
What's Wrong With This Approach?
Hard to put a finger on what is wrong. The majority will say there is nothing wrong. It’s more of a standard practice of the business and economic cycles. What we would like to emphasize is how bad is it for guys trying to run their own WiFi businesses or starting any sort of side operations. The mindset behind it. Year after year since the early days of our lives we are being fed how hiring multiple people is a positive sign and that everyone should aim for it. That is not true. In bigger companies and more complex organizational structures, there is a use case. As we already mentioned above. But should the same principles apply to any local business owner or someone running smaller operations? Definitely not. Would go so far as to say that hiring plays an important role when it comes to your cash flow.
Many readers will ask themselves - “You are telling us we should do everything alone without anyone's help?” Not at all. The key is to recognize when you can’t carry any more of your business then you know it’s time to hire more. Better said if you are having activities with higher ROI or making more money. That’s the right time. Not when you want to rest an extra 8 hours per week… Because well you deserve it. That is something you should stay away from. How much you are pushing your business should not have any correlation with new hiring. Plus what no one will mention is that training someone you hired will require certain standard operating procedures (SOP) in place, knowledge of how to carry over information, and explaining the processes behind it. In big companies that process is easy since everything is systematized. Most underrated how hard that is in smaller environments where mostly there is no SOP in place.
What Is Working Now
Doesn’t matter what kind of business you are currently running or building. Creating a new SaaS solution or building the ultimate outreach system for someone else. In each case, you are building something that will make you money in the long. This means sooner or later you will have to hire someone else to help you out and build faster. So what is working? If nothing else the last 20 years should have shown us that running a good profitable business can be done with lean operations. Especially when talking about startups. Good business in the sense that the cash flow is positive. What has the biggest impact on running lean operations successfully?
Without a doubt technology.
In recent years, SaaS served as a platform for lean operations. Back in the day you had to have a team now, it can be done with one employee and a good SaaS solution. That is how far we have come. Understanding that what used to work is not the key to a successful future should play a huge role in positioning yourself. Not yourself but the business you are going to run or currently running. It’s also important you don't fall into the corporate trap mentioned above. Since it’s not how things work in smaller environments. Anyone running their own business should not bother with how big operations are run. Not even bother comparing them - it’s a night and day difference.
So what works? Taking care of everything alone as far as you can push it - it's that simple. Yet most will disagree with it. Take into consideration that you have a proper system built up to support you. You will be surprised how far you can get by running everything by yourself only having VA to help you take care of simple stuff. In case you don’t like how the majority of VA operate (can’t blame you), your other option would be to hire motivated students that you take care of and point in the right direction. Providing them with the sort of mentorship that will help you massively in the long run. Since it’s going to build a connection between you two. Hard to tell where that specific student you gave the opportunity to could end up later in life - benefiting you massively.
Readers who already have managing experience know what kind of benefits are coming with smaller teams. Flexibility, effectiveness, and higher motivational levels - if hiring was done right. Hard to beat that. Don’t fall into the trap of thinking big and “being your own boss”. It’s an old idea that still somehow managed to survive through all these years. As always the key is to think differently and understand doing the opposite is often a better choice. What you want is to maintain control of everything without any unnecessary weight. For those wondering when it is the right time to expand the time? When you and your team members can’t take it more - not talking about the complete burnout of your team. But you will have to understand how to read people and hire accordingly. In our opinion? You are better with fewer employees and a good setup than with more employees and a bad setup. Premature hiring (scaling) leads to failure.
Running Lean Operations
Nothing good comes from big teams. It’s a matter of fact. Everyone serious about making money on the side or running their own business should consider that thought. No doubt it’s necessary to step up sooner or later and expand your team - depending on what kind of operation you are planning to run. But should that be one of your top priorities? Not even close.
Before we finish with the article, we feel it’s important to mention that you should not believe anyone rushing you into the hiring process. This is what we often see preached by those who are trying to sell you how easy is it to make money on the internet. Pushing the idea of outsourcing everything you can as soon as possible. We would call that formula for failure. You should not stick to that approach since adequately vetting someone and being able to guide them in the right direction requires experience. In each case do not rush the process. Your goal as a business owner is not to delegate and relax - you are much better at getting the right software and setting up the system. Only those trying to sell you something would preach it. Stay away from those.
The whole article idea could be summarized
Don’t believe in old ideas and status games
Your goal should not be to hire employees and relax
Remember unnecessary hiring leads to unnecessary weight which often results in failure
Cash flow loves lean operations
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