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How To Swing From Vine To Vine

It’s been a rough couple of years, when is the best time to put someone on?

Even before COVID things were not great. But there have been plenty of times in the past when things were not great.

How do you manage the ups and downs?

Firstly we have to remind ourselves that businesses are like bicycles, they fall over if they don’t keep moving. And for any business, moving means getting enough new business to keep things fresh and interesting for everyone, especially you. But that doesn’t mean that you should grow just for growth’s sake.

If you ask anyone that has built a very large business they will tell you the happiest time in their life was back when they used to do what they loved with a cool bunch of people, before it all became HR headaches and mountains of boring policies. Or worse when they sold part of the business to a big company that ended up suffocating them. In the old days they might have struggled to meet payroll sometimes, had to jump on the phones and ask favours from clients, but times were mostly fun and exciting.

Before you decide how much you want to grow, ask yourself what is important to you? And often what you choose can have different financial outcomes than you might imagine.

Let’s call the “happy place” about 20 employees. That size is often called a lifestyle business. The size where you can be on top of what everyone is doing. Beyond that, you start a process of scaling up to meet anticipated demand, demand that might not come, putting out operational wildfires, cultural problems, and cash burn that will keep you awake every night of the week.

Leaving aside the low probability you will make it through the huge risks associated with trying to grow past your happy place, you may end up making less money.

Not less than what you are currently making, but less than you could make if you choose to grow in a healthier way.

I said above that your business has to keep moving. Think about that like Tarzan swinging from vine to vine. Let go of the vines behind you and you might be forever free to hang out in the jungle having fun.

If you are flat out busy, think about your margins before you automatically put extra people on. Let some of the less profitable work go. There is a fair chance that the work is unprofitable for you because you are not good at doing that type of work.

The stronger you make your business the more it has capacity to be good for you, your employees, your suppliers, their families and the community. If all businesses did this the world would be a better place. Rather than a race to the bottom: with people dying on bicycles for a few dollars an hour, or not allowed to go to the bathroom.

What’s more, the stronger you make your business, the more it will be worth if you sell it.

 

 

 

Photo by Elmer Cañas on Unsplash

 

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