Design your business for the lifestyle you want
16 June 2017
Moving 10 cubic yards of earth by hand takes time.
We’re in the process of leveling out our back yard, and to fill in the dips I ordered 10 cubic yards of screened loam. Unfortunately access to the back yard is somewhat restricted, so I had to have the load delivered on the front driveway. From there I loaded a wheelbarrow and carted it to the back yard – one load at a time.
The whole process took me a couple of days working 3 to 4 hours per day. Rain not only slowed things down, but also made the last loads difficult to move as wet loam sticks to a shovel and is a lot heavier than when it’s dry. But I got it done, and now I can get to the work of actually leveling out the yard.
This manual labour is not quite the way that I planned to spend a weekend. A little bit of foresight could have saved me the labour (but in my defense we did not quite have a complete vision of what the finished yard would look like). The work was not that bad – headphones and an energetic playlist helped me along and I got some decent exercise. But progress is slow.
Just like that foresight could have saved me some labour, designing your business to suit the lifestyle you want can save you a lot of pain in the future.
Shape your business to suit your lifestyle
If you’re looking at starting your own business, or you have your own business and you’re wondering where to take it in future, there are three things that you should think about that will make your journey easier:
1. Leverage your skills
2. Consider the cost of entry
3. Do you want to be a manager?
1. Leverage your skills
I’ve had the opportunity to work in quite a few countries in the last 20+ years. In fact, my family and I have relocated internationally 7 times in the last 23 years.
To some people this sounds exciting – and in many ways it was. But here’s the downside: every international relocation has a cost associated with it. There’s culture shock, the cost of renting and in some cases buying a home and the stress it puts on a family.
Every change has a switching cost associated with it. And when you’re starting a new business or growing an existing one, there will be a cost associated with change.
To keep that cost as low as possible, one of the things you can do is to leverage your existing skills. Rather than going into new areas with a costly learning curve, try to leverage your existing skills.
If you’re a technical expert, it is a lot easier to start or grow a business around those skills than going into a completely different field. If you’re really good at fashion, you will be up and running a lot faster in the fashion world than in another industry.
So where you can, leverage the skills you’ve built up over the years rather than going into something completely unknown.
Of course, there are many examples of people who go from one industry to another and make a success of it. If that’s what you really want to do don’t let this stop you – but be aware that you’re going to have to start learning from the ground up.
2. Consider the cost of entry
Some businesses can be started and built on a shoestring – others require substantial investment.
Service businesses, for example, require relatively little up front investment to get going. You don’t need expensive equipment, facilities or office space – a web site, some business cards and some investment in marketing can get you going.
Other businesses require a lot of up-front investment. An earth-moving company requires investment in earth-moving equipment. Brick and mortar retail requires investment in a lease, fittings and stock.
The cost of entry does not make one business better or worse than another. But as soon as you saddle yourself with loans and debt you’ve added to the complexity and stress of running a business. Your runway (the amount of time you have before you run out of money) is potentially shorter and your risks are higher. This adds to stress – and you will have enough of that anyway.
If you’re new to business keep your entry costs as low as you can. You will be learning a lot as you start and grow your business – and chances are that you’ll fail. Keep the cost of that potential failure as low as possible.
3. Do you want to be a manager?
Many of us start a business based on our expertise. We’re good at web design, graphic design or app development. And in the early stages of our business, we’re spending a lot of our time doing what we’re good at. We enjoy doing it because we’re good at it.
And if we’re successful our business starts growing. We get more and more work, and before we know it we have to start outsourcing some of the work or even recruit employees.
And with employees or sub-contractors comes a different kind of work.
Now you have to manage people. You have to manage payroll, benefits, sick leave and motivation. Suddenly you’re spending more of your time managing people and less doing the work you love.
Congratulations – you’re a manager.
I’ve managed teams of people most of my professional life. I had a lot of fun doing it too – you can achieve a lot more with a team of people than you can on your own. A team brings strengths that you don’t have and the capacity to do a lot more.
But managing people is not for everyone. You have to be aware of what you’re walking into, that you’re going to have to deal with stuff that is new and some of it can be a grind.
The biggest challenge with employees are not the employees themselves – it is the fact that you now have people depending on you for their livelihoods. Every pay day you have to have enough money in the bank to meet payroll and other obligations. And that can be nerve-wracking especially when you’re starting up.
As you’re growing your business, think carefully about whether you want to manage people and take on the burden of caring for others’ livelihoods. It can be extremely rewarding, but it brings its own challenges that you may or may not want to deal with.
But how do I grow a business without adding employees?
Some businesses just require more hands and you have no choice but to recruit employees or sub-contract out some of the work that you do. But if the thought of having to deal with employees and payroll and benefits gives you cold sweats, there are some things you can do:
Free up more of your own time.
By the time you have enough work to justify bringing on employees, you have to make sure that you’ve maximized the time you spend on doing the work you love doing. So, for example, you can outsource bookkeeping (easy), or marketing (tricky) to web site maintenance (easy). Outsourcing does not mean taking on employees – these people are professionals delivering a service and you don’t have to worry about looking after them.
Automate the heck out of everything.
This is a variation of freeing up more of your own time – but here the focus is on automating as much repetitive work as you can. Rather than using Excel to create your invoices, use a bookkeeping system – Wave is free and a great choice when you’re starting out and for small businesses. Use Dropbox or Google Drive to create online libraries for your clients rather than sending them files by email.
Don’t take on more work.
This sounds crazy, but if you’ve reached the ceiling of what you can deliver you can choose to not take on more work. The biggest challenge you will have to deal with is that you’ve reached a ceiling on what you can earn. To earn more, you will have to raise your price or work more – neither prospect is very attractive. There are alternative strategies for earning more – such as specialization – but that is a story for another day.
You can design a business to suit the lifestyle that you want. But you have to be aware of what you are heading into as you’re starting out so that you don’t paint yourself into a corner.
We covered three things you need to consider when thinking about a new business or where you’re going with your existing business:
- Leverage your skills. Switching to a new industry or expertise can be expensive. Be aware of the costs and leverage your existing expertise where you can.
- Consider the cost of entry. Some businesses require a lot of up-front investment. Be aware of the costs and minimize those where you can.
- Managing people takes you away from your expertise. Growing a business is great, but be aware of the additional burden that employees can bring and whether you want to take that on.
I did move that 10 cubic yards – but it cost me
I chose to move that 10 cubic yards because I did not want to go to the trouble and cost of making the back yard accessible to a bobcat. It cost me in terms of time and sore muscles, but it was a cost that I was happy to pay as the alternative would have been way more expensive.
You can design your business to suit your lifestyle – but there is a cost associated with any design. Whether you design your business as a one-person show or a team out to conquer the world, make sure you know what the costs are before you go down that road.
What to do next
If you’re new to managing people Jamie Newman’s Your Best Manager is a great podcast to subscribe to.
If you’re a techie you should have a look at Philip Morgan’s Positioning Manual – great advice for small technology companies and solopreneurs.
We’re always interested to hear from entrepreneurs and small businesses, so if you have a question or comment on this topic (or anything else) please drop me a note.
We produce a range of products, articles and supporting information for entrepreneurs and small businesses. Download your free copy of the 15-Minute Vision and Mission guide to see what we’re about!
And of course forward this to a friend!
Have a great weekend. Neville
UPDATE: June 21, 2017
I’ve just had an email from Eric over at Cloudwards.net commenting on my mention of Wave. They recently reviewed Wave and gave it an 81% score which ranks it up there with the other cloud-based accounting apps for small businesses.
Their article is a really great review of Wave – head on over to their web site to get the details.