I can appreciate that. It's how most of us start out. And there are plenty of small software services firms out there that operate this way.
But, if those small firms want to get bigger and capture the value they help create, hourly billing sends the wrong message. That's where this list truly hits home.
It's the insidious nature of expenses. Spending comes easy. When you look at expenses before your desired profit, you cover up all sorts of bad habits.
Yet when you flip the script and prize profits, it requires you to justify every one of them and look for ways to make your business work at the profit level you've chosen to target.
You'll have to justify every hire, every recurring expense, and either cut them or find replacements. The end result is a healthier business.
This won't happen overnight but it will work if you're diligent. It's also an excellent path toward innovation - creating new ways to achieve more with less.
Agreed; 7-figures is part vanity metric and part value realization exercise. There is a path to it that preserves his lifestyle. Getting to a few million in the bank would allow him to live off the interest for the remainder of his life, provided he invests it well.
Regarding his risks on going it solo, you're spot on! In his AMA he called out attempting to hire but pulled back afterwards. I'm assuming it was a poor hire so I'd focus on learning what went wrong and trying it again. Even at just a couple employees, he could grow while preserving his massive profit margin and gain the ability to take time away or weather an illness or family mishaps.
He even mentioned he maintains a full-time job to hedge his bets. If he's keeping it because he wants benefits, I'd think it would make more sense to invest in those himself. If he's keeping it because the work is minimal and the reward (pay) is high enough to offset the revenue from what X number of additional clients would generate, I'd say that could make sense as well. Very specific circumstances.
I saw this happen to my wife. She had stayed at home to raise our kids for a number of years and then built a part-time business.
When our youngest was 13, she decided to get a job but feared she was no longer qualified. Fast forward 4 months and she's a critical employee in a 30+ person software startup transitioning away from a design agency. The skills that come natural to her have opened doors she never felt would open... definitely not that fast!
What are your experiences? Did you look "unqualified" but someone took a chance on you? Or have you seen someone become a great hire that didn't have the paper credentials?
I was pulling from experience. In that instance, you are correct, they did realize it was a team effort.
But what I failed to share will hopefully clear up the confusion. They didn't call that out during the hiring process. They talked themselves up as if they could succeed single-handedly. It wasn't shared until they were failing to show progress and then it became an excuse. It wasn't possible to give (or hire) them a team. In the end, the person was let go to find a bigger company with the resources and capacity they would need to succeed. No hard feelings... just not a fit.
Hi. No self-promotion whatsoever. I seek to share.
My motivation here was to share what I've learned. To benefit from my mistakes. Sidestep my missteps.
Ideas are great and necessary, but even great ones are only valuable if they can be acted upon. In a small business, an ideas-only person will have trouble succeeding. Being able to also (at least) kickstart the effort is critical.
How so? I wrote from my gut here and am not one to think I have all the answers (far from it).
I wasn't attempting to dismiss leadership in any way, shape, or form. Merely calling out the difference between personally "doing" (in the sense of small business) versus the "orchestrating" that is more typical in a larger company.
I've worked in both and have seen how people that spent their career in a large company may struggle in a small business setting. No shame. Just a (often overlooked) distinction.
That's why I was quick to call out that ideas have little true value without execution.
Ideas are born and die every day. We're naturally creative but we also (generally speaking) don't tend to follow-through. That's the real and hard part.
Agreed. There is some room for someone that can provide great ideas, however, small businesses need to (at least) pair them with someone capable of executing. This is more "exception" than rule though.
Easy to get snowed though if you don't know what to watch out for. That was my motivation for writing this. I've been kicked a couple times by (good intentioned) people that did not realize their success (ideas) had been team efforts.
Why would influencers on Twitter seek to rebuild on Clubhouse when a viable alternative exists (or will)?! Outside of the timing which will be a moot point shortly...
I've found that most small customers will open their wallets if you can clearly show value and tie it to outcomes.