Grow Your Business Without Growing Your Team

0:03Hi, I'm Joel Miller, and this is the Business Accelerator podcast. Our show to help busy but growth-minded small business owners just like you scale yourself and your business so you can win at work and succeed at life. It's what we call the double win. And this week, I want to focus on a misconception that sometimes prevents business owners from experiencing it for themselves. And that is the belief that the only way to make it happen for themselves, for their teams, is to have a big team. In this episode, our founder and chairman, Michael Hyatt, and our CEO, Megan Hyatt Miller, are going to talk about how to make the most of a small team.

0:42Let's jump in. You know, one of the questions that we hear from our clients all the time is, how can I grow my business without growing my team? You know, in many cases, their customer base is growing, but they often feel hesitant to take on the expense of extra team members, particularly in the current economic climate where there's a possibility, maybe even a probability of a recession in the near future. And so I think this is a tricky balance that business owners have to manage. On the one hand, we want to resource our team to take advantage of opportunities. On the other hand, we want to manage risk and we don't want to get ahead of ourselves.

1:23We don't want to have our overhead be based on speculative revenue that we hope to generate, but we haven't yet proven that we can do. Obviously, that can get you in all kinds of trouble. So I think this is a tension that most business owners face. We're probably always, if we're doing it well, hiring a little slower than our needs. But I think for any of us, whether you have no people on your team right now, a handful of people, or still a relatively small team, you probably have fewer people on your team than maybe you would like in an ideal state if you could afford everybody you want. So the question is, how do we make the most of a small team, whatever that means to you.

2:03Yeah. And I agree with that. And I think that the temptation as a business owner or as a business leader is to throw people at the problem. But the truth is, those people come in and they quickly start filling up their calendar and their task list with all the things you've hired them to do. But then they see other things. So before very long, they too are overwhelmed. And the problem is, if you're hiring really good people, they're going to work to the edges of their capacity, and usually a little bit beyond their capacity. And I can remember a business partner I had years ago who said to me, and he meant it as a compliment, he said, you're the kind of person that if you were bagging groceries at the local grocery store, you would figure out how to make that, you know, a 60-hour week.

2:51And it's true. You know, good people are going to create work for themselves because they're going to see things that need addressed, but not everything needs to be addressed with a human resource. You know, automation is an option. We're going to talk about some of these as we go forward. Having a very clear system for accomplishing that thing that may involve automation or just templating it so we don't have to recreate the wheel every time. Another option for us is that, you know, we just decide we're going to leave that work undone. that it definitely is something we could address, but maybe we just don't need to do it.

3:29Or maybe it's not that important to our customers or our clients. I literally just had that experience this week where there was something that we were doing for our clients that was consuming an enormous amount of staff time. And I said, you know what? Let's just ask the clients what they think. Is this important or no? And you're probably not gonna be surprised to find out that it wasn't that important to the clients. I think we had one person that responded, it was important that we keep doing it the way we were doing it. But gosh, you know, this reclaimed a tremendous amount of staff time just by asking the question.

4:03I love that because oftentimes we don't question the work. We just think we need to resource the work without being critical about it. And that's a really important question in the first place. Does this work need to be done and does it need to be done by a human? That's really critical. But regardless, if you have a small team, and we're assuming that you do, if you're listening to this podcast, whether that, again, is a couple of contractors or a handful or more of employees, the question becomes, how do you manage the risks of over-investing in a team while simultaneously resourcing the team that you have to leverage the opportunities that you want to take advantage of?

4:40So today we're going to talk about four tactics that you can use to drive your focus and that can ultimately allow you to make the most of the resources you have, regardless of how many people that looks like.

4:55So let's talk about tactic number one, which is to clarify your vision. Well, everything, from my perspective, starts with vision. If you're not clear about the destination, you as the leader really can't take anybody on the journey. Until you know where you're going, how do you expect people to follow you? But a clear written vision, like I articulate in the Vision Driven Leader, is helpful for a number of reasons. First of all, it serves as a filter so that you can discern the difference between an opportunity and a distraction. So people are going to be seeing opportunities at every level of the company.

5:37You know, the more successful you are, the more opportunities you're going to get. And the more temptation there's going to be for vision or mission creep and to operate outside the scope of your vision. And that's why a clearly articulated vision, particularly one that's written, particularly one that you're making constantly visible to your team and that your team understands, plans can be a filter so that when opportunities come your way, people can say, oh, we're not going to do that because that's not congruent with the vision or that's not where we said we want it to go. Now, you always have the opportunity as the head of your business to say, well, we're going to change the vision.

6:15I wouldn't recommend that too often, but occasionally you're going to need to change the vision because that opportunity can become a new thing that redefines your business, but that's very rare. Usually, distractions show up on your doorstep masquerading as opportunities, and it's a kind of test. And as the leader of your business, you've got to pull the vision off the shelf, so to speak, and say, is this congruent with where we said we're going? And if it's not, then it's a no. And the more successful you become, the more often you're going to have to say no. And I don't care if you listen to Warren Buffett or any other successful entrepreneur, they all say the same thing.

6:53Really successful entrepreneurs say no a lot. In fact, they almost always say no, and it's very rare for them to say yes. And I heard an interview with an Apple executive this last week, somebody that had been there for decades, who said, you can't believe how often we say no at Apple. We say no to almost everything, rarely say yes. I love that because it's counterintuitive, but it's so obvious when you start to think about it, Because when you get your team in a cycle of saying yes all the time, and oftentimes what this can look like for a small team is, you know, you miss some revenue on one product launch.

7:30And so you then drop something in or, you know, you lose a client. And so you take on some other opportunity and you just start saying yes to all kinds of things. And before you know it, it can feel like you're just on a hamster wheel and doing a million things and none of them really well. And you're not really playing the long game. And what I love about a vision is it's an anger point and a compass in the future that says, make sure your efforts are pointed in this direction and make sure you don't get off course and go do a whole bunch of stuff that you think is helpful in the short term, but that ultimately is going to derail you from achieving something much bigger, much better in the future.

8:06And that is your vision.

8:11Okay, that leads naturally to tactic number two, which is to cut unprofitable products. Yeah, this is funny because what if the key to scaling your business isn't adding things, it's actually subtracting things? You know, most of us as business owners, we're visionaries, we have a thousand ideas, we can think of new products all the time. And the problem with that is it creates more work. It creates more demand for overhead. It maxes out your team. It dilutes your ability to serve your customers. And instead, instead of expanding your product offerings, what if you were to begin cutting the least profitable parts of your business?

8:54Now, obviously this requires an analytical process to identify what are those. And it might be things that surprise you. You know, there may be things that you assume to be profitable that actually aren't once you allocate your limited staff time to those. This is one of the sneaky ways that we can have some creep in terms of profitability or losing ground in terms of profitability is that we don't properly understand how much of our staff time something takes, especially if we're not running on billable hours. And so if we could then look at what we have in terms of our product suite, really analyze it and double down on the things that are contributing to the bottom line the most, well, that's the path to scaling, really.

9:37It's not adding more, more, more, more, more. It's narrowing our focus and going deep and making those things truly excellent. Well, to quote or to cite Apple as an example again, when Steve Jobs came back to the company as the interim CEO, the first thing he did was he cut the product line because they had gotten into all kinds of products that were unrelated to their core business. And so he cut the business back to just four different product lines. And my friend Frank Kern says that if you want to be really profitable, if you want to scale, figure out what's working and do more of it. Now, that's deceptively simple and really important.

10:19But here's kind of a pro tip, and that is if you lead an organization, and you probably do if you're listening to this podcast, then I would insist that my bookkeeper, my controller, my CFO, somebody that's on the finance staff, include as a part of your monthly financial packet what I'm going to call a segmentation analysis or profitability by product category or maybe profitability by sales channels. So there's kind of a matrix relationship between those two, and it's worth looking to each one. Now, back when I was in the book publishing industry, during the Great Recession, we had to go through this very same exercise because all of a sudden, our sales had fallen dramatically.

11:01And we basically had to decide what we were going to keep and what had to go. And once we did the product segmentation analysis and the market channel segmentation analysis, it became very clear where we were making our money and where we were losing our shirt. And so there were product divisions, entire product divisions, that we could cut without affecting the profitability. In fact, our profitability went up because we were losing money on those product categories. By the same token, we didn't cut any marketing channels, but figuring out that 90 % of our profit was coming from 10 % of our customers gave us the opportunity to completely reimagine how we serviced those customers.

11:47So we were sending sales reps into like, I don't know, 3 ,500 accounts, which represented 80 % of our account base. And we said, no, there's like less than 100 accounts that are driving 90 % of the profit. So let's send sales reps to those and let's create more of a self-service system. Or maybe it's phone reps. We just basically tiered it and decided we're going to offer different kinds of services for different levels of customers. But that automatically made us more profitable. And it enabled us to scale. And the business became simpler, too. You know, as I listen to you tell that story, one thing really stands out to me about it.

12:26First of all, clearly you were bold. You made a bold decision. There have probably been a lot of people who would have been scared to make that decision. But you weren't hasty about it. And you also used data. You were diligent about collecting the data and doing the segmentation analysis before you made that decision. You just didn't kind of shoot from the hip or go with your gut or cut out the things you didn't like or anything like that. This was very data-based, which enabled you to check your assumptions, measure twice, cut once. Because obviously you could do this and it could be disastrous in your business if you didn't cut the right things.

13:03But you had the intelligence based on the data and the analysis that you went through to get it to make those decisions in a thoughtful way, which ultimately freed up your team to do their highest value work. This is why I'm recommending this become part of your monthly financial packet so that you have not just a P &L for your entire business. I don't want you to get it so granular that it's a P &L for every product. although in some industries that would make sense, but it's a P &L for a product category or for a sales channel. And then looking at that every month, because one of two things will happen.

13:37Either you'll say, okay, these are the levers we can pull to make this channel or this product category more profitable, or we're simply going to cut it. We're going to get out of this business as fast as we can because there's nothing we can do to make it profitable. If you keep doing that over time, you'll maximize or optimize your profitability.

14:06Okay, well, let's go on to tactic number three, which is to embrace constraints. And this is something at Full Focus we talk a lot about. We have become close friends with constraints. We love them. But the reason for that is that when you have constraints, it focuses your attention, your problem solving, your energy in a unique way. You come up with ideas for things that you never would when everything was on the table as an option. You start to make different kinds of connections and come up with things that otherwise you would have never had access to. So, you know, for example, when you're eliminating product lines, that is a kind of constraint, and it forces you and your business to focus on more profitable lines and to go deeper with those things and continue optimizing and maximizing those things, which, by the way, is something you probably don't have time to do if you're spread too thin among too many products.

15:00It's true. And eliminating product lines is a kind of constraint, for sure. Focusing more effort on the profitable lines and less effort, less resources on the unprofitable ones. But I think this is one of my complaints, frankly, with venture capital, is that sometimes, particularly startups, have more money than they should. And they make stupid decisions as a result of it. Well, another type of constraint is in the workday itself. You know, if you have a small team, you have to think about how do you manage that small team in order to perform at their very best. And if you have people overworking for extended periods of time or really indefinitely, what you're going to end up with is burnout.

15:47You're going to lose your best talent. Instead, what you want to be thinking about is how do we direct the work of our small team to the highest leverage activities? How can we constrain the things that they're working on and the workday itself in such a way that it forces better decision making about what they're investing their time in so that it's not just endless. They're not getting burnt out, but they're really doing the work that drives the results that matter the most to the business. So I think this is a great hack. It can be really easy, especially when we get scared, like in a situation like we are in now where potentially there could be a recession.

16:26If you have any anxiety about that, you can tend to push your team too hard, too fast for too long, and that will come back to bite you. It will be very costly to replace those people when they burn out and they leave. So this is an important constraint that's kind of back to tactic number one about the vision. this is part of playing the long game. How can we create some constraints that enable us to go the distance and succeed, but in a way that is ultimately sustainable? You know, Megan, this reminds me again of Parkinson's law, which says that work expands to the time allotted for it. And unfortunately, when that happens, the need for prioritization kind of goes away.

17:08Because if you're willing to work 24 hours a day, you know, you can probably take on a lot of stuff that you shouldn't be taking on. But when you decide you're going to work an eight-hour day or a six-hour day or a 10-hour day or whatever the constraint is, and it's going to be different at different points in your business, but whatever it is, that forces you to prioritize. If you're thinking about getting out of town for a vacation, you're working in that last week before you leave for a week or two weeks on vacation, you're going to have to prioritize because you realize that if I want to go away and be truly unplugged, I'm going to have to do only the work that matters.

17:46You can't do everything. So what has to be done in order for this to be a smooth transition for the people that are left behind as I go away to be unplugged? So I just think you're so right. This time constraint is enormously helpful. It's counterintuitive, but it's really helpful because it forces prioritization. You know, we've seen a lot of studies that have been released lately around the four-day work week. Now, this is not something we have tried personally at Full Focus yet. It's something that maybe in the future we'll have the opportunity to try. But what they have found is that almost without exception, companies that try that don't go back.

18:23They like it so much that they keep it installed past the experimental phase and that it dramatically increased their net income, which is so fascinating because, you know, it would be an easy thing to think, well, it increases employee satisfaction and retention and all of that, but what about the financial results? You know, were those things compromised? And based on the data that is coming out now, kind of post-pandemic, the answer is it helps. It doesn't hurt, which is so interesting.

18:55Okay. So that's tactic number three, embrace constraints. Tactic number four is to leverage processes. Why is this important, Megan? Well, it's easy to think that, hey, we're talking about a small team, right? I mean, the great thing about a small team is that it's nimble and it can shift quickly and we don't really need all that bureaucracy that big companies have. And I think it's so tempting to think about this from a binary perspective. Either you're freewheeling and nimble or you're totally bogged down in bureaucracy. see. And those are really caricatures because in the middle is a version of process where, as my coach says, you have just enough, but not too much.

19:38And just enough process is going to help you avoid things like double work. And one of the things that can happen with a small team is that everybody can kind of work on the same things. And it's not really clear whose job it is to complete that part of the project or what the handoff is or who's supposed to be doing what. And you can end up in a situation where, unbeknownst to you, two people were writing that email that needed to go out because they both thought they were responsible for it. And so when you have basic processes in place, basic workflows in place, clear delineation of responsibilities, you have things like job descriptions in place, it enables people to work efficiently and effectively.

20:20So I think this is one of those things that it's easy to dismiss or to put off until later, but it's really helpful to install even when you have a small team and maybe especially when you have a small team. You know, and just a little bit of caution here. Most people that are entrepreneurs don't really see the need or value process, right? Because they tend to be, not always, but they tend to be quick starts. If you look at the Colby assessment, they tend to be quick starts. They're high risk takers. They want to get into the game quickly. They don't see the need for process because process feels like it's going to slow them down.

20:58But here's the thing. You don't have to be good at process to appreciate the need for process. Like I'm not particularly good at it, but I see the need for it. And I definitely want to have people on my team that are willing to focus on the process so we're not left reinventing the wheel or making the same mistakes over and over again. I want that in a process so that it can be optimized and we can become more efficient and more effective in the execution of that process. So just because you don't see the need for it doesn't mean you shouldn't do it. Somebody in your team needs to own that. Well, especially on a small team, if you don't have things that are documented, think of it like a recipe book.

21:39If you don't have recipes for how you do what you do, you as the business owner will often end up as the center of everything you do because you hold the recipe you're kind of the genius chef and you hold that in your own head and basically your team can't make dinner for the customers unless you're in the kitchen with them saying you know now add the cream now add the pepper you know what you want is you want to empower your team to do the things that they're the best at so you can be freed up to do the things that only you can do and you can't do that unless you get it out of your head and you create a process.

22:13So just a few ways that you can do this. You can build templates that are used across the company, things like email templates or customer experience templates that you can use. You can document repeated processes and standardize the procedure. We talked earlier about things like contracts needing to be standardized, and that's one of the things that is so helpful to do. Let's not reinvent the wheel every time that takes a lot of work. Rely on written communication more than just conversations, because it can become really difficult to remember who you told what to and you can leave people out of conversations and all kinds of stuff.

22:48And you can end up with alignment issues that ultimately impact your ability to execute that are problematic. So when you can communicate in writing either email or Slack or whatever you use, that can be helpful. Implementing a formal delegation strategy or form. In other words, rather than just kind of lobbying a football at somebody of, hey, go do this thing, actually expressing in writing what you want to delegate to that person and what your expectations are sets them up for success. And it keeps you from having to rescue them in the middle or get involved in the middle. So in a way, all these things are helping you as the business owner.

23:22You can also explore options for project management systems. That can be helpful. and you can clarify criteria for evaluating new ideas. How do you make sure you don't have a proliferation of products or new things that you go after that ultimately compromise your ability to achieve your long-term vision? That's good.

23:45Okay, let me summarize. We've shared with you four tactics for making the most of a small team. Tactic number one, clarify your vision. Tactic number two, cut unprofitable products. Tactic number three, embrace constraints. And tactic number four, leverage processes. So expanding your team isn't the only option to scale your business. It may be the first reflexive option, but it's not the only one. Vision, subtraction, constraints, and processes can provide the focus you need to improve productivity and your profits.

24:29That's it for another episode of the Business Accelerator podcast. If you're a business owner and you're interested in learning more about our Business Accelerator coaching program, go to businessaccelerator.com slash coach. Like I said at the top of the show, we help successful but overwhelmed small business owners just like you scale yourself and your business so you can win at work and succeed at life. It's what we call the double win. And if you want to experience it for yourself, go to businessaccelerator.com slash coach. That's it. We'll be back next time with more conversations to help you accelerate your business.