When you’re building a new business, there are a lot of things that can go wrong at any given point in time. Only a small subset of these problems have the potential to completely destroy your business, bringing it to a total halt. Most of these are obvious.

  • Problems with cofounders
  • Running out of cash
  • Natural disasters/Loss of data
  • Death of a founder

Disagreements among cofounders is one of the most common causes of business failure. If you’re reading this article, chances are good that you’re a solo founder. *phew* Dodged a bullet there, didn’t ya!

Running out of cash is also a common problem, but it’s not often one that comes as a surprise. If a massive, unforeseen expense comes up, then it can be really hard to deal with. If the business is sound and the expenses are “small enough”, you can sometimes float the business on credit cards until you come through to the other side but that’s not always an option. Cash flow problems can usually be seen months in advance. There might not be anything you can do about it, but at least you see it coming.

Natural disasters or data loss of any kind really sucks because you have little or no warning. Maybe a water main breaks and floods your office or your hard drive crashes Maybe hackers broke into your server and deleted all of your customer records. Hackers trashing your server isn’t as common as a hard drive crashe, but it still happens often enough to be a concern. ( *Blatant pitch*: I have a security product called AuditShark that helps detect whether hackers are messing with your servers. Only if you’re into that kind of thing of course.) If your server dies and you thought you had a backup but you never tested the restore, you could go out of business in a hurry.

With the exception of dying, these are all known problems with solutions that you can apply. It’s hard to solve dying, but I hear Google is working on that one too. But hang on a second. There’s one problem that’s more devious than all of the rest for two reasons. First, you almost never notice until it’s too late. And second, it’s incredibly common in single founder businesses.

You Might Be Treading Water

You’re probably familiar with the term “sink or swim”. It’s the idea that when you are thrown into the thick of a problem, either you’re going to drown in the depths of that problem, or make your way out of it. Those are reasonable assumptions, but it’s an overly simplistic and inaccurate representation of the situation because there’s a third possibility.

The worst outcome is that you might simply tread water.

Sometimes that’s enough. But in a bootstrapped business, there are lots of different aspects of the business that are constantly vying for your attention. It could be anything from engineering, customer support, bug fixes, new ordering systems, scaling your marketing, hiring, building new features, responding to customer inquiries, sales demos, etc. At some point, you’re going to find yourself overloaded and instead of doing anything to move the business forward, you’re simply treading water.

Business Overhead

As your business becomes successful, you end up doing a lot of work that is what I like to call “business overhead”. It’s the work that needs to be done to keep the business running, but none of it moves the business forward. These include things like:

  • Any type of government paperwork (Please people, let it stop!)
  • HR functions, such as payroll, retirement plans, taxes, health or dental plans, etc. (Show me the money!)
  • Paying bills, accepting payments, dealing with taxes, or other financial transactions not directly related to making sales. (No, just the inbound money!)
  • Desktop, server or infrastructure administration. (A defrag here, a software update over there.)
  • Purchasing hardware, software, office equipment, etc. (New iPad. WOOT!)
  • Employee or contractor management (I have minions!)

These things tend to be necessary to keep the business running. If you don’t do them, the business can grind to a spectacular halt. But none of these things move the business forward in any way. It’s busy work. Business overhead. You’re doing nothing more than treading water.

But it feels like you’re working on the business. Let me be clear about something here. You’re not.

The work is necessary. But it’s not important.

Let me clarify that, lest you misunderstand. It’s hard to dispute that some jobs are important for you to do, and others are not. Paying bills is necessary. Do you have to be the one to do it?

Of course not. Unfortunately, this kind of work can really creep up on you. Over time, there’s more and more of this business overhead that starts getting in the way of moving your business forward. As it creeps up, you will have a tendency to spend more and more time working in your business rather than on your business.

It’s a subtle distinction, but it’s an important one. If your business can’t live without you, then you haven’t created a business. You’ve created a job. And that’s probably not what you want.

The biggest problem is that many people don’t realize that they’ve done this to themselves. They keep plodding forward, thinking that they’re making progress and they’re not. Anyone who’s ever been employed full-time at a regular company will recognize the difference between showing up and moving the business forward. Between treading water and doing things that matter.

Step 1: Admit you have a problem

If you realize that you’ve been treading water, that’s the first step in solving the problem. Because unless you recognize that it is a problem, there’s no way out and you will tread water until you drown. But once you recognize it, you can take action to turn things around.

Here’s the process for turning things around. First, figure out where you’re spending your time. Personally, I’m a big fan of identifying the things that I procrastinate until the last minute to do. For example, I hate, hate HATE paying bills. It’s not that I don’t have the money, or that I have a bizarre aversion to seeing money fly out of my checking account. Actually I do, but that’s not the real problem.

My problem is that I have three businesses and I get a LOT of paperwork in the mail. There’s a separate set of financials for each of the three businesses, plus I have all of my personal finances to manage. The paperwork alone takes at least four hours every month and sometimes as much as 10-15. If I procrastinate on reconciling my checkbooks for too long and make a mistake somewhere, it can take quite a while to find.

It’s also mentally draining to switch back and forth between the different businesses. Is this receipt for my consulting company or my software company? Can I write off this expense or no? Do I get reimbursed for this expense on my personal card and if so, which account should reimburse it? One month, I had a $54,000 credit card bill from American Express. If you have one, you know those need to be paid off at the end of the month. And while I had the money, it’s still depressing to see $54,000 come out of your bank account all at once in addition to all of your other expenses.

Step 2: Outsource like it’s your job… because it is!

So now that you’ve identified the problem areas, the solution is to outsource them. Find someone who’s qualified to tread water for you and get those jobs done. Your key to outsourcing those types of tasks is to thoroughly document the process. I like to use Google Docs for this, since I can embed screenshots, add videos via my Wistia account, add detailed instructions, and share the instructions across multiple contractors. Another nice advantage is that Google keeps a detailed revision history so if you ever need to go back in time, you can.

Your goal is to document it in such a way that anyone off the street can do the work, but clearly there are certain types of work that you need to have some domain knowledge to perform. Book keeping is one example. Tax preparation, reviewing legal documents, doing payroll, IT administration, etc. These all fall under that umbrella and it should come as no surprise that this umbrella tends to also cover nearly everything that I previously listed as things that fall under the heading of “business overhead”.

Once you’ve documented the process, identify someone you can hand it off to. Hiring someone is a little bit trickier. Fortunately, there are a lot of great resources for hiring contractors. Can’t find any good ones? Here’s three from my podcast:

Step 3: Resist the Urge to Do It Yourself

This one is HARD. The problem is that you are already doing these tasks and have been doing them for a long time. You’re pretty good at them and you’re teaching someone else how to do them now. It’s easy for you because you’ve done it a hundred times. This new person hasn’t ever done them before so it’s natural to want to jump back in and take over when they inevitably make a couple of mistakes.

When you hand these tasks off, you need to set aside your expectations for two things: 1) Quality and 2) Response Time.

When I say that you set aside your expectations for quality, what I really mean is that you should recognize that this task is not likely to ever be done as well as you would do it. That’s ok. You’re the business owner. You’re supposed to care about the business more than they do. Mistakes will happen and there will be a learning curve. But given enough time, the person will learn what to do without your oversight. Eventually, it frees up your time and lets you swim, rather than tread water.

There are a few tips I’ve learned over the years here that I want to share:

  1. Make absolutely sure that you provide the person with not just the process, but the direction and ability to add comments, notes, and the authority to MODIFY the process. That’s right. You’re handing this off to someone else to make the decisions. They will need to make updates. So if you’re using Google Docs to manage the documentation, then make sure this person has read/write privileges.
  2. Stop worrying about it. You’re paying someone else to worry about it for you. I haven’t really said it until now but part of what you’re doing isn’t just freeing up your time. You’re freeing up space in your brain so that you don’t have to pay attention to this task anymore, or even remember that it needs to get done.
  3. Give the person a chance to learn, but have the guts to pull the plug if it’s not working out. I find that it takes at least 3-4 passes through a task for someone to get it right. Back in high school, I worked at a store where I trained for a few weeks and then was on my own. The next day that I came into work, the owner would take me aside and tell me all of the things that I either forgot to do, or didn’t do correctly. I hated that part. But I learned quickly that if I didn’t screw up, we didn’t have that “chat” and I was ecstatic the day he said “Good job, Mike”. I still made mistakes here and there. Speaking of which:
  4. Mistakes are going to happen. When we make mistakes ourselves, we don’t care so much about it. In fact, we simply correct it. There’s nobody sitting over our shoulders telling us the things we did wrong. In fact, quite the opposite. Your own employees and contractors will almost never point out that you screwed up! When someone makes a mistake, simply correct it and move on… EVEN IF IT COST YOU MONEY! Now if they ripped you off, then obviously you need to fire them and maybe get the authorities involved. But everyone makes mistakes. It’s not a big deal, nor is it generally a reason to take back a task that you’ve outsourced to someone else if they’re doing it in a reasonably competent manner.
  5. Don’t dive into outsourcing head first. If this is your first time outsourcing, then you should only outsource one task. It will seem like a waste of time, but I promise you it’s not. It’s an investment in learning how to effectively outsource and delegate tasks in your business.

Step 4: Review Progress For Several Iterations

A big mistake that I see a lot of people making when outsourcing is that they expect things to be perfect the first time. That’s not going to happen. You’re building a new process and putting someone else in charge of it. They need to learn how to do it and you need to provide guidance. They can’t do it alone. Expecting perfection out of the gate is a surefire way to disaster. You’ll end up firing the contractor and doing the work yourself, which is exactly the opposite of what you should be doing.

It should take anywhere from 4-6 iterations through the task, followed by a review of the work and corrections from you for the person to get things right the first time. If the process is complicated, it might take longer. If it’s simple, it might take less, but you get what you pay for so be careful.

Step 5: Walk Away

Once the contractor has started becoming comfortable with the process and the number of corrections after each iteration is almost zero, you can remove yourself from the process. If you’re still doing the approvals, stop doing them and have the contractor do it. Or better yet, get another contractor to issue approvals and have them work together.

By the time you’re done, hopefully you’ve been able to build a series of good systems for your business, some of which are fed from one contractor to another, and all of which free up your time to work on the business, rather than in the business. And you know what that means?

No more treading water.

Have some outsourcing tips of your own to share? Add them to the comments. I’d love to hear them.

7 Comments

  1. dootzky on January 15, 2014 at 10:25 am

    Very good read. Thanks Mike! 🙂



  2. Justin Jackson on January 15, 2014 at 2:15 pm

    This is something I really need to do in 2014. Thanks for the kick in the pants.

    Do you outsource this locally, or with a VA?



  3. Mike Taber on January 15, 2014 at 3:08 pm

    Depends on the task. For most things, I use a VA but I use that term rather loosely. The only thing I keep locally is my book keeping. I use a local contractor in case we need to sit down with a ton of paperwork and go over everything. At some point in the future, I could probably use a remote contractor for that but it’s not all documented right now. That’s part of her job now. 🙂



  4. jcollado on January 22, 2014 at 6:03 am

    Thanks for the post. I agree on that it’s hard to delegate tasks.

    Regarding Google docs revisions, I wanted to point out that it’s not like having a version control system in place and add tags to your documents on important releases. In fact, Google might decide to collapse batches of changes into a single one to save up space in the process that they call revision pruning:
    https://support.google.com/drive/answer/95902

    I’ve never had any problem because of that, but still I think it’s good to know just in case.



  5. Mike Taber on January 23, 2014 at 9:45 am

    I had forgotten that Google makes no promises about keeping revisions forever. But I think it still works well to allay fears that if someone decides to trash the business and delete everything, you can go back to a previous version. Presumably, you would notice this kind of activity quickly.

    So from that perspective, it works well. But you’re right in that you might not be able to recover from subtle changes made many revisions ago.



  6. Jim Munro on January 27, 2014 at 12:37 pm

    Good points Mike. Glad you’re blogging again.

    I’m curious if there is a financially sensible starting point for the automation part to happen? Some of us just starting out aren’t going to have much income to set aside and hire a VA of the calibre that you’d want for handling finances.

    Doing internet research for blog posts can be had at < $5 /hr but I wouldn't want that same person accessing my CC or bank account.

    How would you suggest a bootstrapper just starting out to get to this nice position of freeing up time?

    Thanks!



  7. Mike Taber on January 27, 2014 at 1:03 pm

    Let’s set some terminology first. When searching the internet, typically what you’ll find is that VA’s are used for all kinds of low level tasks, such as data gathering, massaging data in spreadsheets, handling some support emails, placing orders on your behalf, etc. Most of the advice you find regarding VA’s is essentially aimed at people who know how to use a computer, but not much beyond that which is why they’re $5/hour. They’re typically what you would refer to as a step above unskilled labor.

    I don’t classify my book keeper as a VA, even though she’s virtual and assists me remotely. I shouldn’t even call my primary VA a VA because she’s quite a bit above the step above unskilled labor. But for simplicity, that’s often how it ends up being discussed.

    My book keeper costs me $20/hour right now. She’s US based and has a background in keeping corporate books. She’s not a full fledged CPA though. I think she would basically be the type of person who would work for a CPA who then charges companies to keep their books and the CPA would then hire her to keep the books on behalf of the CPA’s company. All I did was cut out the middle man, and the additional charges the CPA would have charged for keeping my books.

    There are clearly certain types of tasks that you will want to pay more for and I think that book keeping is one of them because you don’t want massive mistakes to eat your business. If you’ve never done any kind of outsourcing, there are two routes you can go. Extremely low end (less than $10/hour), or middle of the road ($10-$30/hour). Each has their advantages. Low end means you can screw up a LOT and it won’t cost you a lot. However, it can be really frustrating because you get what you pay for. If you go up a bit on the pricing scale, those people can generally work with less direction, but if they’re going in the wrong direction and you’re not paying attention, it can cost you a fair amount of money. The direction you go sort of depends on how much money you have to throw around, how much time you have to spend on management, and whether you’ve ever done it before.

    My preference is a few steps up from the bottom because those people are skilled enough that if you give them a bit of direction, they can really move things along. But you absolutely need to pay attention to make sure they’re going in the right direction.

    If you’re just starting out, I don’t think I’d go for anything long term. I might do some research gathering projects just to help get the feel for management. Managing people is a skill. Some people are really good at it naturally, while others take time to pick it up. But over time, you get better at it and you will gravitate towards hiring better people in the future as you gain access to more revenue and set better guidelines for managing the business.



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