Fight well when you’re strong, agile, and smart. Win only when your opponent is weaker, slower, or dumber.
A guide to how small businesses fight in a competitive arena against massive corporations and live.
I started Moderite OÜ as my first e-residency business in September of 2018. It wasn’t my first startup business, but it was the first I managed entirely myself, and it was my first attempt at being location independent.
“Why Estonia?” First, my company didn’t care where it came from. The company develops software solutions and hosts remote services. All products can be distributed digitally, and all work can be done remotely. Second, our development is focused on innovative technology, cyber security, and automation; with the e-residency e-ID cards and Estonia’s early adopter mentality for new technology, the community just felt right. And last but not least, I’ve never been to business school so my dreams of running a business didn’t include complicated business aspects such as taxation and legislation. The e-residency program seemed suitable for an entrepreneur who really just wanted to code without feeling the boss’s breath on the back of his or her neck.
So I founded Moderite through Estonia’s e-residency program remotely — all without ever setting foot in Estonia. (Someday my company will be able to justify sending me on a business trip there.) To be truthful, US FATCA compliance made it a little difficult trying to open a bank in another country I’ve never visited. So that along with some other pieces of founding the company required enduring a little pain (at least when I went through it). However, I have no regrets going through e-residency, only a few comments for the nearest suggestion box. I can’t imagine any entrepreneur saying, “Now that my business is registered as a legal entity, the hard part is over!”
This is where the “hard part” begins: you made the necessary expenses for the company to exist, and now you have to try to bring in an income before you go broke and before your morale fades and you crawl back to your old job. Unfortunately I wasn’t born a business man, and now, I’m the only one holding the reins to a business.
What makes a business succeed? Business owners always talk of hard-work and perseverance merely because they’re egos get too big and they try to act like an inspirational figure to the public. Take it as a man who worked in industry as a doer under the supervision of management: hard-work and perseverance isn’t anything we didn’t already know, it isn’t anything we haven’t already tried, and isn’t anything original. Don’t take this as advice to not work hard, but don’t expect hard work to be enough and don’t let yourself get full of false hope from listening to someone saying, “You can do anything you put your mind to.” Potential and resistance are both equally infinite.
What characteristics should a good Entrepreneur have? This is important. How can I expect to succeed if I can’t break my old habits of working for someone else?
So my research came up with: Optimism, persistence, never giving up, and boldly taking risks. These seem to be the most common characteristics.
As heartwarming as it sounds my analysis was: I’m in trouble!
Blame it on my upbringing or my genetics but I can recognize myself well enough to know I probably can’t adequately feign these characteristics to compete with the average businessperson. If you have these traits, congratulations — the odds of your success are that much more in your favor from a statistical standpoint.
I for one had a different perspective:
- Optimism is great if you’re a cheerleader for your team, but optimism and cynicism are by definition adjectives to describe your inability to assess a situation accurately. If an optimist says, “I’m confident we won’t hit that iceberg,” the accuracy of his assessment comes to question.
- Never giving up, means they pull out of failing projects too late and will lose more money than they have to on failing projects. Also means they’ll have less money to balance the projects that critically need it when things go wrong.
- Boldly taking risks has it’s dangers as well. We only hear from the winners who took big risks and won big, the media silences the voices that took an equally big risk and lost everything. How many interviews did you read of failing business owners? The statistics are in: most business fail. Feeling lucky?
So I had my business and I felt less like a business man than ever before. Clearly the odds aren’t in my favor. So, I took a new approach: If these are the characteristics that lead my competitors then the flaws of their characteristics creates my opportunity. Remember, your business niche is like a pie, and your competitors are all fighting for the biggest piece of the pie they can get. Each business has it’s strengths and weaknesses, and if there’s a trend in business management (or characteristics of business owners), there’s a trend in their strengths and weaknesses.
Back to the pie analogy, this is equivalent to saying majority of your competitors are fighting harder for the same pieces of the pie and are collectively fighting less for other pieces. Therefore, a different personality means different strengths and weaknesses which means you can fight harder for the pieces of pie that your competitors have a harder time fighting for. Imagine fighting for a pie in the middle of a table where the majority of the people are sitting on the same side of the table, and you’re sitting on the opposing side. The pieces closest to you are the furthest from your competition. Bon Appétit.
Introducing the greatest challenge of my business endeavor…
How to be the novice entrepreneur fighting in the same arena as the experts… and live.
So lets start with experience. I didn’t get a degree in business. Spent my career working for others. I don’t have access to mega-rich investors, and my nest-egg is enough to keep me comfortable for a while, but far from buying my way into business.
Software development is a big industry. I know my competitors have more money, more personnel, more output, and more customers. The better they do, the more savings they pass to their customers so their competitors (including me) will be priced-out and surrender their territory in the market to the superior business.
Companies being starved by their competitors typically look for solutions to make themselves more favorable to their customers at the expense of abusing their staff. This is the final attempt of how a dying business clings to life. (Pay cuts, reduced benefits, impose unreasonable expectations on staff performance). However, companies with more resources than mine, are in this dying state and are still dangerous competitors since they appeal to customers by crossing an ethic that I dare not. Just as an obese person will starve slower than a skinny person, a bigger company can stay in this dying state longer than I can afford to wait to see profits.
As a development company, any project I take on, a competitor can invest twice as much to create their version of a competing product, and that’s only if I do something that really turns heads. So far things look pretty bleak for me. I can’t win by mimicking my competition. So I need to get creative if I want Moderite to nuzzle its way between the fat pigs so it can get a nibble from the feeding troff. (And when I say “fat pigs” I mean that in the politest way possible for the sake of the analogy only).
How I didn’t die fighting in the arena
1. Using your opponents weight against them
The larger companies have larger expenses to maintain their larger infrastructure. This means when the market does something that hurts all businesses (a bad press release, an economic downturn) they’ll bleed in millions where I’d bleed in hundreds.
My company used the e-residency program because it offered a chance for something most companies don’t have, a modular business infrastructure that can easily be reconfigured. Competitors on the other hand operate in such a way where the business is only successful if it’s always fully-operational. So companies that say, “We never profit on the 3rd quarter but that’s okay because we always do well enough in the 1st and 2nd quarters to compensate,” will bleed millions. Moderite doesn’t need a physical office for workers, which means there’s no cost for cleaning services, security officers, and heating bills. My staff are paid per-contract per-project and if I no longer need them, I can send them away while my competitors pay per-hour for employees to twiddle their thumbs while they wait for an email.
The modular approach gives a higher pain tolerance to the fluctuating market. Almost the entire income is used to support the projects that bring in income, almost none of it is spent while the business is idling.
Push an idea from the bottom that is well planned from start to finish rather than going for the one that sounds most exciting. Remember the golden rule: Don’t fall in love. Passion in your work is good. Falling in love with a project just makes it harder when you have to put it down.
If you have a project that’s failing, and you can ditch it before it can cripple your business, your competitors and their dreamers won’t be able to mimic what you do with their piles of cash, because they’ll fall in love and waste their money if they try to copy you.
2. Calendars are flawed, and businesses worship them
Maybe it’s just me, but I always thought calendars were very weird. Utility services like to charge monthly, but some months have more days than other months, some months have a higher weekend to weekday ratio. For some reason businesses worship these calendars. People come to work every day to see what meetings they have for the day where they plan which projects to launch and when.
Some projects have hard deadlines in that, they can’t succeed if a deliverable is not ready by a certain date, but they can’t just launch a project ASAP. Most of the team is working on some other project, and if you bring a new team to complete the project, what does the old team do when they finish their project? If the project starts too soon, it will end too soon, and if it ends too soon, the people finishing the project will have to wait a long time before starting the next project. (Do you fire these people since there’s no project budget paying their salary or do you pay them to do nothing while waiting for the next project?)
This leads to competitors only launching projects at determined intervals. Big projects must start and end at the fiscal year. Projects that are finishing too quickly are padded accordingly so they take longer. This misses the opportunity to go under budget and use that cost savings for other projects.
Moderite solves this by focusing on hiring contractors which are automatically terminated after their project is complete and can be easily rehired once a new statement of work is written. The issue with that, is the talented individuals are highly likely to get poached by another company when they stop getting work and money.
To solve that, Moderite focuses heavily on part-time workers (not just to circumvent labor laws) to make us attractive to full-time students, or people working elsewhere wanting to make a little extra money. These people have a life to return to when their projects complete. They keep themselves occupied with their other life ambitions (which is what we want our staff to do anyway) and they’re more likely to be available when we need them. If they get poached by another recruiter, we can still offer opportunities to work on-the-side without leaving their job.
With this new flexibility Moderite can start a project on a Wednesday without worry. Projects are launched when it makes the most sense to launch a project. Projects that our competitors reject because they can’t launch till the fiscal year, and then wouldn’t have enough time to have a deliverable for a hard-deadline, can be accepted by Moderite. Best of all, a project finishing sooner, under budget, or exceeding expectations are all viewed as good things.
3. Half an idea (not the time for a glass-half-full mind)
Ever heard someone say, “I’m not a technical person, I’m an idea person.” These are the people who come up with an idea that sounds awesome to everyone have no problem finding investors, but the doers have to fill in the blanks between dream and reality. Suddenly the project is not feasible: Not enough money, too many requirements, not enough time, not physically possible. Idea-people are dreamers, and who wouldn’t want their dreams to come true?
So the idea-person treats the project like his or her baby, and no one’s baby looks ugly in their parents eyes, but there are some ugly babies out there. They keep the project going against all logic because they’re in love with the idea.
The end result is the project gets ran into the ground: Budget blown, crummy quality, not ready on time.
Big businesses do this all the time because their hierarchy employs people with budgets who spend majority of their time managing their budgets. Suddenly they’re no longer doers, but they hold the purse to fund the ideas and the ideas they like, are the one’s that lack reality.
There is no solution to fix an idea that lacks reality. The only way is to come up with ideas based on reality. Guess where those ideas come from: The people that make things real!
Having passion for your work is a good thing, but the golden rule here is: Don’t fall in love. If a project needs to be put down, be smart and quit before it cripples your business, because I can assure you the big businesses will have dreamers and those dreamers will fall in love and burn their money pursuing something that won’t ever exist. They’ll be too ashamed to cancel a project prematurely (because it will mess with their calendar worshiping) and they’ll bleed in millions while you get to start your next project in a better position because you prevented a catastrophe.
This give your business an advantage by being agile enough to switch directions. Remember when I said boldly taking risks might not be a good thing? This is equivalent to jumping out of a trainwreck
4. “I need another [insert title] on my team and I need them yesterday!”
Every project has a chance of going wrong. People on the team leave, or project managers discover that a web developer isn’t necessarily suited for python-based web-applications. Every company wants to minimize things going wrong, but there’s always a moment where something goes wrong. So the issue with this scenario where a project manager says, “I need another developer on my team and I need them yesterday!” is that hiring another employee is timely. Figure a week to send the request to HR, a week for them to announce the job posting, two weeks for interviews, then the new employee can give his previous employer his final two-week notice. They may bring on a contracted employee which is a little faster and considerably more expensive due to overhead from the contracting company. Now project managers have to choose to run the project at least 6 weeks without sufficient staff or blow the project budget.
First, job postings, hiring processes are ridiculously slow often with poor results if you don’t have the reputation and incentives offered by competing businesses. I focus recruiting at events, workshops, meetup groups etc. My favorite target, community college students, and people trying to switch into a new career field. If they go to the event, they already proved the initiative to go beyond the bare minimum requirements of a college course to teach them, which I find to be worth more than a person from a prestigious university. Also, their knowledge is fresh, and my competitors reject their job applications prior to an interview because they’re experience isn’t relevant or their degree is incomplete. So they’re competent, ambitious, eager to work, and my competitors are foolish enough to pass them up.
I hold contact info to anyone I think I could need in the off-chance I need them. When I need people I don’t waste time or money with expensive hiring processes, I start calling people and ask if they’re looking for work. Why spend weeks with job postings when you can spend one day calling the top ten brightest people you have ever met and ask if they want job? This flexibility means I can balance human teams when a project needs them without derailing the project. Now, when I have a project manager saying, “I need another [insert title] on my team and I need them yesterday!” I can reply, “Yesterday’s no good for me, how does today sound?”
5. A happy worker is a productive worker. Who knew?
(everyone did for a long time)
Now as a person of logic, all my data is subjective for this, but I have to admit when there’s a positive work environment people work harder. It doesn’t take much to kill the morale of a team. Some big businesses will likely never experience what the difference is when everyone comes to work in a good mood ready to work.
Businesses typically expect middle managers to uphold workplace positivity, but they only reflect the environment they work in. They throw birthday parties and barbecues only to cheer people up from a sucky day of work. A positive work environment needs to be built into the very bones of the company itself. For starters, managers that get paid more than the people who do the work is just a tradition based on insecurity of the wealthy. People who make things real, produce something worth money. That’s called an investment!
Project manager courses typically state a project manager will spend majority of their day communicating. They talk to shareholders, talk to project sponsor, then somehow tell the team how to do things despite having a job that doesn’t involve doing things.
My management strategy is simple, hire people capable of taking responsibility for their own actions so the manager doesn’t have to, then work alongside your team as a leader rather than a manager.
This makes the environment far more positive when workers look up to a person willing to sit down and crunch through the same problems as the rest of the team. No person on a team is too important to be doing any task assigned to the team. No job too small, no exceptions!
But what about all the meetings and talking? Get a smaller team! (a really small team) I structured my chain-of-command based off the United States Emergency Services Incident Command System(ICS) which was adopted post-9/11 to make emergency services capable of handling disasters of varying situations with personnel of diverse skill sets pulled from varying agencies whom may have never worked together before.
My team sizes are a minimum of three people per leader, when a seventh person joins the team, you appoint another leader and they divide the team so they each get three people. Work related communications goes through the chain of command, and no one ever needs more than seven employee email addresses in their address book. Suddenly everyone has time to listen to their coworkers, report to their leaders, and focus on their work with minimal distractions. I can say from my work experience, this has value for a positive work environment, and for the sake of efficiency.
As much as I love presenting objective-based data for business strategies there’s nothing I value more than saying my team can out preform most regardless, because my team is happy when they’re working.
In Conclusion: Don’t fear the arena get ready
The business arena is full of gladiators, and many of them understand business pretty well. I survived today, and will likely survive tomorrow, but there is no moment of comfort. You either compete hard, or you begin losing. A quick summary of the tips explained in this article to give small businesses and advantage are:
- Fight for projects with sensitive deadlines that calendar worshiping businesses can’t fulfill to grab a piece of the pie from the side fewest people are on.
- Feels no shame finishing projects too soon where competitors will suffer logistical complications.
- Human teams, the least predictable resource managed, can be balanced without hesitation to reduce fail-rate of projects.
- Use money to invest in the things that make money (which is by doing something) and don’t waste it on infrastructure/overhead you don’t need.
- Don’t fall in love with a project, because knowing when to quit before a catastrophe will make competitors unable to follow you.
- Positive work environments starts within the structural bones of the company itself.