How I Went from Burn-out Entrepreneur to Automating my $4M Company and 10x my Productivity.
Building a business is hard enough. On its official website, the U.S. Small Business Administration purports that “roughly 50 percent of small businesses fail within the first five years.”
So the odds are stacked against us entrepreneurs. No matter how much time, money or resources we have at our disposal, starting a business is never easy.
In my experience, one of the biggest issues I’ve personally had to deal with in being an entrepreneur is the constant tug-and-pull between it and the personal life I’d like to live.
The freedom often attributed to having your own business can often become a black hole of your time and even sanity. It’s easy to negate your personal life and time with your friends and family when there is always something to do and a constant feeling of dread at the end of every day when it seems like you got nothing important done.
“If your business depends on you, you don’t own a business — you have a job. And it’s the worst job in the world because you’re working for a lunatic! And, besides, that’s not the purpose of going into business. The purpose of going into business is to get free of a job so you can create jobs for other people.”
E-MYTH BY MICHAEL GERBER
This was once me. My business was my life and I was my business. Living month-to-month with no money for a vacation and certainly, no time for a sick day.
There’s a Southern folk saying that says “you can’t read the label while you’re sitting in the jar”.
Too often, we as entrepreneurs, employees or contractors just keep doing the work that’s in front of us, unable to see how we’re sabotaging our own success.
We often get stuck in habit loops of doing familiar things that are no longer relevant, or we find ourselves working longer hours as the pile of work just keeps growing.
Today, many know me as that “systems guy” but unbeknownst to many, it wasn’t always this way. What I hope to accomplish in this post is to offer my perspective on how I went from working for my business to working on my business.
“Countless business owners complain about their lack of control or freedom and yet, in the same breath, discount the value of process. It’s like the story of the dog sitting on a nail. A gentleman walks up to a farmhouse. On the porch is an old man sitting in his rocking chair, and next to him is his old dog. The old dog is moaning, so the gentleman asks the old man why. “It’s because he’s sitting on a nail,” the old man replies. “Why doesn’t he move?” asks the gentleman. “Because it’s not hurting enough for him to move.”
TRACTION: GET A GRIP ON YOUR BUSINESS
The Bottomless Pit
I started out when I was just 15 by signing up for a reseller account at Hostgator and started selling web hosting services. Quite frankly, I had no idea what I was doing but it was sheer will of wanting to accomplish something that motivated me. I had to learn how to do everything, from how to build a website, accept credit cards and get customers to sign-up.
Despite the never-ending pressure of school work, I had a new found addiction with optimizing my business. It led to working long nights and into the weekends learning how to code and market my business while juggling school and what little personal life I had.
Over the years this led to a repeated cycle of burn-out, but I didn’t even know what burn-out was and just continued to push myself each time.
I had garnered a habit of working 60+ hour weeks and a feeling of guilt and shame every time I stepped away from the business.
The business couldn’t run without me and I thought that’s how it had to be. At the beginning, I was basically running entire departments by myself. Once I started to generate money I quickly outsourced the customer support and server maintenance but was still the go-to person for any problems that came up.
Now I tell you all this because this is was the lowest point in my career. It was an unhealthy obsession with my business and an inability to know when to stop working. In part, it’s because I never thought much about whether I was doing the right things or doing them in the right way.
That was until I read the 4-hour workweek.
In vs Out
Apart from entrepreneurs becoming too attached to their business, there is a common feeling of dread, that if they don’t do XY and Z, then the business will implode.
It was only after reading Tim Ferris’s popular book which created an internal epiphany of sorts. I realized that I was spending too much of my time doing all the execution. I had created a mindset for my employees to always come to me for any questions and I felt chained to the business.
This made me question exactly how I was running my business. From reacting to put out fires, to constantly solving one-off issues.
I realized my time could be better spent learning new skills and devising skills I could use to better run my business. A huge part of it was realizing I could simply document much of the work I was already doing and find somebody more capable who could do it.
I also started to look at the issues they constantly brought to my attention. For example, a common issue was upset customers who weren’t applicable for a refund and my billing reps would just instantly deny a refund without considering the context of the situation. Maybe we messed something up, or the client didn’t know what they were buying. We’re all human, so I tried to instill a philosophy in my employees that doing the right thing was more important than keeping that $60 from a client because they canceled their account a day after the 30-day money back guarantee.
Over time I was able to relinquish myself from several responsibilities within the business while orchestrating a process of documenting new problems and better ways of doing things.
Here are the 3 main thinking processes I went through in the course of my mindset shift:
- What problems do my employees keep coming to me for? What are some “if-then” type-policies can I create to handle similar situations in the future?
- What recurring tasks or processes are my employees doing? Work with them to figure out a basic outline that can be improved and updated as systems and processes change.
- Have a weekly check-in session with myself where I review my 3-main priorities for the week. Figure out and document strategies for Marketing, Social Media, SEO or otherwise and find the right people to delegate recurring or unimportant work too.
What’s a SOP and why you need to have them
A standard operating procedure is in essence just a step-by-step guide on how to do something. It’s typically used across the board in large organizations to carry out routine work within the company.
“Achieve efficiency, quality output and uniformity of performance, while reducing miscommunication and failure to comply with industry regulations.”
Most small businesses fail to create SOP’s and the knowledge is typically retained within the workers that the business hires. This can quite often put your sprouting business in dangerous situations.
For example, if you hire an employee who handles a certain aspect of your business during a huge period of growth, it’s likely they will have acquired some level of knowledge about your company through sheer experience. If you haven’t created a mindset of documentation and collaboration then it’s easy to end up with employees who are afraid to share what they know for fear of being replaced.
This can lead to situations like this recent incident where a hosting provider in the Netherlands had all of its customer’s servers wiped clean after a rogue ex-admin decided to take revenge. If this was an enterprise company, I can almost guarantee they would’ve had a very solid off boarding process that wouldn’t have allowed an ex-employee to do that kind of damage.
Regardless, I can’t stress enough the importance of documenting your companies processes on just about everything from hiring, firing and general operations to ensure your company can scale.
The Software SOP Solution
Even if you’re among the few small businesses that end up creating some form of SOPs, there come a handful of problems associated with them.
Often you have to force yourself to create the process even when you don’t know all the parts of it. Then you have to remember to update it with new information as you and your employees learn more about the process.
I’ve spent a lot of time creating internal processes, but I always had trouble getting my employees to refer to them, let alone remember to update them.
This led me on a search to find a better solution that could help simplify the creation, usage, and modification of my company’s SOPs.
Over the years I discovered an emerging number of companies that are trying to solve this problem for business owners. At their core, they try to serve as a platform to extract information about the operations of your company in a way that increases transparency and accountability.
This was a ground-breaking idea to me, and my ADHD brain made me want to try them all!
Here are the ones I’ve tried below. Check a few of them out, they might give you some ideas.
Note: None of these companies asked or endorse me to list them here. The views expressed below are solely that of my own.
Online Process Documentation with a relatively simple interface and among the cheapest in the group starting off at $39 for up to 8 users.
My personal favorite as noted below has a free version for up to 5 users but will need the Pro version at about $12/mo per user to take full advantage of its functionality.
It’s a pretty standard checklist software that works like a form that employees can fill out. Looking at $49/mo for 10 users.
If I weren’t using Pipefy, I’d probably be using Manifest.ly. The owner is a great guy who has implemented a lot of my feedback and is constantly updating it with new features and integrations. Pricing is quite reasonable.
This is an interesting software that acts more like a Wikipedia specifically built for hosting processes. It’s among the most expensive on the list but they have interesting features like the ability to require that your team sign-off on new or updated policies.
I haven’t invested too much time in KissFlow, but it’s largely based on their selection of pre-existing apps (forms) which you can then customize for your business. The ability to design a workflow and create conditional variables makes it probably the closest thing to Pipefy, and slightly cheaper too.
My Fav is Pipefy, and here’s why
Think of a Trello board, also known as a Kan-ban board. Now imagine each column is a different phase of a specific process. Then each phase can be configured like an individual form where you can create questions, insert information about the process, automatically email your staff and clients with custom emails and much more.
It comes with a set of pre-made templates you can use to replace whole systems like your CRM, Helpdesk and HR system. Now it’s not good at being any one of those in particular but I find it useful for defining specific processes within those existing systems.
For example, we don’t use it to replace our Recruiting software, but we use it to define the onboarding process for new employees. We don’t use it for our CRM but we use it for contract negotiations with a client.
Why it’s a Game Changer
Now being able to wrap your head around a system like Pipefy can be a doozy, but here’s why I really like it.
Up till now, procedures and SOP’s have been easy to forget and often get relegated to a company folder that your employees might rarely refer to. In this case, Pipefy becomes a part of the very process itself, therefore requiring that your staff use the software in order to complete the process they’re performing.
The beauty of this is that it means you don’t have to worry about whether everybody got the memo on a change that was made to a procedure. You can just add a new required question, add extra clarification to a help section or change up the process to automate more aspects of it.
By merging the written procedure into the process itself, you can unilaterally increase the overall integrity of your business.
How does it do this?
1. Better Communication
Teams can communicate with each other through pipes that can instantly create card cards in other pipes based on certain conditions. For example, once a card in our Client Onboarding pipe reaches the “Welcome” phase it will automatically create a card in our Accounts Receivables pipe, notifying our accounting team to send out an invoice to the client. This significantly reduces the amount of communication on regular business happenings.
2. Increased Accountability
Every time a card gets processed through the system, all the answers and every aspect of who, what, when, where is logged. You can see who did what and how did they do it. You can create SLA’s so that if a card sits in a phase too long it notifies somebody.In our case, we connected it with Zapier which is a great tool that allows you to trigger actions across different types of software. In our case, if a card sits in our Client Onboarding phase for too long, it’ll trigger an alert to one of our Slack channels.
Social Pressure Keeps The Train Running On Time.
3. Less chance of Errors
Since each process is already documented, there is little chance that an error can be made. New hires won’t need as much training since all the information about each part of the process can be documented.
4. Encourages Continuous Improvement
We encourage our employees to update the pipes as they use it, or think of a better way of doing something. If an employee spots an error in the FAQ, they can update it. If a part of the process changes, they’re responsible for updating the process so it still works the next time they send a card through.
Here’s why you probably won’t succeed and what you can do about it
It’s Hard work that takes deliberate effort and attention.
It’s easy to get excited about the possibility, but it’s easy to become demotivated in the process. You might get too busy and forget about it. You might encounter employees who are resistant to documenting their work or changing their ways.
Now, what if your business doesn’t really have any defined processes? You need to start learning the value of documenting them then.
Check out the book “Checklist Manifesto” which talks about how the consistency of a simple checklist saved people’s lives. Another interesting read is called “E-myth” where you learn about the journey of a stressed out entrepreneur as he learns to document and delegate aspects of his business to others.
Then the bigger challenge that faces most companies, is trying to get your employees to actively improve their work. I’m not talking about an anonymous suggestions box but creating an environment where your employees actually spend part of their work-hours trying to optimize or improve the company with some long-term objective in mind.
What I’m talking about is the Kaizen philosophy of running an organization. In his groundbreak book, Gemba Kaizen observed that the succesful management of an organization came down to the continuous maintenance and improvement of existing standards.
The following is a passage from the book Creating a Kaizen Culture:
Take the analogy of owning a high-performance personal vehicle. Let’s assume that such a vehicle is more fun to drive, accelerate, map the journey, steer the course, tune up, or even refuel often than an average vehicle. But most of us who are not trained mechanics would not choose to maintain an expensive high-performance vehicle ourselves and certainly not to tune it up on a daily basis. Without maintenance, before long there would be no vehicle to drive. At best, we would spend our time and resources on neither maintenance nor improvement but rather on repair. Because we are busy in repair mode, we have little time for upkeep and no time for improvement. In the modern organization, we are all passengers in the same vehicle, and we all must pay attention to maintenance of the vehicle and improvement of the journey. Daily Kaizen turns this activity of maintenance and improvement into a virtuous cycle that develops people and processes while delivering results.
Where does all that leave us?
Now I’m not saying you need Pipefy, or that a checklist type of software is even right for your business. What I am saying though is that in order to scale your business successfully, you need processes in place and employees who maintain them.
Here’s an interesting method of storing processes as simple Google Docs inside of Google Drive by fellow blogger, Taylor Pearson.
Either way, as I see it there are 3 major hurdles to implementing new processes:
If your executive team doesn’t actively participate in creating and updating processes in their daily work-flow, then how can you expect the rest of the company to? It takes mindful effort to work with the people and teams within your company to extract all the information needed and change the workflows and mindset of your employees.
Once the initial processes or procedures have been laid out, it can be difficult to get your team to refer to them. They might be stuck to their old way of doing things or forget about it all together. If new hires are never made aware of the processes and the existing employees resent them, then it’s easy to let them fade into the background.
- Employees often find a certain groove in their first few months. They get stuck to a certain way of doing things and are motivated to do or not do things based on what they see around them. If employees aren’t taught to update processes they will think it’s not a part of their job to contribute knowledge to the organization.
If you can find a way around these hurdles, then — my friend, you have a fighting chance at creating a successful business.
Freelancer vs Entrepreneur
In my mind, freelancers are those who garner a skill in a certain area and sell their time to other people. An entrepreneur is when that freelancer decides to start documenting their strategy and hires their first employee or partner.
If your business requires you to commit a significant amount of time to it every day just to keep it operational, then you’re operating more like a freelancer. Now maybe you’ve just started and you can’t afford to expand yet, in which case you need to start with the Kaizen mindset before you scale. It will be much easier to develop your culture and create a sustainable business with employees who share your mindset from the start.
Either way, it takes consistent and deliberate effort to ensure you’re working on your business and not just in it.
With any luck and a little bit shit-load of determination, you’ll find your business to be part of the 50% that succeed.
“It is not necessary to change. Survival is not mandatory.”
W. EDWARDS DEMING