What happened to THUT? At its height, we employed 6. Today, with more and larger customers, there is only 1 employee. In order to grow, older companies (4+ years) need to get lean first: downsize until the marginal costs of outsourcing exceed the cost of doing it internally.
- Staying lean is key to operational efficiency. For a company with healthy revenues, the fastest way to increased profits is to cut costs. You’ll need to eliminate product lines/customers that are responsible for a disproportionately small part of your revenue.
- Getting lean first sets your company up for better scale. Efficiency compounds so you will grow exponentially faster if you get lean first and improve your margins.
For us getting lean, meant realizing no one has ever gotten rich doing everything for everyone: In 2016 we cut down our contacts because it made no sense to corrupt our Dunbar’s # when half the people we dealt with only generated 10% of our revenue. 2017 we have improved where 14.67% of our revenue comes from 37% of our customers. But it clearly makes more sense to give up $115,000 of revenue (14.67%) if we can save 37% of our time, hence we have eliminated even more.
Now in 2018, we slashed product lines to focus on being the best platform designed to meet the needs of recurring revenue. The best being defined as precision, ease of use and comprehensiveness. Now, we are a fully integrated blockchain solution that brings together payroll, bookkeeping, accounting, corporate taxes, personal taxes, banking and wealth management.
Lessons in staying lean:
- 3 team members have 3 communication paths but adding only 1 additional teammate doubles the communication path to 6.
- Business plans, financial projections, budgets are all a waste of time – simply reframe your focuses as a function of time and get better every day. Prioritize maximum effort and make sure taxes, payroll and housing are planned for – no other cost-cutting matters compared to those big 3.
- 80% of your time should be in delivering your product and only 20% on support and marketing.