Making Profit vs Growing the Company
I wrote this email to Tim and Zack. I realized the amount of time Zack especially, and me to a lesser extent have been working on the weekends has generated around $50k. Since the company isn’t profitable I am treating this money as a direct subsidy to one of our non-essential staff members. I’m a bit frustrated, but writing this out helped me understand what I need to do about it.
The bottom line is that we keep growing revenue, but adding on expenses that are less than optimal. I proved earlier this week that if I spend an hour brainstorming, I can come up with 8 blog posts. I found a writer who can do a good job with my brainstorm input.
Translation, 1 hour per week x $11,000 per year will get me more output than my own marketing employee. We spend about 5x that much on her after all expenses are incurred, and I bet we spend more than an hour a week managing her.
Thinking like this is needed to make sure we don’t waste time and money. Having said that we do have a goal of having a fun, bustling company. The solution is not to get rid of any stuff, but to think about how can we make sure we are getting real solid output out of them that we couldn’t have gotten otherwise.
Hey guys,
Let’s pencil in a weekend discussion to go over this in the next week. I scheduled for Sunday 7/27, but feel free to reschedule.
One of our frustrations with our overseas staff and local staff is that we can’t just say go and get something done. We need to handhold.
I think we need to come to the conclusion that we can’t do that with our current staff either. Each time we do, we end up wasting a lot of time and money compared to when we plan things out.
Recent examples:
Marc. Hear nothing, see nothing, work gets done, but a big timebomb was waiting to go off. The solution only came once Zack took the lead on this.
Miriam on Scripted. Several low quality articles produced, lot’s of editing time, lot’s of time wasted bombarding Tim with questions, and her having writer’s block
Managing David. When we hired David, we gave Timmy 2% to deal with the mess. Tim Spell ended up dealing with most of the mess. Sure Timmy helped out with closing deals on his vacation, but Tim Spell really helped rectify this.
Mailgunner Data.com Blasts. We asked the sales people to come up with a plan. The plan was to waste our money. The early discussions we had about this included semi-targetting, but there was never a plan developed that was written. Timmy wrote a few paragraphs that was the closest thing we had to a plan.
I guess it is human nature. When you give someone a vast amount of resources ,there will be waste. We’ve grown this company so far by working our assess off and spending money very carefully.
Miriam Paintings – Another example of loose negotiations going bad. Miriam through out an initial # of “thousands of dollars for a 4′ x 3′ painting.’ I did my own homework this morning to understand where she got that # from, of course she threw out something on the high end.
This is a semi-organized email, but my high level point is, we work our assess off. The last thing we need is to be taken advantage of. It may not be people taking advantage on purpose, but it can be subtle things like Kyle working on the wrong priorities, or Miriam letting writers block be an excuse for low output.
My vote is to move away from a hands-off culture and move towards a hands-on one. By being hands-on we are constantly innovating, cutting costs, and getting to be more efficient.
I’m not saying we micro-manage, but a hands-off approach is too costly.
The best solution for sure it to only have team members that can lead themselves and push the envelope, but at some point we need to recognize how rare that is.
To put it another way. The work Zack and I did over the last 4 weekends will generate around $11,000 worth of money. For $11,000 + 1 hour a week of our time we have 200 blog posts and 5 guides. We are spending more than $11k + 1 hour a week on Miriam.
Right now we are spending money and working more to come up with that money. We are seeing results, but we can see much better results.
Going forward, my vote is to slow down a bit in terms of hiring. Setting a few major goals and making sure we get them.
Miriam – We spend $4,500 per month on Miriam. What do we want as output.
Kyle – We spend $4,500 per month on Kyle. What is the output we expect
New Salesperson and Salesperson Compensation – It takes 6 months to break even on a new salesperson. While Timmy may do a better job round 2, it will still be Tim Spell who picks up the pieces. I think before we ask the salespeople to come up with their own comp plan, we internally come up with one and hold our cards close so that we are not skewed by the first thing we see.
Kunal
