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Why The Size Of Your Company Doesn’t Matter

More people, more problems. Growth isn’t always measured in terms of employees, but in success with the team you have.

Why The Size Of Your Company Doesn’t Matter
[Image: Flickr user Edwin Torres]

The question “How big is your company?” usually pops up in the conversation within five minutes after a new acquaintance learns I’m an entrepreneur. They’re always interested in number of employees, rather than the number of clients or gross revenue. Maybe it’s more polite than asking about revenue, but I smile a little when I respond, “three, and we’re doing the work of 30.”

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Every entrepreneur must make the choice to grow their business or stay small. It is typically implicit that to grow revenue you must hire more. That choice is a false dichotomy, though; hiring is not the only way to grow revenue, and it is one of the less desirable ways.

Even in businesses that scale linearly with people, like massage therapy, you can grow revenue without hiring more. Instead of viewing hiring as a necessity for growth, treat it as a scent indicating that processes can be improved.

Smaller is better

Remaining small in terms of the number of people is an advantage for businesses with flexibility and leads to a bit more happiness. A business’s happiness can motivate, but customers’ happiness decides a business’s fate in the long term.

Employee happiness and return on assets is meaningless if customers are using a substandard product with below-average service. Productivity, service, and quality do not correlate to number of workers, and elegantly automating one person’s task can improve all of that. If you’ve used Acuity Scheduling, you know our service is phenomenal, and the product is simple yet powerful. It’s evolving better every day and growing rapidly, all with a team of two developing.

I was inspired by Markus Frind, the CEO of Plenty of Fish (PoF). He’s the brilliant creator of a dating site with hundreds of thousands of users, millions in revenue, and for many years was operated solely by Frind. He understood that value comes from your users. They are who decide your fate.

Frind suggests that doing work for work’s sake won’t lead to success. If anything, it leads to over-engineering and wasted time. Ingenuity trumps scaling employees. For PoF a simple solution might have been for employees to police the website, but instead Frind decided to empower users to report what’s inappropriate. That eliminated a potential human scaling problem. Or as Jim Buckmeister, Craiglist of CEO, told The New York Times “Anything that represents customer hand-holding represents a failure of site design.”

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Plenty of Fish, Craigslist, and Acuity Scheduling might be extreme examples of designing a product to scale without hiring, but the raw idea is simple. Take time to reflect, question every task, and blame your service if customers have difficulty. For Buckmeister, customer hand-holding is the scent of product failure, but for most businesses the prime culprit is repetitive tasks.

Time for innovation

Adding employees to solve problems where there are alternatives isn’t doing us, or them, any favors. We’re wasting time on rote tasks, when we could be innovating. A University of Chicago study noticed that small businesses have trouble innovating when a small number of employees is straddled with growing demands. Time for innovation is gobbled by immediate needs.

One way to free up time for innovation is to hire additional workers, but that is a waste of a person’s life and your capital if you never take advantage and innovate out of the mundane. A healthy amount of skepticism about your daily routines is all that is needed.

Changing processes can help you reap huge rewards. So before you hire, look at what you’re hiring for.

I was about to hire another person for customer support, then our customer support lead left on vacation. I replaced her for a few days and realized that many of the questions were already answered online. Changing the flow to have people see frequently asked questions instead of being able to email us directly from any page reduced our support load by 20% and curbed its growth, and hiring was no longer necessary.

For Plenty of Fish, enlisting their customers to police the site helps keep their product free for all. For a massage therapist, try having customers book your appointments online instead of over the phone. The hours of phone-tag saved can be turned into productive time.

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For hiring other positions the question is whether people are truly needed in-house or can be replaced with new services. If bookkeeping is outside your jurisdiction, try FreshBooks. Do you really need someone to answer the phones? Maybe Grasshopper can route calls to anyone available. If your receptionist spends time booking appointments and sending reminders to clients, automate that function with an online service to liberate him for other tasks.

Hiring is a hint that your business can be optimized more. Rid yourself of the redundant tasks and free your employees to innovate more. Companies are not endowed with success after reaching a certain size; it is what they achieve that matters.

Gavin Zuchlinski is founder of Acuity Scheduling, a service to help small businesses offer appointments online.