Learn to Love Spaghetti, and Other Entrepreneurial Success Secrets
(This post originally appeared on Inc.)
So Facebook just celebrated its 10th anniversary. Big whoops. My company has also been around for 10 years. In fact, this year will be our 20th year in existence. Mark Zuckerberg may be smarter and richer and (arguably, I might say) better looking than me. But I’m a survivor.
Take a look around. How many companies do you know have been around for more than two decades? Not many. How did my company stick around for so long, even when my hair said sayonara years ago? Here’s why, in my view.
1. We have always kept our overhead very low. My company has a few key employees and many contractors. Our costs are mostly variable for this reason. When things get slow, our expenses decrease and my family eats spaghetti. When times are good, we can afford more workers and my family eats spaghetti. We like spaghetti, OK?
Managing contractors has its challenges, but one advantage is that you’ve got control over their time. Back in the mid 2000s, we shut down our offices and have been operating virtually ever since. We have a hosted server and use cloud-based collaboration and phone systems. I’ve watched clients move into expensive offices or shell out cash for unneeded perks and luxuries. Some of these clients are still around. Many are not.
2. We know our costs inside and out. I know exactly how many billable hours I need each week to at least cover my overhead. I know exactly what kind of profit per hour I need to make a job worthwhile. Granted, I have no idea how much my wife spends on shoes. I think it’s probably best that I don’t ask.
At work, however, I look very closely at my costs and my billings each week. Sometimes, I don’t hit my numbers. Sometimes, I significantly exceed them. But at least I know them.
I’m manic about hitting those numbers. The business owners who really know their costs are the ones who are able to navigate their companies through good times and bad.
I’m not a big risk taker. I am not a big gambler. I am boring. I am the Wimp of Wall Street. The downside is that I have never and will never make big, big money, drink Dom Pérignon, snort lots of cocaine, or sleep with Margot Robbie. However, I don’t need much to be happy; I can do just fine with a couple of beers. And it’s not as if my wife is sleeping with Leonardo DiCaprio, so let’s just say we all appreciate what we’ve got.
I do make some investments, but they’re always conservative. I would never bet the shop on anything, no matter how much of a sure thing it appeared to be. I like to look at my money, not spend it.
The big risk takers make the big money, and I salute them. But a high percentage of them wind up with nothing. And you need something if you’re going to survive.
3. I’m OK with change. When my company first started, in 1994, we were selling my dad’s bookkeeping software, the world’s worst bookkeeping software. It took us five years to figure out just how lousy it was, but at least we were smart enough to finally dump it for something better. We took on new products. And we dumped some of those, too. We always offer new services to our clients. And even though some services are less popular than others (What, you don’t want a back massage from Louie while we train you how to enter invoices?), we are at least smart enough to recognize that and make some changes. My company will always sell business technologies, but 10 years from now, we might be selling a completely different line of products or offering different services. We’re pretty comfortable with change, and that has helped us survive.
4. I’m not greedy. Meyer Lansky, the famous mobster, died of old age in an industry where premature deaths were the norm. That’s perhaps because he shared his wealth (and most of his enemies wound up killing one another instead). Lansky was known to live modestly and comfortably.
I tend to overpay my people. I overpay because they are so damn good. I don’t usually argue with clients when they want to adjust their billings. I’m happy to accept a lower price if I can still profit and get the work.
I don’t haggle my vendors for every penny. Maybe I should. I see guys doing that all the time, and I get it. It’s just business, and part of the game is grabbing every penny you can. But my attitude has seemed to work for me over the years. People have gone the extra mile for me when I needed it. Others have given me a break when I asked.
Being greedy is fine when you’re strong. But businesses go through periods of strength and weakness over their lifespan, and there are times when you’ll need the financial kindness of others. Sometimes, that could be the difference between survival or not.
Will we be around for another 10 years? 20? Barring any personal catastrophe, you bet your you-know-what. My business could never be Facebook, but it could be bigger and more profitable than it is now. I could be doing things differently. We all could. But it has provided an income for me over the past two decades. It has survived recessions and downturns. If I keep doing what I’ve been doing, I think we can survive more.