How to Deal with Capacity Constraint as an Entrepreneur
Regardless of the reason for hanging your own shingle, you’ve found some “success” along the way. Success can mean a lot of things, but in this context, let’s focus on financial success. You have steady, recurring revenue from a growing client base as a service-based entrepreneur. You are coming to the realization that there aren’t enough hours in the day to accomplish your business goals. You cannot personally serve any more clients without some help.
Michael Gerber’s book “The E-Myth Revisited” explores this dichotomy well. You have the technical expertise to serve clients, but you have done such a great job growing the business that you feel capacity constrained. You find personal fulfillment from offering direct service to customers but are forced to make a critical decision: accept no new clients or hire a team to support you.
Right now, you are wearing every “hat” in your business - strategic visionary, technical specialist, CFO, administrative assistant, etc. That worked for a while when you had a small client base. Suddenly, it doesn’t work anymore. You need to decide whether you will stay a solopreneur or move to a scalable business model.
Each person and business is different, so I can’t decide that for you. I read and listen to A LOT of podcasts. In fact, my biggest strength according to the StrengthsFinder assessment is “Learner” which means I love to absorb new information and perspectives from others. Every business coach with whom I’ve connected shares a similar message: you are likely not going to grow a seven-figure business by yourself.
Let’s assume you have given it serious consideration and decided to grow a scalable business. Refer below to 4 steps you should take next.
1. Distinguish High Value from Low-Value Tasks
What services are you uniquely qualified to provide?
The high value tasks for me include fostering deeper relationships with clients, providing strategic consulting services, and business development activities. The lower-value services such as engagement letters, tax return preparation, and client bank reconciliations can be done by another team member. In other words, I need to maximize the amount of time spent directly with clients and minimize time on “behind the scenes” work.
Look at your value as a small business owner and honestly evaluate whether you could hand off certain tasks to someone else. You may find that the other team member(s) handle the tasks more efficiently and effectively than you!
2. Hire Others Who Excel in Your Areas of Weakness
Where do you really shine? Are you a creative brain with an eye for visual design? Then you probably shouldn’t be wasting time with bookkeeping, a time-intensive process for detail-oriented people.
The biggest mistake I’ve witnessed is when a solo entrepreneur hires a carbon copy of himself or herself. Naturally, we are drawn to people like us. But in the business context, this should be avoided. We need to collaborate with others who see things differently or have a skill set we don’t already possess.
3. Decide: Internal Team Member or External Contractor?
This global, sharing economy is making it easier than ever for companies to grow without having internal staff. Graphic designers can be hired on a project basis to craft logos and promotional materials or perfect your company’s website for a fraction of the cost of an in-house art director. There are several items to consider when hiring independent contractors or internal team members. Tax consequences and professional liability considerations are crucial but not the only factors. Rather, consider the short AND long-term needs of your business.
Can a virtual assistant hundreds of miles away from you handle most administrative needs, or do you need someone local who will scan documents when you physically hand them over? Are you working from a home office with limited space for another person to work? What is your budget for the scope of work this person will provide? Most small business owners use a hybrid method: external contractors for short, one-time projects and internal hiring for longer-term initiatives.
4. Systematize to Lessen the Learning Curve
Systematization is essential if you want to scale and grow your business. Repeatable processes will make it much easier for new employees or contractors to familiarize themselves with your company.
I find it best to let employees see me do the job first but also keep a recording of the training for later reference. You’ll save time on subsequent hires by only conducting the training once. Future employees can refer back to the video for years to come.
Another way to create efficiencies in your business is to focus on a niche or specific type of client. You’ll find that clients in a particular industry or role are easier to serve in aggregate because they have more similarities than differences. You can create processes that address their unique pain points.
Contact us today for a free, initial consultation to align your business and family financial goals.