Value Added Ep.17 – The Fragility of Business

What happens to a business when its founder gets hit by a bus?*

Apparently, big transportation has it in for entrepreneurs, because this question is posed with shocking regularity. 

While the body count of bus-struck founders is currently unavailable to us, this oft-repeated cliche seems to be a metaphor for reminding entrepreneurs of the importance of creating systems and hiring to ensure that their business isn’t overly reliant on its owner.

In this week’s podcast, Jarod and Jonathan discuss the steps you can take to insulate your business from overdependence on you — the owner.

Key Takeaways

• A staggering number of new businesses fail: 20% within the first two years, 45% during the first five, and 65% by the 10-year mark. It is unlikely that bus-related incidents caused many of these business failures.
• Diversification is key to business survival. If you’re overly dependent on one person or one piece of software, you’re ultimately in a very precarious position.

“I see so many micro SaaS companies popping up right now that are dependent on one single API. And if that API shuts down that SaaS is dead in the water.

I’m always looking for SAS companies to invest in and every single one is entirely dependent on a single API from another startup. 

So if that startup goes bust or even worse, the developer or the creator just loses interest, that business is shot. 

Say you’ve just spent a hundred grand, a million, on a business that is completely dependent on one other service. That scares the crap out of me more than getting hit by a bus!”

Jonathan Kiekbusch

• Structuring your cash flow to accommodate for the inevitable ebbs and flows of business is one of the most significant steps you can take to mitigate risk.
• Don’t become overly reliant on any one employee, client, or tool.
• Always back up everything — from your site, to your CRM, to your accounts. Minimize any single points of failure that will devastate your company.
• Identify the most imminent risks to the health of your company and develop a Business Continuity Plan that addresses them.
• Resist the temptation to cut costs by opting for less-established, cheaper options for software tools that you rely on to run your business. The money you save could be quickly eclipsed by the damage done if that company goes bust and leaves you without your data.
• Automate processes like order management as much as possible, so you’re not dependent on employees who are only available for a fixed number of hours each day.
• Implementing robust project management processes mitigates risk significantly.

“If you’re running your business properly, then at a certain point, you become the least important person in the business.

That means that you getting hit by a bus matters less than anybody else in the business, because you’ve delegated responsibility for the things that you need to worry about being incapacitated for.” 

Jarod Spiewak

Subscribe to the Value Added Podcast — featuring SEOButler founder Jonathan Kiekbusch and Blue Dog Media head honcho Jarod Spiewak — to be notified about future Live Streams and Podcasts.

*No entrepreneurs were hit by a bus during the course of this podcast.

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