Monday, April 25, 2011
People frequently ask me for my No. 1 small-business tip, but who can say if they’ll be faced with the situations I’ve faced? The lesson that was the hardest for me to learn might be something other people never encounter. But since y’all want to know, I’m going to answer with a Pandora’s box of a post, except that I’m releasing a host of clichés and adages into the world instead of evils.
My first job after college was at Dow Jones News Service, a business-news wire service, where I was a copy editor. The experienced editors used to warn the new ones that, “If it sounds too good to be true, it is” and “There’s no such thing as a free lunch.” I’ve been thinking of those sayings — and a few of their equally hackneyed brethren — because it’s become clear to me that I have often acted as if it’s possible get something great for very little. Money for nothing and chicks for free, as Dire Straits sang.
If you have or wish to have a high-quality small business, it’s crucial to recognize that you need to invest as much as you can to get where you want to go. This knowledge has been so hard-won that I shouldn’t pass it along to you as bluntly and clearly as I’m going to. Why should I give away expertise that cost me an enormous amount of time, money, sweat and tears (no blood was involved, thankfully) to obtain? I’m a fucking saint, that’s why!
Conventional wisdom tells us that “You get what you pay for.” It’s easy to dismiss that as a lie after a few bad experiences where you pay a lot and wind up dissatisfied anyway. So a better way of looking at the concept is to recognize that you will NEVER get MORE than you pay for. If I were going to get a tattoo, that’s what I’d get. Maybe across my forehead, backwards, so I could read it in the mirror every damn morning. Here it is again, so you can tattoo it on your brain:
YOU WILL NEVER GET MORE THAN YOU PAY FOR.
I’m comparing apples to apples when I say that. The apples to oranges comparison is looking at the price of U.S. labor versus overseas labor. Yeah, the cost of manufacturing a single piece of jewelry in Asia is a tenth of the cost of manufacturing the same thing in the U.S. (The hidden cost of overseas production is the need to produce greater quantity in order to secure the discount). Similarly, you can find great computer programmers in India who will work for a tenth of the cost of U.S. programmers. But sticking to apples — which I don’t even like except for Granny Smiths, so this whole image is starting to annoy me — we must compare U.S. programmers to other U.S. programmers and Indian programmers to other Indian programmers. And in that scenario, I can assure you that the least expensive programmer in the U.S. isn’t going to be the best in the U.S. and the least expensive programmer in India isn’t going to be the best one in India.
I’ve tried to save money for my very small company by doing things myself, using volunteers, and hiring affordable people instead of great ones. All of the above should be emergency measures, not long-term strategies. I’ve made these mistakes with graphic design, computer programming, photography, public relations, sales, wax-model making, jewelry manufacturing, stone setting … and those are just the examples that immediately spring to mind. I’ve tried that thing where you hire someone less experienced for less money because that person will be “hungry” and work harder. Not! The hungriest people will get themselves an internship or an apprenticeship or an entry-level job at a quality organization, even in these hard times. And if they can’t manage that, they’ll be too smart to sell their services for nothing. They’re the ones who know that you don’t move up in the world by selling yourself short. I’ve thrown away years and thousands of dollars on all kinds of bad work that got me nowhere. When I’ve finally dug deeper to hire the best, I’ve realized exactly how much I wasted. Money that paid for a three-year-long effort might have only covered six months with a better vendor, but I would have done better in those six months than I did in those three years.
“Do it yourself” is the worst money-saving tip as your business grows. I’m not a professional programmer/photographer/publicist/goldsmith/stone setter, so why should I waste hours/weeks/months/years doing a subpar version of those jobs, when I could be doing the things that I’m best at? Sure, you have to do everything you can in the very beginning but at some point you need to scale up. A growing business should demand more people, not fewer. Before Bill Gates retired from Microsoft, my guess is that he wasn’t running around the company trying to do every job from the lowest to the highest. It’s also easy for DIY-ers to undervalue their own labor, as I’ve pointed out before. Check out this 2010 post on Bead Mavens for more on how you might be charging less than you’re worth (and thanks to Deanna for alerting me to that post).
What if you can’t afford good help? The question is, can you afford to NOT have it? I’ve debated that question since I launched my business. If I had a dime for every time I said, “I can’t afford to do XYZ, but I can’t afford NOT to do it,” I’d have a hell of a lot of dimes. I only paid attention to the first “can’t afford” for a long time. My policy was don’t spend the money and hope for the best. (Note: Hope was the one thing left in Pandora’s box.) But now it seems to me that’s the ultimate in “penny-wise, pound-foolish.” It’s like saying you can’t afford to go to the doctor even though you’re really sick, and, as a result, winding up hospitalized, permanently incapacitated or dead. Have you known people who have played that game with their health? I have, and I’ve thought, “How foolish.” The consequences for the penny-pinching were much more costly than that original appointment would have been. Same is true in business. I definitely rule out stealing, but if you need to beg or borrow to secure the funds to ensure a better result, start begging or borrowing sooner rather than later. Feel free to attribute your future success to this post — which is an exception to the rule that you’ll never get something for nothing.