Entrepreneurship Leadership Uncategorized

The Right-Sized Team

American entrepreneurship has a certain mythos to it. It involves a lot of historical figures like Andrew Carnegie and John Rockefeller pulling themselves up by their bootstraps, fighting against insurmountable odds, and sacrificing all comforts in pursuit of success. That success comes in the form of massive wealth, the product of a huge company employing thousands of people, the hero’s name emblazoned on the front of a massive corporate headquarters for all to marvel at.

Is this the only model for success? Is the sheer size of a company, the size of its revenue stream, or the number of its employees the only definition of whether an entrepreneur has “made it?”

When a small business is growing, it has to grow carefully. It has to grow at an appropriate rate, and to an appropriate size. What size is appropriate for your business is a question worth putting thought into. Everyone wants to reach their fullest potential, but relentlessly pursuing growth for its own sake can be counterproductive.

Deciding on the size of your team, then, means carefully balancing the potential benefits of expansion against the daunting challenges that come with it.

Is Bigger Better?

Deciding on the right amount of people for your business team will depend on what kind of business you’re running, and what its ultimate mission is. Many like to assume that bigger is better, but 21st-century business models make it clear that sometimes, leaner is meaner. Instagram, for example, sold to Facebook for a staggering amount (hint: it starts with a “b” and rhymes with million) of money. That company was comprised of 13 people.

Instagram is an extreme case, but small businesses regularly make big-time profits in today’s web-driven market. Jason Fried and David Heinemeier Hansson’s Basecamp (formerly 37 Signals) is a twenty-person team making millions through their various business products. Noah Kagan’s AppSumo is a nine-person teaming pulling seven figures as well. Clearly, size isn’t everything when it comes to putting together the most effective team.

When starting out as an independent business person, either by yourself or with a partner, it’s important to explore this issue from the outset. Once you add members to your team, it can be very difficult and very costly to change your mind. Especially once people depend on you and your business for a living, downsizing is painful. At the same time, small teams are capable of working wonders- provided they’re part of well-designed system.

This doesn’t only hold true for “soft” online products like education or software; brick-and-mortar businesses with physical products can follow the Mighty Mouse Model too. Especially in the right markets, small businesses like restaurants can rake in incredible profits with no more people than it takes to play a pickup game of halfcourt basketball. Morandi’s in Manhattan has a single location in the West Village and a small staff, but makes more profit than restaurants several times its size. The key is that their little team is part of an effective and well-managed system, a formula that they’ve perfected over time.

Deciding How Many to Hire

Once you’re convinced that it’s time to add members to the team, proceed with what I like to call “optimistic caution,” a more positive spin on cautious optimism. Understand that expansion comes with inherent extra responsibilities, expenses, and demands on your time. Realize that eternal growth for growth’s sake isn’t a real goal, unless you’re measuring yourself only in comparison to others- a very counterproductive approach. Remember that it’s possible to grow in revenue without growing in overall size.

The key is to start by setting reasonable goals. How big do you really want your business to be? How much of your time are you willing to spend doing managerial and administrative tasks? Is your business a way to do something you love for a living, like web design or the culinary arts, or are you happy being in the business of business, further removed from the actual production? This will help you estimate how many people you’ll want to end up with ultimately.

To avoid raising overhead unnecessarily, it’s important to keep your team streamlined. Never hire someone just to increase the number of employees under your umbrella. Instead, look for multi-talented people with a diverse range of skills, especially in the early stages of the company’s growth. If you can pay one person for two or three skill sets, that’s far better than paying two or three people.

Make your goal to have as close to one person per department as possible. Sales, marketing, tech and customer service may need only one person each. Take advantage of the shrinking world of telecommunications we live in, and don’t be afraid to hire freelancers, contractors and part-timers who can contribute smaller amounts of work from all over the map. Keep the team lean, and pick up the slack yourself where extra support is needed temporarily, rather than hiring someone during a busy time only to leave them idling later.

The Advantage of Small Teams

The beauty of small teams is that the fewer people work together, the more powerful a dynamic they can create. Members of small teams tend to work more closely with each other, and develop interpersonal bonds and dynamics that have a multiplying effect on the quality of their work. Like a family or a sports team, they come to know each other’s strengths, weaknesses, and dispositions, adjusting and compensating to achieve the best results as a group.

For the head of the business, it’s much less stressful, and even enjoyable. People you know personally are easier to manage and to motivate, because you have the time to develop strong relationships- relationships that can turn out to be a company’s greatest asset. With creativity, flexibility, and the loyalty engendered by a small amount of people feeling as though they rely on each other, a pint-sized team can outperform dozens of cubicles’ worth of large-firm employees.

The Bigger Question

In deciding how large you want your team and your business to be, you’ll have to confront your own personal philosophy of success. Is size what you really want from your business, or is the desire to be at the helm of a big operation merely your ego talking? Do you want to pursue a passion, or confine yourself to the endless administrative duties necessary to run a big operation? Ask yourself what it is you want to do as well as what you want to have.

The best advice I’ve gotten and given in my years as an independent business person is this: define success for yourself, and then question that definition. Be honest with yourself about what would truly make you happy, and what would only be a status symbol. “Success” is a social construct; it is whatever we decide it is. Maybe success doesn’t mean huge revenues or armies of employees. Maybe it means the freedom and flexibility to be your own boss. Maybe it means having more time off to fish. Maybe it means contributing something of value to the world.

Whatever it is, it’s up to you, and no one else. Bear that in mind when deciding on the size of your team. At the end of the day, there are more options than going big or going home.