Do You Suffer from Business Suffocation Syndrome?

  • June 7, 2011 by Guest Writer
  • 10 Comments

Guest post by Noah Kagan of AppSumo.

Last night I shared a bottle of wine with some very successful entrepreneurs. How successful? Some days they are generating $100,000 a DAY in revenue. That’s $36,500,000 a year.

Insanity, right?

The fact that surprised me most wasn’t how much they were making, but that THEY were still doing their own data entry and dealing with their smaller clients.

Think of it another way: if you look at their hourly revenue, $100,000 / 8 hours a day of work / 2 guys = $6,250 an hour.

Do you see where I am about go with this? :)

They should pay $40 / hour to an account manager to deal with data entry and handling smaller clients. They should ONLY be doing work that is the worth their $6,250 / hourly they produce, doing anything less than that is inefficient.

(After spitting out my wine) I started berating them with hate words about how dumb they are and why aren’t they focusing on higher value things for their business.

Their response: “we want to make sure it gets done right.”

Aww, now it makes sense. They’re control freaks.

This is something I had a problem with myself. As entrepreneurs we often want to do it ourselves AND we don’t focus on the highest value things we can be doing for our businesses.

I used to do that same kind of data entry, write up the emails for AppSumo, do the support emails (which I like most of the time) and other things.

It all changed when my buddy Joe opened me up to outsourcing.

“Come on Joe. Those outsourced people are crappy and it’s so weird,” I said.

He finally convinced me to try, so I paid a guy $4 an hour start aggregating certain data from me.

– LIGHT BULB —

It wasn’t about outsourcing to India, it WAS about maximizing the best use of my time.

What do you think is better use of my hour: writing this article that hopefully attracts 1,000 smart and attractive Think Traffic readers to check out AppSumo OR data entry to put a new deal in our system?

Go ahead, take a guess. Writing this article obviously generates way more value which is a way better ROI / value / monetizable use of my time than doing data entry.

How you can save yourself today:

Start small in hiring other people to do your tasks. It’s a lot to transition your favorite task of data entry to someone else right away. Start someone off with one task a week that you routinely do and build from there. (message me on twitter and I can recommend some people for you)

Think investment. Don’t think of it as a cost. I LOVE hiring for my company. When we bring new people on, it helps grow the business and it makes ROI sense. Here’s the secret to adding employees as investments: if someone has a salary of $X, ONLY hire them if they can help the business generate at least $X+1.

Guard your time. Next time you think about doing something, think if you are really adding value (i.e. only your super special brain can do it), or if someone who’s value of time is lower would free you up for better things. An even easier way to do this is to assume an hour of your time is worth $500. That gives you a bar to help evaluate the tasks and things you choose to spend your time on.

Don’t get me wrong, if you love data entry and you get enjoyment out of it, don’t let this post stop you. I just want you to leverage your time for the maximum impact on your business.

Ultimately, while you are starting or growing your business you should be constantly asking yourself if what you’re doing is the best use of your time.

That’s the key to not suffering from business suffocation syndrome.

What have you done recently to stop suffocating your business? Let’s chat it up in the comments.

(Hey everybody, this is Corbett): If you haven’t heard of AppSumo yet, you’re missing out on some incredible deals on applications and services that can really help your online business.

Go check it out and let’s see if Noah’s theory about 1,000 smart and attractive Think Traffic readers holds up: visit AppSumo.com for daily deals for web entrepreneurs. This isn’t an affiliate link, I just have gotten some great deals at AppSumo and have learned a lot from Noah as an entrepreneur.

Noah Kagan is the Chief Sumo at AppSumo (daily deals for web entrepreneurs). He was employee #4 at Mint.com and #30 at Facebook.


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Dean Mehrkens June 7, 2011 at 5:11 am

I’d love to know if that group of entrepreneurs thought that their businesses would have been as successful if they had outsourced. Noah makes a valid point about outsourcing the smaller, less important tasks to someone else, freeing up the business owner to pursue other things. But I still wonder if these businesses would be as successful as they are today had it not been the head honcho answering emails, taking phone calls, entering data, etc.

Graham Lutz June 7, 2011 at 5:38 am

Early on, it’s hard to Know what will actually bring in revenue and what won’t. There is hesitancy to spend money on a VA or otter products when you’re starting out.

How would you address this?

Corbett June 7, 2011 at 4:13 pm

Hey Graham, I think Noah’s broader point is to essentially do everything you can to free yourself up for the highest-value activities you can be doing. Generally that means servicing clients, creating content and setting the vision for your company. If you’re spending time doing simple content formatting that you could pay someone else to do, that’s keeping you from delivering as much value as you possibly can.

Dave Doolin June 7, 2011 at 7:34 am

Noah! Fancy meeting you here…

I’m going through the same exercise with a client right now. Fortunately, she’s more than willing to turn over all the tedium to her small but growing staff. So we’re parsing out what she needs to do, what she likes doing, and “procedurizing” all the rest of it.

I’m going to start telling people, like, right now, if you don’t write down what you’re doing and how you’re doing it, it’s gonna be a lot harder to unload it. Especially for control freaks. Get whatever wackadoodle system you’re using printed out into a 3 ring binder, outsource it. Or in-house it. For the kind of money Noah’s friends are making, they could hire two full time staffers on a day’s revenue.

Sibyl June 7, 2011 at 6:38 pm

Noah: I hear you loud and clear and think this is sound advice for so many people. I couldn’t agree more that it is so important to know what your hourly rate is and then make certain you aren’t doing things that are really not worth your time. Law firms are probably some of the greatest examples of businesses that totally follow this policy and the law firm business model is one of the most profitable models out there. If you are an associate at a law firm and are even caught at the copying machine or doing other administrative work, a partner will literally have your head. It can be tough in the beginning to get over the mindset of “why hire someone when you can do it yourself”, but as you mentioned, you’ve got to think investment. Great post.

Adarsh June 8, 2011 at 7:26 am

Nice thoughts there…

I’d like to state that if I love doing something (whether it’s costing me thousands of dollars in lost income), I’ll continue doing it.

Business is not just about making money. It’s a state of mind as well.

Robert June 8, 2011 at 11:52 am

I’ll second the tip about starting small with just one or two tasks a week.

I started outsourcing with big ambitions and had hunt for things to off to my help. I’d recommend now to get in a relationship with a VA, or use a site like http://fiverr.com/ to outsource one or two tasks a week, it will open up your brain to the possibility when more tasks come at you down the road. That option that you’re not familiar with now, will be accessible to you once you’ve had some experience.

You give up some control, cope with this, people who succeed are doing a lot, sometimes things get dropped out, and they clean it up, but they can do so much because they’ve delegated. Would you rather get a %100 on 5 tasks things, or %90 on 10 tasks.

Sunil from The Extra Money Blog June 20, 2011 at 1:36 pm

very valid points. for me it has been the removal of myself from my business that has been the most refreshing / rewarding experience, and definitely far from suffocation. the key has been to start with a solid plan to build passive and residual streams of income that are easy to manage via third parties (i.e. VAs)

Extreme John June 26, 2011 at 12:44 am

Time maximization through outsourcing – great idea! I think it’s predominant to most entrepreneurs to take control of everything as much as they want. But sometimes freeing up some time by delegating less important tasks really helps a lot. It gives you more opportunities to focus on something more important. It’s not always a bad idea to loosen up a bit and give your mind a chance to explore or wander other great stuffs to improve the business.

Graham Lutz June 7, 2011 at 4:29 pm

After thinking about this for the day – I think it’s more of a hesitancy to take the risk of spending money at all on unknown outcomes. Having written that, I see how ridiculous that is. Now, to find the money…

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