The cottage industry mindset

October 20, 2020
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You start small. There’re the very limited amount of resources and you have a lack of almost everything. Things don’t scale and they don’t even need to do at the beginning.

Gradually, if you find the product-market fit resources become more accessible. The limitations become evident in other parts of the business. Your processes may not scale.

Things become inefficient and your response time slows down. Communication does not work as well internally and externally. Feedback from customers may already have layers.

Most of the above issues are management and leadership challenges. They can be solved with the right tools and expertise.

I’m talking about something else, more vicious and tacit: a mindset from the early days when you did not need to consider too much about other people and processes since there were few and everybody could gather around a pizza or two.

There’s nothing wrong with lifestyle business if you want to build one. But if you’re aiming for scale and the large impact that’s another matter where the trouble is around the corner soon.

If your mindset is not updated beyond your own capabilities and resources it’s hard to make things work. The calculus is different when you cannot just use your cash flow thumb of the rules and simple measures.

Contributing margins, variable costs, resource allocations and limitations become important. You may run out of working capital even if you’re growing.  Losing money on every new revenue unit coming in can kill your company.

That’s what happened to dot-bomb companies when they were expanding rapidly and growing hyper-fast. The costs structure was just growing faster and every new sale meant more losses and running out of cash faster.

Exponential growth is hard to grasp. It’s even harder to manage and plan. If you’re not paying attention and learn to live with that mindset you may not be well-equipped to handle the next challenges.

The worst scenario is that you may not even ever reach that point where the problems emerge. Why? Because your mindset is still in the minor league. You never manage to make the jump to the majors.

A survival mode is not the same as thriving. If your goal is just to come by and have enough cash to cover costs that’s not a growth company mindset.

Don’t waste anyone’s time, yours included by thinking that you’re doing something when you’re not clearly having the growth mindset.

It’s not hard but you need to be aware of it. How do you handle things where you have 100x more what you have now?