This article is an excerpt from the Shortform book guide to "The Minimalist Entrepreneur" by Sahil Lavingia. Shortform has the world's best summaries and analyses of books you should be reading.
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Does your business need a boost? How do you stay relevant in business?
Staying relevant can be difficult because the market is always changing. That’s why Sahil Lavingia’s book The Minimalist Entrepreneur teaches you how to prevent becoming irrelevant as a small business.
Continue reading to learn how to stay relevant in business.
Staying in Business
Once you’ve gotten off to a successful start and have a customer base, Lavingia says there are some important steps you can take to ensure your business stays relevant and profitable and continues to grow organically. In this section, we’ll explain his minimalist methods for ensuring sustainability, hiring the right people, and creating a company they want to work for. Finally, we’ll look at his vision of what the long-term goal of a minimalist business should be: improving your life and the world.
1. Focus on Sustainability
One of the major differences between a minimalist business and a venture capital startup is sustainability. Lavingia tells us there are just a few reasons most businesses fail: overspending, hiring too quickly, and founder conflict. In order to be sustainable over the long term, you’ll need to be careful to not make these mistakes.
Overspending and Hiring
Carefully monitor your expenses to be sure you’re spending less than you’re making. This might seem obvious, but Lavingia says many business owners don’t pay close enough attention to this.
Some of the ways you can avoid financial problems are:
- Pay yourself the minimum you need at first, and then increase it slowly as you’re able to. Lavingia only paid himself $36,000 per year when he started his business. He raised that as the company grew, but tied his own salary to those of his employees, meaning every employee’s salary increased at the same rate as his.
- Avoid paying for office space if you can do your business without it. (Shortform note: People are increasingly seeking out remote employment, and this trend is expected to continue. So by not having office space, you’ll not only save money, but you’ll likely also attract more applicants to your job openings.)
- Do anything that you can with software instead of hiring a person, because software costs less than paying people. Don’t hire anyone until you actually need help.
- When you do need help in the beginning, hire freelancers on a contract basis, rather than permanent employees. Think about using people who are really interested in the business, and who could learn from you and potentially become full-time employees later.
- Pay attention to what your customers are saying. Negative reviews can be financially damaging, so take them seriously.
- If and when you want to invest more into expanding the company and you need more capital, crowdsource the funding from your customers and make them shareholders.
If you’re working with a partner or thinking of it, Lavingia cautions that it’s important to avoid conflict and the potential disaster it could cause your business. He says you should treat a business partnership like a marriage, and he offers the following advice:
- Only work with people you trust completely.
- Before committing to a partnership, discuss both of your values, visions, and goals to be sure they align.
- Create detailed, written financial arrangements, so they don’t become a point of contention.
- Establish an exit plan, in case it doesn’t work out.
2. Create Your Company Culture
When it’s time to bring on permanent employees, Lavingia says you should first be sure to make your company a place people want to work to stay relevant in business. Create your company culture thoughtfully and intentionally, and evaluate potential employees by how well they’ll fit with that. Lavingia’s process for creating a healthy company culture that encourages long-term sustainability is:
- Write a value statement. Think about what kinds of values you want your company to stand for, and make the value statement explicit and visible. This will set the expectations for how people should behave, including yourself, and how problems will be handled. You’ll use this to evaluate potential employees and to remind yourself and others regularly what the company stands for.
- Be transparent. Be clear about what your intentions are as a company. Lavingia recommends sharing all company documents, including finances and salaries, to create a culture of openness and sharing.
- State your company values in job postings. This will attract people who will be a good fit and turn away people who won’t. In the hiring process, stay focused on whether the applicant will align with the company’s values and culture. It needs to be a mutual fit.
- Empower your employees. If you give your employees autonomy and treat them as peers, they’ll feel empowered, manage themselves, be loyal to the company, and care about providing the best service to the customers. Rather than top-down management, Lavingia says to think of it the opposite way: Your employees serve the customers, and you serve the employees.
Hire people who will improve the company. Try to find people who have talents or skills you don’t have, so they can contribute those to the company. Hiring others who share your entrepreneurial mindset is also a good way to bring motivated, dedicated people onto your team. Consider looking within your customer community for potential employees. Lavingia posts his job openings on his social media sites, thereby reaching out to people who are already his followers.
Lavingia says it’s natural that sometimes an employee won’t work out. While that requires a difficult conversation, you have to be honest and straightforward. Don’t think of them as being a bad employee, just an employee who wasn’t a fit. Offer them any assistance you can with finding a new position.
3. Improve Your Life and the World
Finally, Lavingia addresses the long-term goal of a minimalist business, which is also the last step to staying relevant in business. He reminds us that this kind of business isn’t about getting rich—it’s about creating a satisfying life, contributing to something you care about, and being financially successful in the long run.
Building a business, Lavingia says, should be about making the world and your own life better. Working extreme hours is self-defeating. So he says you should use your financial success to create “time affluence,” or a wealth of free time, so you can enjoy life. He gives a few pieces of advice for using your financial assets to create the more valuable assets of time and life satisfaction.
As your business grows and prospers, Lavingia suggests you think about automating and outsourcing anything you can, to free up time for yourself. Sometimes spending money to create free time is well worth the tradeoff. Then, he says, you can use that free time to go back to being a creator and work on projects you love, whether it’s something you want to do for pleasure or starting another business. In this way, your business should not trap you, but free you.
He also suggests using your financial success to contribute and give back to the world, by supporting other entrepreneurs, social justice and environmental causes, or whatever you care most about. In 2020, as a response to racial justice issues in the US, Lavingia decided he wanted to invest in a Black-owned tech startup. He posted this on his social media sites, inviting Black entrepreneurs to contact him. He received over 200 emails in response and ended up investing in four of these startups. (Shortform note: This is called “angel investing.” It’s different from venture capital because an angel investor uses their personal funds to invest, rather than an investment fund. Angel investors also typically expect a lower return on their investment than venture capitalists.)
And finally, Lavingia says you should always keep in focus your original purpose of wanting to help people in a community you care about. You’ll likely want to embark on a new endeavor at some point. When you do, take some time to reflect on why you originally wanted to solve the problem you did, why you align with the community you serve, and why you want to do the next thing. This will bring you back to your driving purpose and help propel you forward in a way that will continue to make your life fulfilling.
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Here's what you'll find in our full The Minimalist Entrepreneur summary:
- Detailed advice for starting your own business without venture capital
- How to run your business sustainably and contribute to the world
- Why you don’t need to spend any money on marketing