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EMEA Entrepreneurs

Don't prematurely optimize operations for your business

There are a lot of norms in ‘doing business’. Things like

  • Contracts
  • Invoices
  • Policies

You can spend an infinite amount of time and substantial amounts of money doing these ‘properly’ from the start.

It’s also possible to just not do a lot of them.

Instead of setting up and paying for invoicing software, paying lawyers to create and review agreements, and making sure you tick every box for having the correct policies in place and available on your website, you can just not do that stuff.

This isn’t an endorsement to not understand the risks of taking shortcuts, but I’ve seen many people treat these things as absolute necessities rather than risks.

If you quit your job to start your own business, you’re probably more comfortable with taking calculated risks than average.

The basic formula for risk is

Risk Magnitude = Severity x Likelihood

When it comes to being fully compliant with local laws, you’ll often find a bunch of pretty weird things you’re meant to do. For example, in South Africa you’re meant to have a PAIA Manual linked from your website and available at your primary place of business. You could spend a few hours finding a template, customizing it, adding a link from your website, and maybe printing it and putting it a drawer in your office (or bedroom if you’re working from home?)

Or you could just not do that?

Probably controversial advice and everyone should find their own balance of staying compliant with laws and not drowning in them. I’ve been operating a business for four years and I’ve never had problems with

  • Skipping a lot of stuff like the PAIA manual mentioned above entirely
  • Using very rudimentary 2-page contracts that I wrote myself and that a lawyer has never seen
  • Using Google Sheets to create and send invoices

This isn’t the correct balance for every person or every business, but in general the following applies to everyone

  1. Calculate all operational administration in terms of “Risk Magnitude”. How likely is it going to be a problem (in the case of some authority asking if you have a PAIA manual, very very small) and what would be the severity of impact in that case (in the case of the PAIA manual, in theory a fine, but in reality probably a request that you create one within some certain time frame).
  2. You’re probably, by default, over-estimating the severity and liklihood of many operational matters. A lot of the industry is viral - lawyers create the need for more lawyers, accountants create the need for more accounting. It might be scary to just yolo your way through it without checking with the professional adults, but sometimes it’s a lot more scary to actually cross every i and dot every t.