Simple vs Complicated Businesses

The best businesses to start, run, or work for are those who have these two qualities:

1. Few number of things that can go wrong during its day-to-day operation.

2. Consequences for anything going wrong are minor.

The opposite of these two qualities are businesses where lots of things can go wrong, and if they do there's hell to pay.

I once consulted for a bakery distribution company. At 3am every morning, these guys had to very quickly ship baked goods, which are perishable and fragile items, using a fleet of trucks to various bakeries and stores across the city, all by 6am.

If you factor in the early morning hours, the non-negotiable time crunch, the fragility of the product, the reliance on the transportation, the reliance on the bakeries to get their stuff out the door by 3am, the odds of any problem in any given morning were very high.

Moreover, the consequences for any problems were extreme. If any bakery, grocery store, or restaurant didn't get their goods in pristine condition by 6am, they were furious. They didn't have product to sell; likely product they had already paid for.

This company was a nightmare. Every time I went in there, most of the employees were stressed and angry. The owner of the company was constantly pissed off and frustrated almost 100% of the time. There were constant problems, and constant huge explosions from customers and vendors alike. It was a brutal business.

I've also seen similar conditions in commercial construction companies. When everything is going fine, everyone's happy. But when anything goes wrong, and there are about 1000 things than can in any given day, everyone is furious and screaming at each other.

Compare this to a friend of mine who owns a marketing consulting practice. What can go wrong in his business? Not much. It's very rare he has any problems. If something does go wrong, often no one even notices before the problem is fixed, and often the problem is fixed by simply sending an email.

My friend is happy all the time and probably makes as much or more money than the stressed-out guy who owns the bakery distribution company or the typical on-site project manager working for a large construction company.

Before evaluating a business to either start or work for, ask yourself these two questions:

1. How many things can go wrong in a typical business day?

2. How bad is it when things go wrong?

If one or both of these answers are "a lot" and "bad," then you should strongly consider doing something else.