Business Difficulty Scale

A framework for understanding business difficulty based on operational complexity and resource requirements.

Hardest Businesses

• Brick and mortar operations

  • Requires physical location management
  • High fixed costs
  • Complex coordination of resources

• Businesses with physical goods

  • Inventory management challenges
  • Supply chain complexity
  • Storage and logistics requirements

• Employee-heavy operations

  • Example: Bakery requiring 40-50 employees
  • Complex coordination of staff schedules
  • High management overhead
  • Vulnerable to staffing issues
    • Single employee absence can disrupt operations
    • Requires early morning shifts (e.g., 2 AM baking)

Medium Difficulty

• Agencies
  • Asset-light operations
  • Minimal initial investment needed
    • Only requires office, internet, keyboard
  • Challenges:
    • Balancing supply and demand
    • Managing feast or famine cycles
    • Maintaining culture during growth
    • Need for rapid adaptation to market changes

Easiest Businesses

• Digital products/services

  • Example: Job boards (like WeWork Remotely)
  • Minimal operational complexity
  • Can operate with small teams
  • Automated revenue streams
  • Scalable without proportional resource increase

• Key advantages of easier businesses:

  • Lower operational overhead
  • Fewer moving parts
  • More predictable revenue streams
  • Less dependent on physical infrastructure
  • Reduced human resource management

Success Factors

• Prefer businesses with:
  • High margins (30-50% EBITDA)
  • Minimal inventory requirements
  • Limited physical infrastructure
  • Automated operations where possible
  • Smaller, more efficient teams