The One With the Best Practices That Hurt Your Business

Hey guys, it's Omar here again. So picture this, you're listening to a podcast, maybe even this one, and a founder of some $40 million brand is on there walking through how they run their operations. So they've got demand planners, a fancy inventory software. 3 different suppliers and let's say a 3PL in every region for fast shipping. And you're nodding along like, okay, this is the blueprint and that's what real brands do. 6 months later, you've copied basically all of it and somehow you're doing worse than before you started. And that's today's mistake number 12, the big season finale, and honestly, the mistake that's been quietly hiding underneath every single one of the other 11. And copying playbooks is what you do and it's what's built and what you're building and that's gonna be copying brands that are 10 times your size. So here's the setup, you're early, you're figuring it out and naturally you're looking around at brands who've already made it and you go, what are they doing? Let me do exactly that. And it makes total sense. It's nothing new and right, it's, they're successful. They basically, so in your mind you think that whatever they're doing must be the reason. So let's copy the winners and let's not reinvent the wheel. And the thing is their advice is everywhere. The big founders, they write the Twitter threads, they go on podcasts, they speak in conferences. These— they also sell courses, maybe a couple of them. So their playbook is just in the air that you breathe. You absorb it without even trying. And yeah, that's mistake number 12. And it seems smart because, well, if it's worked for them, it should definitely work for you, right? Right. And that's what happens 18 months from now when you're trying to scale and you find out that the playbook isn't universal. A playbook is built for a specific stage, a specific size, and a specific set of resources. And the stuff that works beautifully at $50 million can hurt you at $50,000. And because here's what you're not seeing when that big brand tells you what they do. They're telling you what they do now today at their size with their cash, their team, their leverage, and their data. And of course, another layer to that is also they have their own supplier relationships that's built for over a decade. And they're not telling you the scrappy duct tape, slightly embarrassing stuff they actually did when they were your size. Because half of the time they don't even remember it, or they're a little embarrassed by it. Or it just doesn't make sense for a good podcast story. So you end up copying the destination while you're still standing at the starting line. Okay, so why does it get expensive? And let me help you out with that and let me break it down for you. When you copy a big, a big brand's operations, you're taking on all the costs of being big without any of the revenue of being big. And think about that. The big brands can afford a 3PL with high minimums and expensive software and 3 suppliers and a deep bench of inventory because they've got the sales to spread all those costs around, but you don't. So when you copy the structure, those exact same costs land on a tiny revenue base and just flatten your margins. And remember that you've now got money locked up in, let's say, 90 days of inventory you didn't need, plus warehouse minimums you're not even using. And that's the first problem. You're, you're in, you import a cost structure you can't carry yet. Here's the second one, and it's sneakier. When you copy the playbook, you skip the reps because that's probably like messy early phase. That's not just something to survive. That's where you actually learn your business. Packing your own orders teaches you your fulfillment. Talking to one supplier teaches you your supply chain. Doing it by hand in a spreadsheet teaches you your numbers, like real, like real teachers do for brands. And if you copy the way, if you copy your way past all of that, you skip the learning. So later when you do hit real scale and things get genuinely complicated, you've got the intuition to fully back it up. And, and yeah, that's the— and then the third thing you optimize for, let's say the wrong goal at the wrong time. Big brand playbooks are built to optimize for efficiency and scale. But early on, you should not be optimizing for efficiency. You should be optimizing for learning and for staying alive. Totally different game. Copying their answer means you're answering a question you don't even have yet. And it all compounds because each copied decision drags into the next one. You get a 3PL, so now you need a software to manage that 3PL. So now you need to hire someone to manage that software. One important decision and suddenly you're 3 layers deep. in complexity you never actually needed. Each piece is justifying the last. And here's the analogy I keep coming back to. Copying a big brand's playbook is like copying an Olympic sprinter's recovery routine. The ice bath, the massage therapist, the sleep coach, the custom diet, and you're doing all of it before you've actually started even running. And yeah, that's not what made them fast. That's the stuff of the result of being elite, not the cause. And— you've got it completely backwards. So let me give you a quick example. So there's a founder that ran a pet brand, nice products, loyal little customer base, doing around $400,000 a year, real business growing, and of course, totally legit. And one day he's listening to a podcast and on it is a founder of a $40 million brand. And this big brand guy rattling off in this whole setup, we've got a dedicated demand planner, we run everything through the enterprise inventory platform, we hold about 90 days of stocks, Spread across 3 suppliers. We've got a 3PL, blah, blah, blah. You know how it goes. And our guy, the $400K guy, hears that and goes, that's it. That's the roadmap. I need to build that. So over the next months, he does. Here's the shopping list. He signs with 3 PLs, one with monthly minimums he can't actually hit. So he's paying for storage and volume he isn't even using. He buys the inventory management software setup fee. Monthly fee, the whole thing. He splits his orders across 2 suppliers to diversify. And just like the big brand, he tries to hold 90 days of inventory. Also, just like the big brand. Now watch what happens. The 3PL minimums and the software costs straight up eat his margin. The 90 days of inventory, that froze a massive chunk of his cash. And of course, if that sounds familiar, you need to change some things. But here's the part that's actually almost funny. The supplier diversification, it backfired completely because when he split his orders in two, each supplier was now getting half the volume. So he lost his price break. Smaller orders, worse pricing, and he became a smaller, less important customer to both of those suppliers. So instead of being one supplier priority, he was now two suppliers' afterthought. Which meant, yeah, more stockouts and more quality issues. The exact opposite of what diversifying was supposed to protect him from. So let's tally up. He'd taken a $4,000 business and bolted a $40 million company cost structure right onto it. Margins down, cash tight, stocks are up, stockouts are up, and he was in every single way worse off than when he started. And he's done it all by following best practices. So how do we fix it? You have to ship it back, all of it. Cancel the 3PL, went back to the super, super simple fulfillment setup he could actually grow into. He dropped the software back to one clean spreadsheet. And of course the big one, we consolidated back down to one supplier. And here's the magic. Now that he was given that one supplier all of his volume, he was suddenly their bigger, more valuable customer, better pricing, better terms, and he became their priority. Mm-hmm. We cut his inventory by 90 days to about, let's say, half, 45, and a couple of months later, the margins recovered, cash freed up, and the stockouts, the thing the, the fancy playbook was supposed to prevent, actually went down. The line we would give him, and still calls back to me to this day, is he's been trying to run a Ferrari's pit crew on a go-kart. So how do you actually avoid this? And here's the playbook for not copying playbooks, which, yeah, It's quite ironic. Number 1, and this is the whole thing, before you apply any piece of advice, ask one question. What stage was this built for? That's it. If a tactic is coming from a brand that's 50 times your size, just assume that it doesn't apply to you yet until proven otherwise. And by the way, that includes this podcast. Run everything I say and we say here at Move, um, through that exact same filter. If it doesn't fit your stage, ignore it. Number 2, go find stage-appropriate advice. Stop studying the brands 10 steps ahead of you and start studying the 1 or 2 steps ahead. And honestly, a founder at $1 million has way more useful advice for you than a founder at $50 million. They actually remember what your problems feel like, and they were just there, and their playbook is close enough to yours. For you to actually use. And number 3, this is a skill that levels you all the way up. Steal the principle, not the tactic. Here's what I mean. The big brand diversifies across 3 suppliers. The tactic is use 3 suppliers, but the principle underneath it is manage your biggest supplier risk. Now at your stage, that same principle points you to the complete opposite tactic. Your biggest risk isn't one supplier failing. Your biggest risk is being too small to matter to anybody. So managing your risk is actually going all the way and all in, in one supplier. And that's the, that's the key to it. And your goal is to become their priority. It's the same principle, opposite move. Steal the why, never just copy the what. And number 4, when in doubt, default to Scrappy. At your stage, the simplest version of anything is almost always the right one. And spreadsheet over software, one supplier over three, ship it yourself before you hire a 3PL. So do it yourself before you make the hire. And you only add complexity when the pain of not having it is real and present. And of course, it's staring at you in the face, not because of some podcast you feel like you wanted to support and you wanted to copy. Number 5. Run your own experiments. Your brand, your customer, your product, your supply chain. It's a unique combination. Nothing else on earth has run your experiment. So test things small, watch what actually happens, and then decide. That beats importing somebody else's conclusion every single time. And number 6, the meta one. Since this is the finale, go back and look at the whole season and what we've been talking about. Getting a 3PL too early, buying this, buying software before spreadsheets, diversifying suppliers too soon, hiring a supply chain manager first, overordering, forecasting like you've got data you don't even have. Almost every single mistake we covered, and it's just, and this is just another flavor of it, and it's all copying a playbook built for a stage you haven't even reached yet. So if you take one thing from this episode, let it be exactly that. So, all right, the permission. And this is, this might be the most freeing one of, for all the other episodes. And this is what I'm going to say. You can ignore, I'm going to say 90% of the operational advice coming from huge brands. And what I want to be really, really clear on is not that the advice is wrong, it's just not for you. Not yet. File it under later and move on with your life. You don't need their tech stack. You don't need their team structure. You don't need their supplier diversification or their deep inventory. Let's go to the infrastructure. Let go of that infrastructure envy and the fancy machinery you're staring at. It might be quietly strangling their margins and you'd never know it from, from the outside. And that FOMO, that— feeling that everyone else has that these slick systems and you're falling behind with your little spreadsheet, drop it. We've worked with huge brands and they are still using the most basic tried and tested tools, your spreadsheets and Google Sheets. So yeah, you're definitely not behind. If you power through it and you learn it, it's an actual advantage. You're faster, you're leaner, you're closer to your customer than any $40 million brand could ever be. Use that. And here's the fun one. You've got the permission to ignore some of this advice too, if it genuinely doesn't fit your situation, because that is the entire point of this episode. Don't copy what I'm saying either. Take who fits your stage, leave the rest. So really the permission this week is just stay small and simple for longer than you think you're supposed to. There's no prize for adding complexity early. The prize is staying alive long enough to actually need it. And that's it. That's all. The 12 mistakes, 12 episodes of this stuff that seems smart at $30 grand a month and quietly wrecks you at $3 million. If you've been listening along and you're counting more than 3 of those in your own business, first of all, welcome to the club. Every founder's been there. And second, the accelerator is built to walk you through fixing all 12 in order, step by step. We've got, of course, our free videos here on YouTube if you want to dig on your own or just come join us in Circle for the full thing. Now, once you stop making these mistakes, you graduate to a brand new problem because at that next stage, you finally have data, numbers, dashboards, reports, and all of it. And here's the catch, you're almost certainly tracking the wrong ones. So yeah, thank you so much for listening to us and we fully appreciate your time. And, and, and of course we want to share as much information as we can, of course, coming in from a brand that are supporting— yeah, we are supporting brands from pre-revenue from the $0, they haven't launched yet, to somewhere between the $15 million to $20 million range. And we've seen it all, people who have, who have grown with us. So yeah, we would like to share even more. So come join us next time for the next couple of episodes.