Welcome back to Business Unfiltered with Mercer and Jeff Sauer today's topic is Minimum Viable Resources. 0:00: Mercer defines "minimum viable resource" as the bare minimum needed to prove a business concept. Jeff suggests using less expensive resources, such as those found on Fiverr, to complete tasks that do not require senior expertise, while still charging the same amount to clients. Sauer advocates for leveraging processes and systems to generate profits in business while minimizing costs. 3:08: Separating labor costs from system costs in business. Jeff discovers that relying on contractors without systems in place can lead to low-profit margins. Sauer suggests separating the cost of a contractor's systems from their labor rate to increase profitability. 5:54: Streamlining business operations for profitability. Jeff discusses the importance of processes and systems in business, citing the McDonald's model as an example of how a well-defined system can lead to consistent results and easier talent acquisition. He shares his personal experience with this approach, noting that he used to focus on selling products without considering the profitability of his business, but has since shifted his mindset to prioritize process and efficiency. Jeff shares a real-world story of how implementing an operating system (EOS) helped his agency reduce labor costs and increase profitability. Sauer emphasizes the importance of getting labor costs down to 25-30% of total expenses to be profitable and sell a business. 11:07: Streamlining business processes for profitability. Jeff and Mercer discuss the challenge of consistently delivering high-quality work while maintaining profitability. Sauer explains that they identified a need for a repeatable system by analyzing their business operations and determining which projects were most profitable. They agree that finding a balance between custom work and standardized processes is crucial for long-term success. 13:54: Profitability analysis for a business. Jeff identifies people as the biggest expense and breaks it down by service line, targeting $200k in revenue per 2 employees for profitability. He discusses the profitability of different service lines in his business, considering options such as specialization, cost reduction, and sales optimization. Jeff emphasizes the importance of analyzing each service line's profitability and taking action accordingly, rather than simply cutting unprofitable lines or investing more in successful ones. 17:05: Managing payroll and efficiency in a business. Jeff discusses the challenges of scaling a digital marketing agency, including managing payroll costs and finding efficiencies without adding more staff. Mercer suggests using AI tools to automate tasks and increase efficiency without adding more people to the payroll. He discusses the challenges of managing payroll during economic downturns, including the need to reduce costs while maintaining employee morale and productivity. Mercer suggests documenting and delegating tasks to reduce the workload of high-performing employees, and using AI or tactical resources to take on some of their responsibilities. Jeff acknowledges that layoffs or adding more work to existing employees' plates are also options for managing a bloated payroll, but emphasizes the importance of finding a balance between cost-cutting and maintaining employee morale. 22:06: Leadership, entrepreneurship, and automation. Jeff discusses the challenges of running a business, including the departure of a key team member and the decision to take on additional responsibilities himself. Mercer shares his personal experience with a similar situation, highlighting the difficulty of having tough conversations and the importance of being proactive in finding solutions. 24:43: Delegating tasks and improving systems in business. Mercer shares his experience of downsizing their team and leveraging AI automation to improve efficiency and productivity. Mercer and Jeff discuss the importance of striking a balance between trusting team members and stepping in as a strategist to guide them toward achieving business goals. 27:16: Hiring and managing resources during economic uncertainty. Jeff predicts a challenging 2024 with a potential buyers' market for resources, leading to consolidation and the rise of minimum viable resources. Mercer agrees with Jeff's predictions and foresees upcoming shifts in the marketplace. Jeff and Mercer discuss the concept of "minimum viable resources" in business, focusing on the idea of specializing within an organization to maximize efficiency and profitability. Jeff emphasizes the importance of having a system in place to ensure the organization benefits from the specialization, rather than simply relying on cheaper or more expensive resources.