“I thought I needed more people. I was wrong about which people.”

Jim had built the company over ten years to nearly $10M in annual revenue. Gross margin sat at 17%, and projects were routinely late.

Growth had increased the volume of work coming in without increasing the company's ability to push it out. He had backend engineers idle while frontend engineers drowned — and every fix he tried was aimed at whichever project was late that month.

Running underneath it was a decision he'd been postponing for its cost: a former partner still held equity, still questioned his direction, and could reopen anything Jim decided.

He wanted one thing settled: What do I fix first — delivery, staffing, or the former partner?

The financials said demand wasn't the constraint. A company at $10M doesn't need a new sales story first — 17% gross margin points at what happens after the work is sold, not before.

The questionnaire surfaced the buyout as an open decision rather than background. Two problems that looked unrelated, both blocking the same thing: Jim's ability to change how the company worked.

The obvious move was to hire, or to replace whoever was attached to the late projects. I ruled out headcount. The company had enough people to produce considerably more than it was producing — it had the wrong capabilities sitting at the wrong points in the work.

I ruled out weak demand and bloated payroll for the same reason. Cutting people would have reduced capacity without touching the thing causing the delays.

The real constraint was structural. Projects were scoped, accepted, sequenced, and assigned in a way that funneled nearly every job through the same narrow points — frontend capacity, and a sign-off step that only ever moved in one direction. The backend team got more efficient every year, which made the queue worse, not better. It wasn't a people problem wearing a structure disguise. It was a structure problem wearing a people disguise.

And the third constraint sat outside production entirely. As long as the former partner was in place, Jim could redesign the company and have it reopened six weeks later. The operating fix without the ownership fix wouldn't hold.

So the answer to “what do I fix first” was: both, in that order, this week.

He restructured how projects were taken in and moved through delivery, then placed capability where the new flow actually required it — adding three frontend developers rather than cutting the three backend engineers he could have cut. He kept his staff.

And he completed the buyout.

He chose against what he'd been leaning toward: leave ownership alone, treat the staffing gaps as separate hiring problems, and keep managing late projects one at a time.

It cost him. The buyout took cash out of a business running at 17% margin. The production changes risked real disruption while teams learned a different way to work. And with the partner gone, there was no longer anyone else to hold responsible if the direction turned out wrong.

Gross margin went from 17% to 31% — up 14 points. Revenue reached $15M in 2025, his first year at that level.

He kept every employee and hired more. With the delivery bottleneck gone, the company could take on work it had previously turned away, which is where most of the growth came from.

The former partner no longer sits in the middle of Jim's decisions.