Every business venture I’ve had feels like walking a tightrope. You’re moving carefully, making progress in the right direction. Lean too far to one side, and you risk toppling over (and I’ve toppled many times throughout my career too).
You can “fall” in two ways.
You might spend all your time working in the business, putting out fires and keeping the wheels turning, until you run out of steam. Or you focus solely on working on the business, dreaming up strategies and improvements, and neglect the daily grind that keeps revenue flowing.
For me, they can both get too much to handle. So what’s the solution?
Balance.
When one side outweighs the other for too long, you create something costlier than inefficiency: operational debt. It’s a quiet tax on your time, and the reason so many small businesses plateau, or stall under their own weight.
What is operational debt, and why does it matter?
Operational debt is the accumulated cost of shortcuts in how a business runs. It builds when processes are unclear, decisions rely on memory, systems are patched rather than designed, and people compensate instead of fixing the root cause. It shows up when a temporary workaround quietly becomes the permanent way of working.
A single shortcut is rarely a problem. The sum of many, over time, is what makes a small business harder to oversee and lead.
How does operational debt happen in the first place?
I tend to see it forming in three ways.
1. The “we’ll fix it properly later” shortcut
This is when a quick fix becomes the de facto process, and no one remembers why it exists in the first place. Over time it turns into a confusing, outdated habit that slows everyone down.
Example: a café owner starts taking orders on a scrap of paper because the receipt printer is broken. Months later, they’re still scribbling orders on napkins. No one can read them, orders get mixed up, and customers walk out frustrated. It becomes a bookkeeping headache too, and the accountant isn’t thrilled either.
2. The founder as the single source of truth
Critical knowledge, like passwords, client details, or workflows, lives only in the founder’s head. If they’re unavailable or leave, the business grinds to a halt.
Example: an events organiser coordinates every freelancer over WhatsApp, from memory, with no shared brief or handover notes. When she’s off sick for a week, nobody can pick up where she left off. Bookings stall and a client chases a reply that never comes.
3. Growth that outpaces the infrastructure
What worked for three clients becomes a nightmare at fifteen. Systems, tools, or habits that were fine at a smaller scale start to creak under the pressure, causing delays and frustration.
Example: a freelance graphic designer manages clients through a free email account and a basic spreadsheet. When the client list doubles, emails get lost, deadlines slip, and hours get lost hunting for files instead of designing.
The compound effect operational debt has on your small business
Imagine you’d been an early investor in a small business that has become a giant and a household name. A few decades on, you’d be very comfortable, because of compounding effect of your initial investment.
Debt can compound in the same way, just in the wrong direction. It doesn’t sit still. Like a snowball rolling downhill, each unresolved inefficiency doesn’t just stay the same size, it creates more as it rolls.
For example, I’d love to skip the process of untangling my daughter’s hair some mornings, but I know exactly what happens if I do. A small shortcut today becomes a tangled mess tomorrow, and it takes far longer to sort out than it would have taken to prevent in the first place.
The hard part is you can’t see it on paper the way you can see financial debt. Instead of showing up on a balance sheet, it shows up in forms of founder stress, team turnover, and capped growth.
Do you have operational debt? A quick check
You probably do if any of these sound familiar:
- You have a subscription you’re not sure you still use
- A task is only easy if one specific person does it
- You’ve said “I need to sort that out” about the same thing more than twice
- Onboarding a new team member or freelancer takes longer than it should
- You’re not sure who has admin access to half your accounts
- You’ve paid for a renewal you didn’t mean to keep
There can be so much more big and small debts. But none of that means you’re disorganised. It means you’re carrying interest on decisions made under pressure, and that interest is manageable once you can see it.
What to do about it, and the mindset shift to make
The first step isn’t action. It’s recognition.
Call it what it is: operational debt. Once you name it, it stops being a vague sense of things feeling messy and becomes something you can manage. It’s not a moral failing or a sign of incompetence. It’s a natural byproduct of running a business under pressure and needing to move quickly. The goal isn’t to eliminate it entirely, that’s impossible, it’s to stop ignoring it.
Try this: schedule a periodic “debt audit.” Not a full overhaul, just a deliberate pause to ask what you’ve deferred, what shortcuts are weighing you down, and what repetitive tasks or mistakes keep popping up. Treat it like maintenance, like servicing a car. You wouldn’t drive 100,000 miles without an oil change and then act surprised when the engine seizes.
When my car goes in for its MOT and service, the mechanic gives the usual list: what’s fine, what’s recommended, and what’s an immediate priority. I like talk through the recommendations and decide what to do now versus later. Sometimes it’s cheaper to fix something today than let it run and add to the debt.
I see operational debt the same way. You can let some things slide and pick them up later, you can’t do everything at once, but there are tasks that need attention now, before the interest builds.
Let’s sort it out
If you want your business to scale smoothly, you can’t keep cutting corners. That’s how the debt builds, and the interest becomes harder to shift the longer you leave it.
All you have to do is to start small. What’s one thing in your business you’ve been “meaning to sort out”? It can be as small as getting rid of that subscription tool you never use. Or something more complex like creating a proper onboarding process for new clients.
Whatever it is, let’s sort them out.
