[Home](https://stoneforgegroup.com/) · [Insights](https://stoneforgegroup.com/insights/) # The art of losing a finger **James Walls** · September 17, 2026 · 9 min read As a woodworker, I’ve known the joy of true flow – hours where I tune the world out and shape wood into something beautiful. It’s how I’ve built the pieces I’m proud of, from bookshelves to outdoor furniture. I’ve also had the reverse, and it sent me to the hospital. That day I’d decided not to keep pushing through the financial and business stress grinding at me, but to step away and let busy hands clear my head. I went to the workshop, and I was indeed distracted – just in a bad way. The worry came with me, my mind stayed in the business while my hands fed timber through the bandsaw, the wood twisted and the blade bit hard. Bandsaw versus finger is never going to have a good outcome. The finger was stitched back on and pinned. It never healed properly – the joint is fused now. Some lessons are learned the hard way. I was running two jobs at that bench: my hands were the employee’s, doing the work, and my head was the owner’s, carrying the worry. Most owners I sit with are running both jobs every day – just without the X-ray to show for it. ## I’d rather work for me When the business has plateaued and we’ve hit the wall, the quiet realization arrives: we would rather work for us than be us. Something has become self-evident in conversations with many owners of established businesses (ourselves included at one time!). We get to a point where we’ve spent years treating everyone else well: our customers, and particularly our staff. And then comes this gnawing realization that, when the overwhelm, the worry, and the hours we spend in the business are all called to account, we would rather work for us than be us. We would much rather be a true employee of our own company than this owner who, for all intents and purposes, gets paid a salary (and probably not a big one!) – because that’s what the CPA tells us to do – but carries both the employee’s workload and the owner’s worry at once, and never comes up for air. **CPA (Certified Public Accountant).** A professional designation for accountants who pass the Uniform CPA Examination and meet additional state education and experience requirements. [Full entry →](https://stoneforgegroup.com/glossary/#cpa) ## Working harder was the plan We got there mostly because we’ve all decided that working harder and being more productive is the way to lead a business. I believed it as much as anyone – it’s how I’d led everything. Even my escape from the business was to go and be productive somewhere else – it’s what took me to the workshop that day. And when we grow the business, we start to hand things off – or at least we think we do. But if we haven’t set ourselves up to outsource decisions, the task comes back with a million questions attached, and we end up working more at exactly the moment we’re trying to work less. “It’s just easier if I do it myself.” “I haven’t got time to get someone else to do it properly.” So the first lesson (for me at least) was this: to lighten my load, I need to enable someone else to make the associated decisions. My role is to set the guide rails (the operating processes), some form of reporting or notification, and ideally a continuous improvement loop. It doesn’t have to be perfect at the outset; iterative is absolutely fine – hence the continuous improvement. This formed the core of how we would go on to teach and lead sales teams and bookkeepers alike. The aim is to move beyond pure personal productivity – from doing more, to doing less. Or as Mike Michalowicz’s book *Clockwork* states: “Productivity gets you in the ballpark. Organizational efficiency gets you hitting home runs.” Organizational efficiency, in his phrase, is “selective efficiency, not mass productivity”: not doing more with less, but doing less with less to achieve more. It means enabling the people with the skill to spend their hours on the work that pays for everything else, and it builds a flow state into the business – the work running well – without everything hanging on one leader’s forced concentration or decisions. But guide rails can only hand decisions to team members who have the necessary foundational skills and capacity. Where this is lacking, people have to be hired for the role, or to do the teaching. In short, we need to invest. And if we all felt we had buckets of excess money lying around to hire people at will, that would be gravy. (Look up the saying if you need!) So, how do we fund this? ## What the P&L can see The funding is usually already sitting in the business, and your P&L has been recording the difference between working harder and working efficiently the whole time. Greg Crabtree, in *Simple Numbers*, gives that difference a measure – the Labor Efficiency Ratio, or LER: for every dollar you pay in wages, how many dollars of margin come back. There are two versions, and we use both because each one points you at a different side of the business. **LER (Labor Efficiency Ratio).** In a business where people are the product, labor is the largest cost – so the number worth watching is not what you spent on people, but what each dollar spent on them brought back. [Full entry →](https://stoneforgegroup.com/glossary/#ler) ### Direct labor efficiency ratio (dLER) Gross margin, with any direct labor sitting in your cost of sales added back, ÷ all the wages you pay the people who actually deliver the work – wherever those wages sit on the P&L. Greg Crabtree’s working benchmark: around $2 of margin for every $1 of direct labor. **Gross Margin.** The percentage of revenue a company keeps after covering the direct costs of producing the goods or services it sold (COGS). [Full entry →](https://stoneforgegroup.com/glossary/#gross-margin) ### Management labor efficiency ratio (mLER) The margin left once direct labor is paid (on most P&Ls, simply the gross profit line as it already reads) ÷ everything you pay the rest of the team – management, admin, and yourself. This layer of the team exists to buy you freedom. There’s no clean cross-industry number here – what you want is this ratio rising as the business grows, not sinking as you add overhead. Treat both measurements as a bearing rather than a pass mark – benchmarks travel badly across industries, so watch the direction more than the absolute number. Direct LER reads the delivery side: slack there is capacity you’re already paying for that isn’t turning into margin, and capacity you can redeploy or sell. Management LER reads the overhead layer, you included. A weak number there has more than one cause, but the one we keep meeting is paying for management while every decision still routes through your head – and when that’s the cause, the fix isn’t another wage – it’s the guide rails. Pull your last four quarterly P&Ls, split your wage bill between direct and management as the definitions above describe, work both ratios, and write the four numbers for each ratio side by side. If a ratio is falling, every wage dollar is buying less margin than it did the quarter before – and if everyone feels busy while it falls, working harder is paying less. We’ve watched exactly that happen this year: one business we work with has its direct ratio at 1.4 against Crabtree’s suggested 2 – and falling since April. From the floor it looked healthy – full days, a team anything but idle. The ratio was the X-ray: it showed the margin thinning underneath. ## Breathing space There is undoubtedly a gap in efficiency to find. If there wasn’t, you would already have been able to afford the roles that free you up to do only what you want in the business, for as long as you want. Growing up, I was part of Upper Hutt Swimming Club, and when we were taught freestyle we were told not to rotate the head purely to the side to breathe. Tuck the chin, aim back toward your armpit – there’s always a pocket of air there. You don’t stop swimming to breathe, and you don’t lift your head and lose the stroke; you learn where the air already is. That’s what the ratios are for: finding the breathing space in a business that feels like it’s all water. What the numbers open up is the gap between where you are and where you could be – for that client, the stretch between 1.4 and 2. That gap is capacity they were already paying for, and the real decision is what they’d want it back for. They could spend it driving toward the 2 (more revenue through the same team – i.e. increase delivery efficiency by adding sales), or hold revenue where it is and invest in increased efficiency to move the doing, and the decisions, away from the owner and into the team. But the gap doesn’t turn into money on its own – unlocking it takes deliberate effort, or investment. Where to aim that effort depends on two things: the ratios tell you where the waste is, and the skill already inside the team tells you which fix is open to you. If the skill is there, aim at handover: define what a good outcome looks like for one piece of work – the simplest guide rail there is – and hand the whole piece over. Your team member makes the calls inside that piece, the million questions stop coming, and you get room back to define the next outcome. When growth comes, the management ratio will record the change – the same management wages supporting more margin, because growth no longer has to route through you. If the skill isn’t there, aim at delivery: build the guide rails there first, drive the direct ratio up, and use the margin you recover to fund the skilled hire who takes over the areas trapping you. Either decision makes sense if the numbers do. Another client came at the same investment question from the hiring side this year. The question on the table was whether to add people, and a capacity model we built alongside the ratios – the team’s available hours set against the year’s revenue goal – showed that the team they already had, plus one hire, could deliver the whole year. The reflex said “we need people,” and the numbers said one. And the gap between those answers is where the freedom comes from: the money that would have gone on those extra wages can go instead into the guide rails, and into the roles that free the owner up. My finger doesn’t bend anymore; that price is paid, and it stays paid. The hard lesson it left me with is that being present is as important as being there – if not more. The prices you’re paying in the business don’t have to stay paid: the wish to work for us rather than be us was never really about the employee’s job – it was about breathing space, room to work in flow on the things you enjoy, and being in charge of the company rather than trapped inside it. And that room, it turns out, is something the P&L can help you buy. The labor efficiency ratio is one measure; the Financial Scorecard shows you the rest of the picture. It’s seven sliders and about two minutes: answer with how the money side runs today, not how you’d like it to run, and it shows you where your finances sit – and which gap is worth closing first. There’s no email to hand over and nothing to sign up for, and nothing you answer is stored anywhere – it’s meant to be useful whether we ever speak or not. ## Three questions to sit with - Before you work your labor efficiency ratios for the last four quarters, which way are you afraid they’ll point? - Which decisions still have to route through you – and what would your team need from you to make the next one without you? - Do you know which of the wages you pay are direct and which are management – and whether each side is earning its keep? ### See how your own numbers are being run Seven quick questions, a gut answer to each – no email asked for, nothing you answer is saved. Useful whether or not we ever speak. [See Where You Sit →](https://stoneforgegroup.com/financial-scorecard/) More on the two jobs an owner runs at once: [Where should the owner stand in the business – and why does it matter? →](https://stoneforgegroup.com/questions/where-should-the-owner-stand/) First published in The Stoneforge Newsletter on [LinkedIn](https://www.linkedin.com/pulse/art-losing-finger-james-walls-4stee), September 17, 2026. ### New issues land here first One email when an issue is published. Nothing else, ever.