After the stress and difficulty of starting your own company – allow me to say, congratulations – you have finally progressed to the next phase. You now have a growing business that is finally earning money—after significant effort over the span of months or sometimes even years. Now that the initial hurdle has been cleared, you need to work on getting your company to scale. And the thing that has gotten you to this point—hard work—doesn’t necessarily help you in this regard.
As Marshall Goldsmith once suggested, what you did to get you where you are, won’t necessarily help you get where you want to go.
I could use the analogy of a small business like a local locksmith but instead I’m going to go to the world of sport. To help create a clearer picture in your mind, let’s go with this analogy. The initial startup phase is like playing football with a bunch of toddlers. Undoubtedly, they have tons of energy. If you make two teams of very young children (say four year olds) and put them on a soccer field, they are basically going to run amok. They won’t play a game that even remotely resembles football. They will all be chasing the ball, tripping over each other and practically falling all over themselves. If you know anything remotely about football, you will agree it wouldn’t be pleasant to watch. Coming back to business, if you are an employee, it can be impossible to play properly with all this going on around you. No one stands out, nobody has a designated role, and there is no leader.
Despite this craziness, if you have great teammates who put in the effort, you might be successful. This drive to succeed is usually an important characteristic of the team and what got you started. But as you scale—increasing your offerings, adding additional teammates and leadership, and adding new business functions—it ceases to be solely about accomplishments. Your play-hard mentality may become your downfall.
As you continue to grow and diversify, you will notice that your team is gradually becoming too big to field all at once. Now you will have to start strategizing. If your team is still running crazily after the ball with no clear objective in mind, or if you are trying to score every goal on your own, you are still in the peewee leagues. This isn’t going to benefit you or your business.
As the CEO, it is your job to walk off the field and pick up a coaches’ role. You need to learn how to field a team that works together, who know the requirements of the position they are assigned, and can run effective plays. You need a backfield standing at the ready to defend your own goal if one of your frontrunners is beaten. Football is one of the top team sport and a good analogy for creating a functional team and growing your company.
Here are a few ways to age up out of the peewee leagues and start playing on a more professional level; moving from startup to scale-up mode:
In the beginning, it was probably necessary to have your entire team doing a little bit of everything. As you grow, your employees need to narrow their focus and develop specialized functions. While relinquishing responsibilities might feel like a demotion to some of your workers, it is critical to scaling in the long run. You may lose a few people during this restructuring but everyone will benefit from having set responsibilities and knowing what is expected of them. Whether you need to expand one person’s job into an entire department full of expert roles for people, or are forced to restructure the whole organization, assigning roles and specific responsibilities is a necessary evil.
You can still foster an environment of creativity and encourage your employees to take large risks. Ensure them that they can still take on ambitious projects, and praise them for going above and beyond. Just be sure they know that their job responsibilities come first.
After you hire about 25 employees, it is smart to move toward an 80/20 ratio: 80% of your employees should be players and 20% should be made up of coaches. You hopefully already have a lot of great players; it will be finding the coaches that can be difficult. You need to look for people who can lead people, who can inspire the team to play together and do it well, and be above any pettiness or infighting among the other employees.
These coaches are going to be the ones you lean on for the administrative duties: they are the ones who will handle your reporting, quotas, your metrics, and any other information you are going to need to make decisions regarding the company. Your managers are going to be the ones who enable your team to find and handle those pie-in-the-sky challenges. When they do their jobs well, your other employees have the time to do great things instead of being buried in the little things that are necessary to ensure your business continues running smoothly.
You need a new employee indoctrination system, because you cannot expect to just drop a new player into a game and expect them to keep up with the rest of the team. Nearly all companies put off this kind of training until it is too late—only when new employees are floundering do people realize how beneficial this can be.
You need to devote a few days, preferably a whole week, to familiarize employees with various aspects of the company. At companies like Galvanize, people are shown data science, web development and entrepreneurship. Every employee should have at least a basic understanding what your business does, be familiar with the competition and what sets you apart and makes you better. All of your employees should be able to sell someone on the company.
Happy employees who feel that they are valued are going to give you their all. Make sure that your employees’ morale stays high and that they feel appreciated. Once you make it out of that difficult, just-scraping-by startup category, be sure to reward your employees. Create a 401(k). Give them generous paternity/maternity leave, and any other perks that you think will boost your employees’ motivation. Showing your employees that they are a priority will encourage people to stay around, and a great benefits package will allow you to lure critical, high-level hires to your business as you grow. It is the right thing to do and benefits you as well.
This is a general list of some of the things you need to keep in mind as you move into a scale-up mode but you will find yourself with other issues as you continue to expand: Is a CFO necessary? How do you best establish your team? Do you need different compensation packages for different departments? How and when do you get involved in what is happening throughout the company? Find other entrepreneurs to provide a sounding board and ask them questions. Have advisors that you are comfortable asking the big questions that come up.
Growing from a struggling startup to a scale-up creates big and potentially unpopular changes, but these situations are what make owning your own business fun and rewarding. Best of luck!
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