by Brent Freeman, co-founder and president of Stealth Venture Labs
Despite what many entrepreneurs may think, know this: Not all growth is good growth. In fact, expanding too quickly can be just as dangerous as not growing at all.
Companies that put their noses ahead of their skis in a quest for glory often lose balance and fall flat. To maintain stability, you have to update your operating procedures, processes, and people as your organization develops.
Startups that successfully scale understand they can’t just throw warm bodies at their problems — they often need to recreate processes that got them to where they are today. They constantly evaluate their systems, frameworks, and processes to determine whether they’re operating in the most effective manner for where they are now.
This was an obstacle I encountered while at Roozt.com, the Etsy-style platform for social entrepreneurs we launched in 2008. The venture garnered great press and put many brands and products in the spotlight, but the fast growth we experienced ultimately led to us putting our nose in front of our skis before we knew it.
With over 10 years of entrepreneurial operational experience, take it from me: If you don’t refine your startup’s systems to meet its growing needs, you end up treating symptoms instead of the ailments. And those untreated ailments will ultimately kill your company.
An Ounce of Prevention Is Worth a Pound of Cure.
Think of your startup’s journey as a cross-country road trip. You’ve got a great car, and your eyes are glued to the destination. But the preoccupation with getting there prevents you from checking the oil or stopping for gas.
The gas gauge is on E, but you keep telling yourself, “I’ll fill up when I get there.” So you speed up even more, step your foot on the gas, and ultimately run out of fuel well before you arrive at your destination.
Thriving companies need the right growth mentality just like your car needs fuel and oil. Follow these steps for smart, dynamic expansion:
1. Build flexible, scalable processes.
At Roozt, we struggled with customer service as we grew. The number of daily cases we had quickly rose from 10 to 100 to 1,000, and our lone customer service representative insisted that we hire another person to help out.
We listened and hired another team member — but our customer service needs continued to double as the company expanded. So we continued to hire more full-time salaried employees to help ease the pain. In the short term, it helped, but in the long term, we were putting a Band-Aid on a large wound.
It wasn’t a sustainable solution, but we were in reactionary mode. We were doing whatever it took to keep pace with how quickly our needs were changing.
Had we refined our customer service processes as we scaled up and implemented a real system for managing cases better with just one person, we might have made more thoughtful, less frantic decisions. Create and revisit procedures as you grow — what got you to where you are today probably isn’t right for where you’re headed tomorrow. Apply the right solutions to the problems that arise as you expand, and iterate on the processes you already have in place.
2. Remember that not all growth is linear.
Some days, the business will be going at breakneck speed, while others will feel like you’re moving in fits and starts. Be mindful of these shifting dynamics, and think through the solutions you’re relying on during different periods.
Stay agile so you can respond intelligently to your company’s needs. If you get caught up in the whirlwind of an extreme growth period, you can’t just bring things to a halt to catch your breath.
Carve out time each week to analyze the biggest three to five problems facing your team. Methodically review each one, and work out a process for solving it. Then revisit the issue every four to six weeks to see whether it’s improved. These proactive measures can help you avoid catastrophes before they happen.
3. Work on your business, not just in it.
As Roozt’s customer service problem got out of hand, we realized that we were just throwing people and money at the problem. We analyzed the complaints our team received and found that 80 percent of inquiries revolved around one or two issues.
By tweaking our customer experience, we cut our call volume in half. Had we continued hiring new customer service representatives instead of dealing with the root cause, our personnel costs would have sunk the company.
When you’re working in your business, you treat day-to-day symptoms such as disgruntled employees, unhappy customers, and other matters. It’s not until you remove yourself from the day-to-day and get a 30,000-foot perspective of the business that you can start understanding how to grow efficiently.
The path to growth is a winding one filled with many twists. Be prepared to navigate the turns, the flat stretches, and even the detours. It may not be a particularly smooth or speedy journey, but if you take the time to stop, fill your fuel tank, and change your oil, you will ultimately reach your destination.
Brent Freeman is the co-founder and president of Stealth Venture Labs, an early stage venture lab based in Los Angeles and San Francisco that focuses on incubating and accelerating scalable e-commerce businesses using operational expertise, data science, digital marketing systems, and compelling business models. Brent is also an Entrepreneur-In-Residence at Crosscut Ventures, a venture capital firm based in Los Angeles, where he advises on customer acquisition, digital marketing, and consumer internet investments.
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