This is a guest post by operations executive Keir Tutt about scaling operations (learn about him below).
Building a startup seems like a simple formula. You come up with a great idea, perhaps you seek seed funding, then you develop a Minimum Viable Product, acquire customers and sell, sell, sell! Nothing else matters, right..? But once you get some pioneer customers on board and it becomes clear your MVP has legs, how do you progress quickly from hustling to scaling operations for growth – without everything falling apart?
One of the critical decisions founders need to make is when to look beyond sales and marketing and start investing in robust operations to sustain growth. The right timing and approach depend on the nature of the startup and whether the founders have an operations background. If they don’t it probably makes sense to hire an experienced operations manager sooner rather than later. Either way, setting the conditions for growth with a strong operational foundation can be the difference between success and failure, so it certainly bears serious consideration.
How do you set the conditions for scaling operations?
There are both internal and external considerations when building operations in a startup. Tech companies in particular tend to focus on developing an MVP that serves customers well and justifies their initial investment (external). However this often means the underlying backend infrastructure (internal) is clunky and inefficient.
The question to ask is “what happens if we double or triple our customer base?” The most common answer is to hire a lot of people to do administration, which won’t be a long-term solution because headcount will continue to scale with revenue. That’s a great way to burn cash faster than you can raise it! A better answer starts with a strategic thought process.
Make a roadmap for scaling operations
The first task is to create a clear roadmap balancing great new features for customers with efficient backend processes that scale. To handle exponential growth without adding significant overhead costs, it’s important to invest in automating product delivery as well as product features.
In terms of prioritisation, the mantra “more for less” couldn’t be more apt. Money in a startup environment is often tight and investment must be aimed at processes which move the needle. Operational efficiency is important but ultimately processes must facilitate customer acquisition and have flexibility built in to adapt to changing requirements. Keep in mind that building the right administrative environment, while potentially an expensive upfront cost, will work out cheaper than continually hiring new people just to keep the wheels on.
Build software with integration in mind
All too often startups choose systems and tools which function really well for individual functions but operate in silos without proper integration. This can necessitate double entry of customer or order details, result in reporting data that need to be knitted together manually to conduct useful analysis, and even cause business critical processes to break down – losing the business vital revenue and force-churning customers. Thinking holistically and consulting relevant stakeholders from other departments helps mitigate suboptimal software choices that inhibit growth.
An example scenario is selecting a Customer Relationship Management platform. The obvious solution early on is the best system to accelerate sales – the procurement (or product management) process may even have the sales team as its sole stakeholder – meaning features like lead generation and pipeline management are front of mind. That’s not inherently wrong, however:
- Expanding the parameters to incorporate features like contracting, ongoing communication and order processing could be invaluable in creating efficiencies for other functions down the line.
- Consider how your CRM interacts with your customer service software. End-to-end integration can bring significant cost savings as your growth targets become a reality and enquiries start to stack up.
- Be mindful of cost structures. Some applications can be implemented in such a way that they grow with your organisation, with scalable license fees that are relatively inexpensive for smaller startups. Others are not so flexible.
Think about scaling your operations team
It’s not all about technology but also your people. How you set the conditions for them to grow and develop can have a material impact on how the company scales. Operations in a startup will often begin by necessity with a very small team covering many diverse activities – therefore each individual needs to be able to turn their hand to anything. As a result people become skilled generalists, with a great breadth of knowledge. As the company grows, technical specialisation will need to take over.
Kickstart that transition process early on by identifying talent and understanding what individuals prefer and excel at. The worst thing you can do is suddenly replace all those experienced generalists with more expensive specialists who don’t understand your business.
Document everything!
Even as a small company, make sure all your processes are documented and stored in a shared repository like Google Drive, for day-to-day reference. This may seem counterintuitive in a startup. Surely everyone needs to be focused on delivery and there’s no time to keep notes?
It may seem tempting to save yourselves the time, however even in the short-term underpinning your operational infrastructure with up-to-date process maps and how-to guides allows you to onboard new team members more quickly. That means they can contribute to the business sooner and with less time spent in low-value training.
In the long-term process development will be easier and the valuable intellectual property contained within these documents will demonstrate to your investors that the company is well run, as well as making performance analysis and due diligence more straightforward. Any start up looking to gain an external accreditation such as ISO 27001 or ISO 9000 will find the process easier with proper documentation in place.
There’s no substitute for hard work
When it comes to preparing your operations function ready for a step change in growth, there are no easy answers or shortcuts. Like all aspects of developing a startup through it’s growth phase the best approach requires a lot of hard work and dedication. But with the right thought process and the right people and resources in place, it’s possible to make that growth smoother and more predictable.
About the author
Keir Tutt is a values-driven operations executive who loves building and scaling companies. He has over 25 years’ experience in both corporates and startups, having worked primarily in financial services, HR and technology.