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The 2019 Synapse Summit brought some of the best leaders and entrepreneurs in Florida and beyond together for two days of speakers, panels, and networking. As a supporter of Florida’s entrepreneurial ecosystem, Sheryl Hunter, the Entrepreneurs’ Attorney, led a panel of business owners on scaling strategically. Here is a summary of the lessons and tips from the panelists when it comes to scaling your business.
Panelist #1: Jonathan Bowman
TProfessional EOS Implementer™ at GetVTH
Connect
Core values are a valuable tool for you and your team. They can be used to help inform business decisions as well as who and how you hire, fire, review, and reward. Know your core values, what they mean and create a core value speech. Give that speech to every new hire, and repeat it every quarter with your entire team.
Know the right functions and structure needed to get you to the next level and define the major roles for each function. Then, put people in those seats. Most entrepreneurial companies mold the roles to the people that work there, which can get you in trouble.
Consider implementing a 90-minute weekly leadership team meeting where the goal is to solve your highest priority issues, report on what is important and ensure people did what they agreed to do. Stick to yes or no, black and white – not explanations. Additionally, consider a 90-day quarterly “rock” setting (these are clear priorities that can be individual, team, or company-wide). Check how you did the past 90 days, re-check your vision and set new rocks. You should always be working on the most important priorities and assign accountability to the completion of these goals.
As goes the leadership team, so goes the rest of the company so it’s important to get the leadership team 100% aligned around where you are going and how to get there by answering:
You are going to hit the ceiling in multiple places in your company – revenue, profit, division, people and yourself. All businesses grow through periods of evolution and revolution; it’s never linear. Below are a few skills that can help break through the ceiling:
Panelist #2: Tom Cardy
Managing Director of T. W. Cardy & Co, LLC
Connect
An innovative idea without good execution won’t make you rich. Create and write down a concise mission and vision statement along with objectives and measurable key results or key performance indicators to keep you focused and moving in the right direction and on a planned timeline.
Things cost more and take longer than you plan, and you’ll go broke waiting. Launch, iterate, prove and improve so you don’t run out of cash.
Determine your key human capital, financial capital and intangible capital (i.e., intellectual property) requirements.
Understand what you need now and have now, need now but don’t have, need later, and don’t have. For the “don’t haves” consider all the alternatives to get and consider starting with one alternative and migrating over time.
Panelist #3: Karri Zaremba
Founder/COO of Venuetize
Connect
Once quality starts to get impacted, you will see a ripple effect through customer dissatisfaction leading to customer churn and the knock-on effects of a damaged reputation. If you’re growing so fast that your cash position gets compromised, you will likely join the 29% of startups who fail due to running out of cash.
When contemplating the revenue vs. profit question, profitability is obviously a critical component for success. That said, there is a timing mechanism to it. At least for venture-backed technology companies, most investors, particularly VCs, are only interested in startups with relatively high growth rates and therefore almost always value those businesses on a revenue multiple. So, for these types of businesses, starving growth to get to profitability is not a recipe for success. But they should at least show a path towards profitability and progress towards that metric.
This is critical to scaling the business engine, quickly and effectively onboarding new team members, and creating repeatable products or service levels with your clients. Optimize your organization structure with a view towards the “end state” once you hit that next stage of scale.
Even if this means paying them more, you must hire A-players; particularly if they have experience with navigating a high-growth phase of a company’s evolution. They will be able to wear multiple hats, not crumble under the stress and strains of scaling, and you will have a greater ability to trust and delegate.
For high-growth tech companies, it is costly and time-consuming to build everything yourself; look for where can you leverage channel partners for their distribution network or a component of your solution, provided it’s not core to your “special sauce.”
Functions that are non-critical, non-proprietary IP, or where economies of scale can be leveraged, consider outsourcing. Examples include legal, finance & accounting, and software development leveraging nearshore and offshore teams; doing so enables you to stretch a dollar, not permanently increase your cost base, and gives you the ability to flex and contract resources, based on the demands of the business.
In the world of startups, often less is more, as being flush with too much cash often leads to wasteful use of capital and loss of business control by the founders due to significant dilution.
Some indicators that a company needs to return to base camp for a while to acclimate before scaling further include: degradation of product or service quality, rapid accumulation of technical debt due to cutting corners, customer complaints or churn, and high staff turnover. The important thing to remember is this is a good problem to have and a universal issue for high-growth technology companies. 65% of startups fail due to premature scaling and the inexperience of their founders to navigate this stage of the company’s evolution.
“Don’t let the perfect be the enemy of the good.” No matter how good you think your product or service is, you need to test your hypothesis and solicit market feedback. 42% of startups fail because there is no market need for what they’re selling, with another 14% failing due to ignoring their customers. Don’t be married to your original idea but instead be open to listening, iterating, and adapting, based on what the market is telling you. This is true not only for your product or service but even for your pricing model or the way you are marketing.
Panelist #4: Daniel Greco
Managing Partner at Ark Applications, LLC. and Entrepreneur in Residence at the University of Tampa
Connect
In order to know where you are going, you need first to know where you have been. In any business, gaining consistent feedback from your customer is a critical first step in deciding if scaling makes sense for your business. The “voice of the customer” is key: it’s important to seek it and be open-minded to learn from it – even when the feedback is negative. Also, be sure to ask questions like: What can we learn from our customers and their customers? What impact are we making to their organization? How can we be better? What are we missing?
Most companies try to be everything to everyone during the early stages of a business, but the fact is that is not sustainable. Focusing on your core strengths and optimizing other tasks is essential to a scalable business. You also need to understand the core strengths of your business so you can invest in focused growth. But you must begin to focus on the key activities that will move your business forward in a focused and strategic way. Sometimes entrepreneurs must do the harder things and take the time to evaluate their core strengths. The ultimate goal is to enable the entrepreneur to concentrate on working on the business instead of in the business.
For the journey ahead, you must understand that developing a robust network is a key success factor in preparing to scale your business. The leader of the company must be a catalyst for growth by building and fostering key relationships. There is a competitive advantage in being able to cultivate relationships as you scale. This will continually reaffirm the value and expertise that you offer your customers and stakeholders. At the end of the day, it comes down to connections and who you know.
Most entrepreneurs want their businesses to grow but many don’t dream of their business growing past a certain point. If scaling your business is a priority, then you must develop a plan and action steps for how this will be achieved. Planning is the nexus between an idea or desire to scale and true success and growth. This step requires continual attention to detail, and investment of time to do it right. Knowing your business intimately will prepare you to navigate the journey to scale.
In order to scale, it’s important to document all of your activities within the company even if they seem small. Then, take the time to identify bottlenecks, labor-intensive activities, and repetitive tasks. Truly successful companies that scale focus on creating repeatable processes and workflows that align to their cores strengths. This allows companies to maximize their resources to focus on areas like strategy, customer segmentation, research & development, and innovation. An organization with efficient processes will ultimately be more valuable if an exit should occur. Key questions you should be asking yourself during this activity include:
Once you’ve turned your tasks into clear, repeatable systems, the next step is to automate as much as humanly possible. Automation in a business can be a very powerful tool and can majorly impact the trajectory of your business. One of the best ways to accomplish this is to leverage available technology to perform more work in a shorter period of time, in an effort to serve more customers or optimize your organization’s bandwidth. Managing the organization’s bandwidth, which includes your human capital, will empower your team to have the time to engage in activities that will fuel the company’s growth without having to add resources. A byproduct of utilizing automation is the data that you can curate in order to provide business intelligence to your company that will deliver operational excellence in ways that you could never access before. Don’t be afraid to think outside the box when focusing on the automation aspects of your business automation; be bold and think outside the box in this area as the benefits could be immeasurable.
The most critical aspect to scaling any business is having the right team to help execute the challenging tasks of scaling. Scientific studies have consistently validated that when you hire smart, trustworthy, and conscientious people even the smallest organizations can accomplish tremendous goals. Once you find them, then make the investment in their development and treat them well because a high-performing team that cares, shares common values, and has mutual respect for one another, will always outperform a team that does not share these traits. Having the right team could also become another innovation engine for the organization as they could present further opportunities for growth and optimization that you had not previously realized.
As your business scales you should be providing unwavering leadership that includes communicating the overall vision, the mission statement, values, and goals for the organization. Don’t be afraid to share what you envision to be the future for the company. Find a method to ensure that everyone in the organization has access to this information so they can understand how their contributions will aid in accomplishing these goals. Be as transparent as you can by providing updates to the organization on the progress of scaling in whatever time frame makes sense for your business. Celebrate and reward the organization when the results align with the overall goals of the company. As a leader, you need to find that delicate balance point between being the person that’s driving the vision and the person that’s the cheerleader of the organization.
If you want to succeed, you have to determine that you want scale no matter what happens. This is one of the most challenging areas for an entrepreneur to stay focused during scaling activities as they want to continue to moving fast or pivot when something seems to be developing slowly. But, it is mission critical that you have patience as scaling takes time. Unexpected issues will occur that will surprise you and the organization. Embrace them. Learn from them. Trust the process and all of the work that you did leading up until this point. Your energy and resolve will make scaling successful and ultimately make your business grow.
DISCLAIMER: This blog is for educational purposes only and does not offer nor substitute legal advice. Additionally, this blog does not establish an attorney-client relationship and is not for advertising or solicitation purposes. Any of the content contained herein shall not be used to make any decision without first consulting an attorney. The hiring of an attorney is an important decision not to be based on advertisements, or blogs. Hunter Business Law expressly disclaims any and all liability in regard to any actions, or lack thereof, based on any contents of this blog.
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