the boring stuff delivers scalability

Posted by in Investing, Opinions

It is no doubt unfashionable to say so in this dynamic start-up environment but there comes a point in an entrepreneurial business when you just have to tackle the mundane. The primary reason for this is that start-up flexibility isn’t scalable. Every young firm has to be dynamic, adaptable, efficient and manoeuvrable – to a point.

That ‘point’ is going to be, hopefully, the point at which it is clear that the business has capacity to grow and develop beyond its current capabilities and start-up stakeholders, i.e. success is on the cards. I have seen businesses that have passed the ‘point’ and the entrepreneur has been turned to a juggler, spending all their time keeping balls in the air, fully consumed by doing so and therefore not growing or continually refining their business but caught in internal paralysis. Then, faced with the awkward position of either stalling whilst processes are reverse engineered and/or dropping a few balls to free-up time to do so, the entrepreneur becoming even further distracted from being entrepreneurial by having to manage chaos and multiple stakeholders.

Ideally you want to try and catch this point ahead of when it actually arrives such that the control procedures can be put in place before the business requires them. These ‘procedures’ needn’t be sophisticated and are as simple as expenditure approval levels, expenses processes, standardising contract documents, formal allocation of sales incentives, roles allocation…… etc….. all things that will accelerate future decision making rather than management/shareholders being consumed in internal procrastination and debate. Forty eight hours of intense work (as we have recently done with a company) should be enough to begin to imbue the company with methodologies rather than the company being reliant upon the spirit of a few founders to keep it on track.

  1. The triggers that identify that processes need to be put into place are reasonably clear and, for me, number amongst them:
  2. When you are considering employing your first salaried only employee (their motivation will be emphatically different from yours);
  3. You are receiving hundreds of cc emails a day as you are being copied in on everything as you haven’t clearly defined roles and authority levels in the business (the ‘need to know everything’ start-up feature);
  4. When legal documentation becomes a regular feature of your business;
  5. When you identify your first delivery bottleneck;
  6. Your first ‘shit we should have spotted that’ comment received from a customer;
  7. When week in week out you are repeating/revisiting the simplest of things;
  8. When you are considering third party capital for the first time.

Clearly it’s not an exhaustive list but the common theme is a requirement for systemisation.

Good preparation up-front will serve you well and even a first hash at making a small set of rules will begin to move things in the right direction. The very rigour of considering what aspects of a company’s processes can be systematised will in itself help. The simple consideration of whether a specific decision or management discussion is ‘repeatable’ should be the trigger for seeing if it can in some way be systematised.

Mundane I know. Obvious perhaps. Tackled in advance – rarely. Tackled in arrears – often. Tackle the boring and then scalability will more readily follow as the key stakeholders will be more able to focus on their key skill sets. Additionally 3rd Party investors are going to want to be a) reassured and b) delighted that if the entrepreneur(s) is/are hit by a bus then there is some momentum in the company itself and not a single or limited focal point through which everything passes. It may even enhance value.