Build to Grow
I had a reasonably successful entrepreneurial career. The company I started grew over the years and eventually reached over $20 million in revenue. However, I had a difficult time reaching the next level. One of the primary reasons was that we did not have the infrastructure in place to manage growth. In other words, we were not built to scale upwards.
The company was originally started with a good idea, and several very talented individuals. We were able to work together as a team and create some very special projects that generated high profit margins. However, when the business reached the point that the founders were no longer involved in the majority of the projects, the company began to stall. This occurred because our current management systems were not scalable beyond that point.
When we reached the point that we had outgrown our current management systems, we had to make a decision. One decision would be to keep the company as it was, and not try for any growth. The company was profitable, and we could have stayed put and made a good living for years. The other decision was to re-tool the existing management systems so that they could support the projected growth. We decided to take the path of upgrading the management systems.
This created challenges. The company had operated with a certain management philosophy and hired people that worked within that philosophy. Scalability requires adjustments to your current philosophy. This means retraining employees on the new systems, policies and procedures. It also requires a great deal of conversion from the old systems to the new systems. Particularly since one of the problems with the older systems was their inability to effectively document company, policies and procedures.
The need for scalability arose when the original founders and startup employees were no longer able to individually track each project or client. The original team knew each other very well and had shared tribal knowledge on how the company operated. However, as new employees and clients were added, the company required more standardized policies and procedures. The original founders and engineers needed away to coherently transfer their skills and visions to the new employees.
A lesson I learned during this process is tha6 you need to ask yourself if you are personally scalable. I always thought that with my own personal skills and the skills of my partners, we could scale as large as we wanted. This was a misunderstanding of what it takes to scale. Scaling requires you to be able to transmit your skills and your vision throughout your organization.
I knew that we had reached a chokepoint in our growth. Something had to change. I also understood that my partners and my existing staff would have to change as well. I had to understand what was blocking my changes before I can implement change into the organization.
I hired a personal organization specialist, who used a neurological based system to help executives grow into their position. Through much trial and error, I begin to understand what I needed to do to make the company scale. The biggest change was that I was going to have to be the leader in accepting and utilizing the new policies and procedures. The entire company had to understand that I believed in them.
The other issue is that we had to understand how to change our systems so that they could be scalable. Fortunately, we were in the process of becoming a Cisco Master Service Provider. This is a very difficult process and very few companies achieve this status. Cisco provided an ITIL audit format to determine if you qualified. In the beginning, I thought this was excessive. However, as I looked through the program, I thought this actually could help. If we could align ourselves with the ITIL processes and procedures, we would establish a very nice platform for growth.
This process involved replacing several systems, upgrading other systems, and re designing many of our policies and procedures. I made sure to involve key staff members in the process to help with buy-in from the rest of the company. The end result was that we upgraded our tickets system, project management system, and network management system. One-of the most important aspects of the upgrade was implementing a rigid communication plan that eliminated multiple repositories of knowledge. Prior to the upgrade, it was a combination of email, spreadsheets, written notes, and other project documentation scattered about various databases. We created a centralized document repository and developed a specific method to communicate about projects. Therefore, all information was contained in a single database This sounds simple. It was very difficult to have some of the original employees change and submit themselves to the new communications process. The main reason it was successful is that I committed myself 100% to it. Therefore no one could say why do we have to do it if you don’t.
My other partners balked at the new processes. We were doing quite well financially, and they did not see the need for some of the changes. One of my partners was near retirement and sadly one of my other partners became a victim of prostate cancer. We decided the best solution was to split the company into two parts. One part of the company was specifically dedicated to large clients in the cruise industry, and the other part was dealing with enterprise clients headquartered in Chicago. My partners then bought me out of the cruise ship part of the company, and I ran the remaining company as the sole owner. We were able to resolve this quite amicably to everybodys satisfaction.
It is important that the entire executive team is on board with the changes. Without their total support entropy will eventually crash the system. Therefore, it was important to realign everything so that the executive team could either leave peacefully or get with the program.
The entire process took over two years. At the end of the process, we were a certified Cisco master service provider. Cisco was so impressed with our project management system that they were going to recommend how we did things to other service providers. However, it cost us two years of growth.
I ran the company for a year after we split. I was then made a very good offer to sell the company to a group that wanted to become more active in the service provider business. I believed that I had the opportunity to expand my existing business well beyond, its current revenue, but the offer I received removed all the risk off the table and solidified my financial future. I was already 60 years old and I decided that I would rather secure my future then take any more risks.
As I look back, I wish that we had taken a much more detailed look at where we wanted to go and how we would get there. We should have structured the system for growth. This would’ve prevented the difficult and expensive process of re-tooling while we were being flooded with business. Therefore, reducing tension and problems within the company. I believe that had we set our systems up appropriately in the beginning we would’ve avoided a lot of the pressure that caused my other partners to exit the business.
Today it is much easier to plan for scalability. When we started the company it required a large investment. This was in 1996 prior to the cloud and software as a service vendors. I believe that if I wanted to start Equivoice today, that I could do it for 75% less capital investment than I did in 1996. Small companies have access to software that in the past only large companies could afford.
I am satisfied with my accomplishments. However, I believe that I would have done much better. The tensions and stress caused by under organized growth affect everyone in the organization. In retrospect, I would’ve split the company sooner and set the systems in place prior to pushing for accelerated growth. I would ask you to examine yourself and your company and decide if you want to grow. There is nothing wrong with a lifestyle business that generates a nice profit for the owners. You may never become Elon Musk, but you can have a very nice living. If you want more, then you’ll have to ask yourself if you’re willing to do what it takes. This is more than hours and time. It is looking into yourself to determine what you need to do personally to make this work. I believe the process is worth it and I think that you will have more satisfying career and life as a result.