I’ve been part of several start-ups.
Some have failed.
Some have grown.
Some have exited, and I’ve ridden a unicorn.
The common thread is they were keen to grow.
Growth is hard.
Even when you don’t want to grow, it’s always hard to stop it when it is organic. I still remember waking up in the middle of the night with my legs aching, later when my grandmother saw me, she’d say, “my, how you’ve grown!”
Start-ups are no different; the pain comes in various forms and inconvenient times. From my experiences, I’ve seen the different growth patterns and have quantified the first three key growth stress points for small businesses.
The first growth point is moving from the solo founder/visionary to the first employee or founding team.
The second growth point happens at about ten employees or so when collaborations need to occur frequently.
Finally, the third growth point happens at about twenty-five full-time employees (FTEs) when a management layer is needed to keep the system on track.
While there are growth points beyond those, this article won’t touch on them.
Table of Contents
Your first growing pain: partnerships
It’s easy to start a company.
Form an LLC with your state office, get an employer identification number (EIN) from the IRS, and you’re off to the races. It costs less than fifty dollars to do yourself. Many resources are available to you, such as How to Start an LLC, that can guide you through the process or recommend people who can do it for you.
Once you’ve started your business and work is coming in the door, you’ll need to balance working in the business with working on the business. Working in the business is doing the work you’ve set up your company to provide, be that a service, a software, whatever. Working on the business is doing the work to grow and scale your business. If you want to grow your business, you’ll need a partner that can work in the business while you work on the business.
That partner can have complementary skills or can be someone who can help you with the work or service you are already providing. Someone with complementary skills would be a technical co-founder to build software for the marketing or sales visionary. The helper would be a trained professional such as an accountant or legal assistant if you were a service provider.
The problem is that those first individuals will invariably become the nucleus of your business. As members of the core team, while they are not the founder (granting co-founder status and founder shares makes this easier), they will have a hand on the torch moving forward; their impact will be felt across your organization as it grows.
In a word, the reason your first hire is so critically important is that they must be able to help carry the torch, drive the mission forward without having to be told, trained, or managed by you, the founder and visionary. If for some reason, you need to carry out one of these actions, it will reduce your ability work on the business and grow at any discernible pace.
Therefore, the first hire or first partner must be willing and able to do the work, be able to be relied upon, be invested in the mission and vision. If your hire or co-founder doesn’t tick all these three boxes, they will compromise the organization’s growth at best, scuttle your business at worst.
Concomitantly, as you grow and you hire your first marketer, first sales rep, first customer success rep, etc.… they too must tick all three boxes. The first people to land in their position must be intrapreneurs; self-starters and complete their mission with minimal direction, oversight, and a bit of creativity.
Every bit of management you need to invest in people whose job is to launch a department is time and energy you are not investing in your company.
Once you’ve found a great person to help you fulfill your mission, the next growth struggle point will happen at about ten full-time employees.
Your second growth spurt: collaboration
While humans are inherently social creatures and work well in teams, guide rails need to be established as poor collaboration can kill productivity.
Think of it, before about ten employees, everyone had their job. Each job was unique, isolated, or both. Once you hit that critical number, your team has to start working together to provide the service and support your client needs on an every increasing frequent basis.
While working together is a great way to get the clients satisfied quicker, it also means that people need to be effective and efficient communicators. Not only that, but they also need to have a system to pass relevant and critical information along.
When people in an organization have to collaborate, it is time for a company to focus on its process, specifically collaborative processes.
Collaborative processes are the service-level agreements (SLAs) that your team will implement to allow them to know what they are responsible for, what their colleagues are responsible for, and when and how to pass the baton. Kenny VanZant called this “golden motion” one of the critical areas where a young company should focus. A company with its handoff processes on point is a company that is ready to scale and scale quickly.
Once the process is set, technology can be layered on the process so that the technology facilitates and amplifies the process.
This is an important point; technology will always amplify any action.
If the process isn’t sound, technology will amplify incorrect or incoherent data that will result in the loss of adoption. Ever heard of the expression garbage in garbage out (GIGO)? That’s technology amplifying poor processes.
However, when the process is sound, tested, and proven, technology will simplify and enhance collaboration efforts. Some technologies will even provide guides for building effective processes. For this reason, collaboration platforms such as Trello, Asana, Notion, Monday, Wrike, and others are typically implemented around this time.
Concurrently, for a sales-driven organization, a customer relationship management system (CRM) such {list of easy CRMs} are typically launched at this time. These systems allow marketing, sales, customer success representatives, engineering, and finance, to share the information needed to collaborate on projects. {links to building stack articles}
While it is possible to collaborate without technology, using shared spreadsheets and or documents, through Google or Microsoft, collaboration platforms and CRMs can act as force multipliers that allow small, nimble organizations to punch well above their weight class.
Now that collaborations are running smoothly, the next challenge you’ll face when growing happens at about twenty-five employees; this is when you bring in your first managers.
The third growth challenge: managers
Hiring your first manager is a massive point in any company’s growth curve.
Why is hiring that first individual or group solely dedicated to managing, be they a manager, a director, a vice-president (VP), or a chief (C suite), a huge step?
They are the first group solely responsible for looking inward at the company, not outward. These individuals are not customer-facing nor directly generating revenue. However, their presence can generate or deplete profit at an exponential rate.
Hiring that first manager is compounded when a company is faced with the prospect of hiring an entire management layer. Think of it, once a sales rep becomes successful at driving business, that sales rep may be employed (or re-deployed?) to manage the new crew of reps while concurrently a marketing manager is hired along with a customer success manager.
A company that was initially comprised of team members all working to bring on and support customers now has a management team that is solely focused on refining and optimizing processes concurrently, ensuring that the front-line personnel is working at their required capacity.
There are similarities between the first manager hires and the first hire or partner.
Your management team needs to be dedicated to the mission and vision, not punching a clock. Employing a clock-punching manager not invested in the future success of the company will lead to an unmotivated front line. The front-line marketers and sales reps are the people directly dedicated to driving revenue; when they are unmotivated, income diminishes or dries up.
I’m not saying hire someone to do forty hours of work and have them do eighty; what I am saying is that person needs to be passionate, about their role, and incentivized on growth..
Typical these individuals are the first that come up with interesting and innovative ways to motivate their teams. These are the folks that will bring in some level of gamification. It could be as simple as a celebration channel within the company communication platform such as Slack, Discord, or MSTeams. It could be something more robust such as a SaaS like LevelEleven, Ambition, Hoopla, or Spinify. Granted, deploying any of those platforms may require integration with other platforms that are helping with your process.
Conclusion
Growth is hard.
Growth takes time.
Growth, however, follows predictable patterns.
Outlined above are the first three growth points a company will encounter. Understanding those growth points, their potential impact on the company, and the company’s future will ensure that a founder can adequately prepare to address those challenges before they become yet another fire drill that must be dealt with hastily and under duress. When founders don’t understand how to grow they make poor decision that have severe ripple and cascading effects far in the future of the company’s future.
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