by Daniel Barnett, is the founder of WORK[etc]
Running a startup is always going to be hard work. More than you ever thought, in fact, and just when you think you have it all under control, your startup starts to grow and the game changes. Here are five things I learned (and was forced to learn) on how to manage a fast growing company.
Repay that Startup Debt.
In the early days, we would have several small bugs in the code being reported every month or so. We were moving so fast that these minor, infrequent bugs could afford to wait. We had more important things to focus on.
But as we grew and piled on customers, reports about those once-a-month bugs became weekly, then daily, until suddenly we were getting hundreds of reports a day.
These small, seemingly infrequent issues in your product or service (you know the ones!) can’t be ignored forever. You cut corners to meet a deadline, hacked in some feature to keep a customer smiling, or purchased the cheapest but less reliable equipment because that was all you could afford. You took a loan out on your future to make ends meet today. In the software world this is technical debt.
Aim to repay your “startup debt” as soon as you’re able. Think of it like this: the longer your startup debt is not repaid, the more interest it will accrue over time and, ultimately, the more it will cost you in the long run.
Cash Flow is Still King.
Growth can bring in a lot of cash, but it’ll also increase the speed at which you spend it. Watch your burn rate — the amount of capital you use up every month. While this should be something that you do all the time, keeping your burn rate in check is even more important when you’re scaling up as it is inevitably amplified, sometimes exponentially.
Creating and regularly updating a simple KPI spreadsheet is a good start. Every day for the past five years, I’ve used one to keep track of our company cash flow — everything from site visitor count to dollar sales renewals. They might not tell the whole story, but these numbers provide enough information for me to quickly spot trends and adjust accordingly. It makes us accountable to cash flow every single day. Here’s what the first few months looked like:
Be Your Own Number One Customer.
Fast company growth can give you a euphoric rush. After all, success is figuratively knocking on your door! Unfortunately, the euphoria means you also run the danger of taking on more than you can handle. This is why it’s important to recognize your company’s limits and to work within them so you don’t sacrifice quality.
A no-brainer way of getting close to your product is to be one of its biggest customers. We use WORK[etc] the product every day to run WORK[etc] the business; if we think something isn’t quite right or something starts to annoy us, you know we’re going to improve it as a priority; if only for ourselves. By making everyone in your business live and breathe your product you naturally encourage a process of consistent and constant quality improvement.
Not All Customers are Created Equal.
The potential customer you say “no” to can be the most profitable customer you ever (not) have. A customer that is either a bad fit for your product or that you feel is going to be “high maintenance” is most likely a customer you don’t need right now.
The lure of money is always strong, but with bad customers it is a false economy. You’ll spend more time than you need on support, which means less time available for what’s important. Worse still, you risk that customer having an unwanted influence on product direction just because they are in your ear several times a day. And don’t forget about the stress!
Unfortunately this is one of those lessons you’re probably going to have to learn the hard way – saying “no” to signing that customer just seems so obvious in hindsight.
Startups are hard. Even if you are doing things right, they only ever get harder. The strategies above came about from brutal experience and sleepless nights, but at the end of the day they helped guide the important decisions as our business grew beyond the startup stage.
Daniel Barnett is the founder of WORK[etc], a cloud-based CRM, Projects, & Billing management tool. He took the business from 1 customer to 1,200 and beyond.