Much as every entrepreneur would like to think their business is unique, certain patterns recur when companies grow. There are recurrent watersheds that an enterprise must cross as revenues and team expand. They happen to everyone and there’s no way to avoid them.
These milestones along the path of growth occur when the organisation reaches certain sizes – roughly speaking at 10-12 people, 30-35 and about 120. I’m told by another serial CEO/non-exec that the one after that happens around the 300 mark, though I’ve not personally been there.
Each of these staging-posts signals that the structures and processes which sustained the business up to this point are not the ones it will need in the next phase, after the watershed. I’ll put it more strongly; those structures and processes simply won’t work, not then. If you’ve taken a business past a dozen employees, you’ll know this from experience. Take a simple function like internal communications; every entrepreneur remembers the early days when you all worked in a single space, probably around one big table, and communication happened via a mixture of osmosis, shouting across at each other and earwigging.
Then there were eight or ten of you and that began to stop working. A couple of people working on the same project developed significantly differing impressions of what the client wanted and how much they had said they were prepared to pay for it.
By the time there were twelve of you it was really starting to create problems.
Extrapolate that syndrome from communications across project management, client/account handling, operations, finance, management information, product development, marketing and so on – those interdependent activities that constitute the humming engine of a functioning business – and it’s easy to see how what was relatively organic, unstructured and implicit might need to become more planned, structured, codified and agreed. The transition into each subsequent stage poses similar challenges but in a more complex form that reflects increased size.
And if you use a lot of freelancers – which is not just prudent commercially for many entrepreneurial businesses, it is also a sensible response to the technology-driven fragmentation of digital-era expertise – then you may well experience a special version of the problem. You’ll look at the books and note that there are only twenty-two people on them. Phew, there’s a way to go before you have to deal with the thirty-something transition. So then why are you having all these problems with people being less-than-fully aware of what each other is doing; why is your work flow creaking at the seams and why is it so difficult to keep track of project profitability?
Forget the payroll for a moment and look around the office/studio. Do a head count. Remind yourself that for the past four months there have been six or seven freelancers in the house on any given day. So you have actually been managing a team of twenty-eight or twenty-nine people, knocking on the door of the next stage and – as soon as you stop to think about it – experiencing symptoms of an organisation that’s not quite fit for purpose.
There’s a simple remedy. Always adopt the systems and processes of the next stage to the one you are in. Not the current one. You simply don’t know when the unexpected additional brief, the one extra contractor, the new business win from a client in a hurry, will tip the business over that watershed – there is no data available about the future. So don’t get caught on the back foot. It’s a world of pain that’s entirely avoidable.