3 Lessons From Scaling My Company Through Economic Turmoil
Founders aren’t motivated to create companies, they are driven to solve problems. Elon Musk wanted to accelerate the world’s transition to sustainable energy, as Ashlee Vance wrote in his biography of the founder. Jim McKelvey and Jack Dorsey aimed to bring contactless payments to everyone from café customers to the electrician.
I started my own company because manufacturers deserve a powerful and adaptable way to run their businesses with one piece of software. That was 25 years ago, and, in that time, I have learned how to build a technology business that has made it through the dot-com bubble, the Great Recession and a global pandemic.
While customers’ needs may shift and market dynamics may change, founders who survive are constantly adapting, embracing new skills and materials that will keep their solution as relevant as it was on day one. As I continue to grow my own global business, I always go back to three lessons that have helped me to adapt my business to scale.
1. Constantly Assess Your Needs
As your company grows and your products are refined, you must constantly reassess how you do business. Do you have the skills and processes in place to operate in your new stage of development? Do you have the talent on staff to help manage $800 million in operating costs or are you still staffed for $500,000? Failure to successfully evaluate all levels of your operations and adjust accordingly can be costly.
A commonly cited example is the meal-kit delivery service Blue Apron, which was valued at $2 billion in 2015 and — as I write — is priced around $7 per share. Blue Apron managed to scale its front-end to drive consumer demand, but it could not scale up food processing in order to fulfill its deliveries. It has since lost millions of dollars and hundreds of thousands of customers.
Founders should take note and realize that, as their business grows, the cost of mistakes will only increase. That’s why it is so important to manage processes more carefully and build systems that grow with any level of the business.
A tactic that has always served us is to build multiple financial outs into our business. As a privately funded business, we don’t go out and raise tremendous sums before we need it. Instead, we need to ensure that we have the financing to support ourselves in the event that our business has to slow or stop. That means nurturing lines for solvency and making sure that the lifeline that worked last year still works this year.
That same forethought and planning will help protect you against costly mistakes. At the same time, frequently reassessing the results will ensure that you move closer to achieving your goals — and those of your customers.
2. Prepare for Future Growth by Constantly Reevaluating
Sustainable growth cannot be achieved if leaders do not understand why customers use their products or what resources they need to keep their customers satisfied. The best product feedback will come directly from your customers, the end users.
For us, this means trying to understand how the third-shift warehouse worker interacts with the warehouse management system (WMS) or how the production scheduler interacts with the scheduling tools in the software. A successful product or software should have a major impact on how well, how easily and how efficiently customers can deliver their best work.
It is also important for businesses to analyze their industries to identify how it is evolving and how they need to adapt to keep up with that evolution. As companies grow, they would also benefit by reexamining their success and expertise in engineering, quality control and cost containment. If any of these aspects are coming up short, it could hinder the next phase of growth.
3. Build and Nurture a Culture That Continuously Drives the Business Forward
It can be difficult for businesses to find the talent they need to support growth, not only in the early days of operation, but over the course of several years. They need a team that provides the capacity to scale, including the right people to take on bigger and more complex projects as they develop.
Culture is key to attracting people who possess the necessary level of expertise within key areas. Through your company culture you must establish values that will flow from the very top of the organization, down to the bottom.
At Deacom, we like to think of ourselves as a family. Our culture is collaborative and supportive, but it’s also about working hard to achieve a common goal. In order to achieve that, we are always thinking about culture, especially as we hire.
A few years ago, for instance, we made a conscious decision to throw away run-of-the-mill interview strategies and to focus on objective-based hiring. Before interviewing a potential hire, we think hard about what it takes to successfully execute a particular role and we design an assignment that depends on those key functions. If we are looking for a software programmer, does the candidate go the extra mile in the assignment to create an attractive user interface? Does the person deliver clean and concise code? We look for the ability to execute and reason, but we also want team players who are going to help Deacom be a better version of itself.
Those values, expectations and ways of working should also be impressed on those who have the job. Culture is reflected in the smallest of interactions — whether it be with employees, customers or partners. If you’ve hired the right people and lived by example, then that culture will begin to sustain itself whether or not the founder is in the room.
Our own culture was developed over a long and slow process, but it ultimately proved to be quite simple. We treat our employees with honesty and respect. As a result, they treat our customers with equal respect.
While knowledge, talent and skill set are invaluable when evaluating new hires, founders and business leaders should not ignore the importance of cultural fit. It should be a crucial part of the hiring process to determine which prospective hires hold the same values and will empower the firm to do more and do better.
Never Lose Sight of What You Do
The current climate has presented a number of challenges to the business world, but the basic tenets of growth and prosperity still stand. Missteps can haunt founders and business leaders, but they are ultimately lessons to build on as we move forward. Through forward planning, constant reevaluation and attracting the best talent for the culture, leaders can turn challenges into opportunities. By concentrating on each of these aspects, businesses will be better prepared for growth in the months and years to come.
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This article is based on experiences first presented on Forbes.com.