Managing fast growth in your small business
by Donna Fuscaldo
The dream of every small business is to grow and grow fast. If the growth happens over a short period of time, managing it can be a challenge. Whether it’s hiring at a rapid pace or finding office space, a key to success during a time of explosive growth is flexibility.
“One of the first lessons we realized very quickly is don’t be afraid to shift the business model,” says Brian Curry, vice president at YouSendIt, the Campbell, California company that sends large digital documents for companies and started out with 15 employees and today has 185 and growing.
YouSendIt began by offering its service for free and relied on advertising to make money. But instead of forging ahead with the planned strategy, it listened to customers who didn’t want advertisements associated with the documents they were sending and switched to a subscription model, turning the entire business plan on its head. “We had faith that our customers would need a high level of service and upgrade to the premium offer,” says Curry.
According to Curry one of the key ingredients for its success has been its focus on doing one thing well and becoming the leader in that market, which in YouSendIt’s case is being the FedEx for digital documents. YouSendIt focused hard on achieving that and today it works with 193 companies and supports 30 million unique users. Curry says managing the fast growth wouldn’t be possible if it didn’t invest in its growth instead of worrying about the bottom line. “We had to create a service that stands up to all the rigors of millions of files being sent,” says Curry. “Profit is important but it’s not going to do any good if we’re the most efficient No. 5 in our category.”
Hiring to support growth
For many small businesses that aren’t a household name, hiring talent at a rapid pace can be tough, especially when it could mean the difference between success and failure.
For Milo.com, the San Jose, California Internet company that lets people search retailers for in stock items and was acquired by Ebay last year, a big challenge early on was hiring key employees. “People are the raw ingredient in technology and building a great product,” says Jack Abraham, founder and Chief Executive of Milo.com. “We spent a lot of time focusing on hiring especially in a competitive environment where we were competing with the likes of Google and Facebook and other big companies in Silicon Valley.”
Instead of settling for leftovers, Milo.com, which went from zero users to a million monthly users in a year’s time, opted to cast a wide net and look outside the local area for talent. The company hired a lot of people from the east coast who wanted to work with a Silicon Valley start-up. Milo also created an environment that fostered loyalty and offered a trial period so that the job candidates and Milo.com could test each other out. “Things like free lunches go a long way,” says Abraham.
For small businesses on a tight budget, using freelancers is another hiring tactic. Envato, the Australian based marketplace for digital goods used freelancers early on and still does today. “When you are growing fast you often end up short staffed,” says Collis Ta'eed, the founder and Chief Executive of Envato. Since start-ups aren’t sure early on what positions will be short term and which will be permanent, using freelancers gives a business more flexibility, which is important during times of growth, he says.
Once Envato was ready to hire permanent positions, Ta’eed says the company resisted the temptation to get the process over with quickly knowing the importance of hiring the right employees. “When your hiring everything slows down but once you get over the hump it’s much better and worth it,” he says.
Fight the urge to become a bureaucrat
When small companies get big, they often expand the number of managers, creating a level of bureaucracy that if it goes unchecked could slow down innovation and thus growth. Sure it’s necessary to hire more people to handle more customers, but doing it without creating road blocks to decision making is key. “We created a culture where we try to push decision making down to the organization closets to the problem,” says Zack Urlocker, Chief Operating Officer at Zendesk, the San Francisco-based online helpdesk company that grew from 20 employees to 85 in a year. “That’s often a challenge for small companies where early on everybody knows everything that’s going on. We want to have engineers making great decisions and sales people making great decisions.”
Expand smartly
Growing pains aren’t only resigned to hiring talent and increasing sales, it can also be associated with not having enough space. Many start-ups begin out of bedrooms, home offices or Internet cafes, but quickly need space to house their growing workforce. To save money while expanding Envato used shared office space early on.
“We didn’t have enough money to sign a long lease,” says Ta’eed. “There are a lot of places where you can rent out desks. At one point we had eight desks in a share office. It’s a nice flexible way to grow early on.” If sharing an office isn’t an option, Urlocker at Zendesk, says if at all possible try to get tax breaks from the city the company operates in. While not every city offers tax incentives, many do for companies that are expanding and creating more jobs.
“A lot of cities are now very savvy. Its great to have big companies, but a lot of job creations comes from the small companies that grow rapidly,” says Urlocker.
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