William Bakhos runs JimmyData, an adwords & analytics tool for digital agencies. He kindly offered to share his experience of scaling a small business, the challenges that presents and how you can use hard time data to make educated business decisions.
Growing a business is a fantastic challenge. It’s rewarding, challenging and extremely dynamic. It no doubt has its pitfalls as business can grow too fast for its systems and structure to keep up. Conversely, it can starve by not growing enough.
In this post, I will take you through how my organisation structures for growth in 3 ongoing phases, using tools like Toggl to build both the team and the processes in a calculated and sustainable way.
As a business owner – whether you’re a part of a fledging startup, a multinational looking to take the next step or the one-man band trying to be everything to everyone – scalability seems to be a term that is thrown around quite often. Even more so in the last 5 years where the SaaS type business model is on everybody’s lips.
Are you ready to scale?
There are many definitions of scalability, with the definition changing depending on what market you are referring to but I kind of like the basic Wikipedia definition:
Scalability is the capability of a system, network, or process to handle a growing amount of work, or its potential to be enlarged in order to accommodate that growth.
I was always told to be wary of anything written on Wikipedia so I did look around for better definitions but have settled on that one (if you know a better one you can let me know).
Very simply put, a scalable business is one where you have the systems and processes in place so when the business grows you have the capability and the infrastructure to grow with it.
Naturally some businesses are more difficult to scale than others, depending on the industry and depending on the service or product offered.
For example if you’re a doctor, consistent growth and more notably scalability is extremely difficult. Yes, you can have people assist you to get more done and spend less time on paperwork but there is really a finite number of patients and operations you can do on a given day. You are your product, brand and service all rolled into one. If you are your business, then there is a point where you run out of scalable options since you cannot create more hours in the day.
On the other side you have businesses that are no doubt more scalable, most notably that of a SaaS type business. With the right systems and processes in place you may be able to service a client base several notches up from your starting levels without too many additional resources. This is an extremely simplified look at a SaaS model, but you get the gist of it.
Then there are those in the middle, the small to medium business owners, looking for their consultancy, agency, firm or brand to take the next step.
Preplanning and setting up for growth is of obvious importance. However, these two things alone are not enough, and small business owners typically don’t have the luxury of sitting back and planning a thorough expansion strategy with members of the board. Most are working 12 hour days, multi-tasking and trying to keep costs low while also wanting to grow their business in a sustainable way.
What happens then? How do they scale and focus on growth without getting stuck in the day-to-day trap that most small businesses fall victim to?
3 step guide to scaling a small business
I was in this very situation (and to some degree am not completely out of it) and it wasn’t until I could identify the areas where scalability was possible that I was able to do something about it.
The growth and scalability approach I took falls into 3 main phases:
At no point do any of the above phases actually stop – it is and always will be an ongoing process. Let’s take a closer look at what these stages mean.
Phase 1: Identification
This is the key to helping the average business to scale and grow in the right way and most direct way. Identifying what you and your team do in the day to day is vital to understanding how you can scale your business.
At my digital agency, we are avid Toggl users. While we have a client count of over forty managed clients, we only use the time tracking data we get from Toggl for billing 3 of them. That’s it. So what do we use the data for then?
We use it to identify areas of the business where we spend most of our time. This helps me understand what my teams are working on – what are my campaign managers doing? What about development? How much time are we spending on administrative tasks vs value added ones? Toggl provides this information to us in a easy-to-understand way.
And initially, the findings were extremely alarming.
Understanding where you and your team spend time help you define the areas of your business that need attention – and some distinctly more than others. Chances are that you don’t even realize the amount of time you’re spending on stuff you should not be focusing on.
The truth is the tasks you think you do are only a small part of the overall picture. You may also think that you make good use of your time and only spend a fraction of it doing the stuff that either isn’t that important or could be delegated. What’s five minutes here and 5 minutes there?
“5 minutes is never 5 minutes.”
Write this down – 5 minutes is never 5 minutes; you are just choosing to imagine it as lasting 5 minutes, because the task felt easy.)
In my case – prior to starting with time tracking – I thought my main role in the company was to handle sales and business development. My job was to grow the business, so naturally my attention would be geared towards tasks that were directly or indirectly related to business growth. Right?
Wrong. Take a look at this:
That tiny little sliver you see in red? That’s the time I spent on business development. Well that sliver equates to a whopping 19hrs out of 170 for the month!
That’s less than 12% of my time being spent on what I really should be focusing on!
Where does all the time go to then? Here’s the breakdown:
- 7 hours goes to accounts (invoicing, payroll, fun stuff)
- 27 hours into Marketing (Blogging, Content, Social)
- 10 hours on administrative tasks
The rest? Majority was spent on client management. Talk about not being able to let go!
That’s just me though. Let’s have a look at one of the team members. Next I’ll look at Jess’s time report. She is our lead campaign manager:
Ok that’s better – these colorful sections, they’re all campaign management.
So to rid myself of the 100+ hours of campaign management I do personally, all I need to do is unload the work load to her right?
Not so fast.
Jess is a hard worker and has done a total of 183 productive work hours during the month. My time on campaign management and client work came in at around 120 hours. How could I transfer all my workload over to Jess when she is already totaling 183 hours per month? That’s a 300 hours per month for one person!
This is where a lot of companies run into the problem of running themselves or their staff to the ground by spreading themselves too thin.
What have I learned through Identification?
It’s actually quite simple – I know where I am spending my time and I know the tasks I need to offload. I also know the capacity of my team and where they stand in terms of bandwidth and capacity to take on more work.
This helps me scale efficiency as a company. Scaling isn’t something that happens in a vacuum or in isolation. Delegating tasks is important, but delegating the right tasks to those who are willing and able to take on the work is just as crucial.
Phase 2: Clarity
Once you have gone through the identification phase, you will then find clarity about which areas you need to grow.
Put simply, clarity is about defining the areas of your business that actually exist. This stands in contrast to conventional systems where the roles are defined and the expectation is to mold people around jobs that should exist (when they in fact may not work).
As an example, GrooveHQ doesn’t have an HQ at all! The company is run with international teams that are not based in one single dedicated location. If Groove tried to design their team structure without clarity, it would be an absolute disaster.
Clarity will give you a very clear idea of what tasks need to get gone and who is currently working on them.
For example in my situation clarity provided us with curcial insight in the area of operations.
As an organization our core service is that we manage digital campaigns for our clients. Our operations should be relatively straightforward, considering we use only a small number of suppliers, often just one (e.g. Google).
After identification we found operations actually divided into several distinct sectors. They were as follows:
- Campaign management – The actual setup and managing of campaigns, ensuring they are performing as to optimal KPIs.
- Campaign reporting – This is effectively the accountability sector where we provide reports and insights to the client.
- Client liaising – Probably the biggest surprise was how much time fell into the liaising sector, a sector we didn’t really budget for in the original proposal and pricing discussion.
- Project Management – We actually didn’t realize this existed at all. Our expectation was that reporting, management and client liaising together constituted a “managed project”. This wasn’t the case nor did it allow us to identify the full scope of work. Project management plays a very large part in our day to day and can’t be filed under any of the aforementioned sectors.
You can see how managing one single client’s campaign was a combination of multiple sectors that realistically should not be assigned to one single person if we wanted to grow the business efficiently.
True, that’s not the biggest problem in the earlier stages of a business, but a jack-of-all trades and master of none isn’t exactly the best way forward. Even worse is sticking with the habit of doing it all which can stump growth as you fail to deliver when the going gets tough.
Phase 3: Action plan
So you have taken the steps to identify where you and your team spend their time. Now that identification has given you clarity around the tasks that are evident in the organization, it’s time to take action.
After you have identified the areas that need attention, you are left to face the decision on the right type of action to take. You’re left with two options – automate some processes, or bring in extra manpower.
Option A: Take action with automation
Before jumping into the job advertising market to look for the next hire, the first question I would ask myself is this – can the job be automated?
There is a tool for pretty much everything these days when it comes to business automation. From accounting to customer management, dashboard creation, inbound marketing and even design, everything can be put into a process and automated to some degree.
Our reporting software, JimmyData, was created out of a need to automate the reporting process. Campaign reporting was taking us far too much time and was very resource intensive, so we had to make a decision to either:
a.) hire people to take on the client reporting load
b.) invest in software that can automate this process
We opted for the latter. This enabled us to drastically cut the costs of reporting through automation and build a system that we can scale as more clients come in. JimmyData took care of the reporting, while we got to focus on the management questions.
Another automation approach we took was to move our accounting system to another provider so it would integrate into billing via our CRM, with the aim of slashing accounting and admin times.
Personally, apart from highly value added roles and tasks; I always look for automation options before I start to think about hiring new team members. The reason for that is automation is much easier to scale and ca often can grow infinitely, with only minor tweaks and adjustments along the way.
Option B: The manpower solution
If I cannot find the answer in automation then I will look to manpower. There is no single defined and foolproof way to hire the right people and giving you tips on that is way beyond the scope of this article.
However, if you’ve done steps one and two – identification and clarity – you should know exactly who you need, and what you need them for. Hiring the right people becomes a whole lot easier when you fully understand what their role entails. You need to know whether the hire is required for administrative tasks or will they be part of the value added team? Will they need to be liaising with stakeholders or will they be solely focused on delivering an outcome?
“Hiring the right people becomes a whole lot easier when you fully understand what their role entails.”
Knowing the answers to the questions above will make hiring easier because the homework is done, giving you the best opportunity to find the right fit.
There is no doubt that with any business looking to grow they will experience growing pains of some sort or another.
Based on our experience, growing pains were also confusing. We knew we were growing, we knew there was more work to be handled – but it was only understood at a macro level. Tracking time diligently across the business allowed us to identify and clarify areas of the business that needed to be addressed, from the core business through to the administrative tasks.
This set the backbone of our approach to scaling and growing, whether it be through processes and automation or through manpower.