You could say I’m an old dog in terms of technology. I started my first business in 1986, back when a Hayes 2400 baud modem was the hot ticket. Fast forward 25 years later, president of two public companies (Mustang and Starbase), a couple corporate turnarounds (Web Associates, Starbase and Alchemy) and two startups (Mustang and EventMingle), you could say I’ve earned my battle scars.
For those of you who have been following my blog know, I have recently been working with 7 startups though our VentureBox business accelerator here in Bend, Oregon. Startups live in the constant state of thinking of ways to disrupt competitors and pivot business plans to grow rapidly in order to increase cash or traction. This week, I had a lot of time to think a lot about the differences between startups and well established businesses. One of the questions that came to mind was: “When is it ok for an older company to stop focusing on cash and traction?" I tried to pick my words carefully. Note, I didn’t say stop altogether, I said stop focusing.
Businesses, as they mature, develop large customer bases they have to support. They have infrastructure in place. They have made decisions about their back office systems such as accounting, CRM, work flow, servers, operating systems, technology partners, etc. Next thing you know, years have gone by, you have tens of thousands of customers and 1,000 employees. Cash and traction may no longer be a focus. Every decision needs to take into account, how will it affect my customers? How does the change impact my back office? Next thing you know, your company is not as agile as before and you ask yourself, "How did we get here?"
Each of the turnarounds I led had major back-office issues. Web Associates built web content for HP, Apple and other companies, yet didn’t build the internal controls to track the cost of producing those pages. They assumed we made money because it was a six-figure sale. You can't improve margins if you don't know - to the dollar - what the margin is. Just like in a startup, find metrics you can easily track in a graph.
Starbase’s accounting system didn’t talk with the customer support ticket system, which resulted in customers getting support even if they never actually paid for the software, which resulted in longer DSOs then we had to have. We couldn't easily inform customers when the defect was fixed by engineering because the CRM app didn't talk to the defect tracking system and version control. These disconnects cost us margin and didn't help us build raving fan customers....
© Jim Harrer