Marshall Haas, cofounder of Need/Want, used to think that a company needs to scale in proportion to the revenue it generates. Thus, a $100 million business needs to have at least hundreds of employees and several layers of bureaucratic managerial hierarchy. What heâs found in practice, though, is that, with fewer than ten employees, his company can grow very slowly and still increase revenueâwhich is currently at nearly $10 million.
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But more often the real shock of growth is that over time youâll bring on people who are just okay. Relative to the amazing people you brought in early, theyâll seem unimpressive. Mostly fine, good team players, get the job done.
And thatâs not the end of the world. As the company expands, you need all kinds of people at all kinds of levels.
You canât wait for the perfect A+ candidate to appear for every single empty slot. You need to hire. The best of the best donât always want to join a big team, or theyâre tied up in another job, or you canât afford them or give them the titles or responsibilities they want.
And sometimes the people you donât expect to be amazingâthe ones you thought were Bs and B+sâturn out to completely rock your world. They hold your team together by being dependable and flexible and great mentors and teammates. Theyâre modest and kind and just quietly do good work. Theyâre a different type of ârock star.â
By far the hardest part of growth is finding the best peopleâin all their different incarnationsâtrusting your team to hire them, then making sure theyâre happy and thriving.
To get to 10 employees, founders must delegate activities in which they are weak. To get to 50 employees, they have to delegate functions in which they are strong!
Itâs between $1 million and $10 million that the team needs to focus on cash. Growth sucks cash, and since this is the first time the company will make a tenfold jump in size, the demands for cash will soar.
Our pet peeve is when a companyâs leaders think it should grow regardless of profit. This is just reckless, unless youâre a venture-backed firm pioneering new territory. For everyone else, we recommend getting profitable with the work you have, proving you can get to 15% profitability (based on our adjusted Simple Numbers), adding labor to knock profit back
to 10%, and then growing to 15% again. Lather, rinse, and repeat.
First, not all of your employees are superheroes. Most companies have a continuum on the payroll, from the exceptionally talented to the should-definitely-be-doing-something-else- with-their-lives. This isn't easy to acknowledge. Any number of things can get in the way of doing so, from the role you played in hiring someone to good, old-fashioned conflict aversion. Here's a safe assumption: unless you have the resources and capacity to systematically attract, reward, and unleash the very best in your industry, some of the people now reporting to you cannot be objectively characterized as outstanding. Second, you're probably making your employees' job harder. The hunt for new sources of revenue within organizations often leads to an increase in operational complexity. New products and services â or even new variations on old ones â lead to new processes, policies, and regulations; new organizational structures and technologies; new customers with new needs being channeled toward new touch points. In one quick-service restaurant we studied, the menu had grown from twenty-five items to more than a hundred in just a few years.