When you start a business, you grow fast. As your reputation grows, so do your sales.
But for many entrepreneurs, sooner or later, they hit a wall.
Overcoming those walls can be traumatic to a business. But it’s impossible to go any further without resolving the underlying issues keeping you small.
At the Dell Women’s Entrepreneurship Conference in Istanbul last week, three entrepreneurs from three different countries shared their experiences in scaling their walls to growth.
Bedriye Hulya is the founder of Turkey’s first female-only gym, b-fit. She described how when her business hit 100 franchises, it simply couldn’t sign any new ones.
Through focus groups, investigations and mystery shoppers, she discovered that her business was simply not delivering the level of support to its franchisees that they required. As a result, they weren’t recommending others open a gym, which was hampering the growth of the fitness empire.
“Growth in my language means change, and change means trauma,” she said. “When it comes to growth, I believe it creates trauma in the company, especially if it’s unexpected, organic growth.
“We weren’t prepared for growth. I’m an entrepreneur, not a businesswoman. I didn’t know how to handle change. I should have seen it coming and prepared myself and my colleagues.
“We were hurt. Some of the senior people in our business, I couldn’t move them to do what was needed. We were very comfortable. But things were changing, and we had to catch up. So we had to say goodbye to some of the people we love.”
Matching the people to the company in its growth stage was a common difficulty cited by all three entrepreneurs. Sometimes, it’s the founders themselves who have to go.
Marla Schwartz, who runs a Benecaid in Canada, a business that helps other businesses package and deliver their health plans, described having to ask the founders of the company to take a step back in order to keep growing and developing Benecaid.
She said the business was founded by two people who originally did most of the sales. Their chief tactic in selling the business was to talk about the money they could save others who signed up with them.
This wasn’t a good or sustainable way to grow, Schwartz said. Today, the founders have no operational role in the business, and when they do sell for the company, do so as contractors through a third party.
Having the founders depart was really a challenge, Schwartz said.
“When they were in the office, all the staff knew they were the owners. So they would interfere without interfering. So we thought they didn’t have to be in the office anymore. Today they have no operational role. They’re still on the board as investors. We’re happy and they’re happy. But it was a difficult transition to convince them it was good for the business.”
Another difficulty in growth is that doing new things can make your old metrics totally outdated.
Donna Boyer leads Blurb, a self-publishing platform that in 2010 was one of the fastest-growing media companies in America.
Recently, the company began helping its customers make e-books as well as physical books.
This new area of growth meant the company had to entirely rethink how it measured its own success.
“Our old metrics were about pages,” Boyer said. “That’s just not relevant now. The cost of our goods was totally different.”
“That led to lots of internal confusion… We were measuring average order value. Print books cost $50, $60, $70. E-books were cheaper. That gave everyone angst. Average order volume fell.
“We needed to change our metrics. Because the behaviour we wanted followed that.”
Dell’s chief commercial officer, Steve Felice, gave his experience of how growth requires totally new ways of measuring success.
“When I joined Dell in 1999, we looked at units. As in, how many computers did we sell? A computer back then had a very narrow price range, and was pretty expensive too. Close to $2000 in average price.
“So we could approximate the revenue by looking at units, which we did, every day. Today we hardly look at units. It’s irrelevant. Some units are $200, some are $3000. It doesn’t tell us what’s happening in the business.”
All three entrepreneurs agreed that as they grew, they had to add technology and processes to support this growth.
Schwartz said that while this slowed down growth for a while, it was worth it in the long term.
“As we started to scale the business, and using more technology and systems to manage things, we began to use revenue per employee as our metric.
“I can say that revenue per employee has doubled in the last three years. We’ve had a huge increase in productivity. And it’s all been technology-driven. As the company has grown, our human resources have evolved. The people we have today are more thinkers than doers. We use our systems to do the doing.”
Myriam Robin travelled to Istanbul as a guest of Dell, which paid for her flights and accommodation.