In my first post in this series, The Startup Experience: Getting Off the Ground, I focused on the challenges of getting a startup off the ground, from financing to building a supply chain. Of course, once you're up and running, there's the small matter of actually running your business. Here I focus on the challenges of day-to-day operations.
When the Internet stops
Startups are typically lean organizations that focus on R&D or sales, leaving everything else to be figured out along the way. Alliance Memory was no exception. Everything from payroll to the phone system seemed like a major undertaking, and the challenges of any two days were never alike. One day the Internet stopped working, and I spent several hours on the phone to correct the problem, while at the same time trying to learn the process of registering a patent. Another day would be spent creating artwork for labels to place on our shipping cartons and at the same time installing access to our new inventory system on everyone's laptop.
On any given day I would wear several hats — office manager, human resources director, benefits coordinator, accountant, or anything else you can think of — and it didn't take long to figure out that I simply couldn't be an expert in all of them. Alliance Memory didn't need full-time employees for each of these functions, but we did need their expertise; and the trick to that was to outsource where needed. I learned that there are experts for everything, and they are willing to come in and work a few hours to advise, correct problems, and set up systems, and then disappear until we needed them again. And their fees are reasonable, when you consider there are no payroll taxes involved and no need to provide benefits.
Memory CEO David Bagby an award for the company's record sales growth in 2010.
When to delegate…
The challenge is in knowing where to outsource and where to control from within, a decision that boils down to your company's daily needs. Daily, Alliance Memory needed accounts payable and accounts receivable duties performed, and payroll had to be completed bi-weekly. This was an excellent function to outsource, as I found several services that would not only do this but file our quarterly taxes and keep up on the latest tax laws as well. IT is another function that can be easily outsourced, providing us with an expert for software upgrades, network troubleshooting, and other tasks that would lead us to pull our own hair out when attempting ourselves.
Of course, I wasn't the only one with one head and many hats. Startups rely on everyone to do almost everything, so it's important to hire carefully. You need staff that knows the ins and outs of your business and your products so that when a key sales person has to take a day off for a family emergency, there is someone else who can willingly and ably fill in on a scheduled meeting. While it can be challenging to fill in at the last minute for someone who is out for the day, it's also satisfying to know that boxes will still leave the warehouse, customers will still get their products, and no one will be the wiser as to how you scrambled to get it done.
Expect the unexpected
One last thing to keep in mind for day-to-day operations is that the unexpected happens. Customers will be difficult at times and you have to anticipate how to handle it. Shipments will get lost by very reputable carriers, and you will need to replace products for the customer in an instant. Power outages, weather delays, natural disasters — at some point will disrupt meetings, deliveries, and production schedules. To take the worry out of the unexpected, have adequate insurance with back-up plans for “just in case.” When you rely on very few resources — whether they be financial or staff — it's easy to overlook good contingency planning. It is time consuming and often a low priority until a problem occurs. Cross-training employees, maintaining financial reserves, keeping insurance policies up to date, and strategic business planning are all priorities in large organizations. It's essential that startups fit them into their daily workload as well.
Be sure to read my final post on this topic, where I discuss how this venture changed us individually and as a family.