What to do when your back office is a hot mess.
You're celebrating because you just received funding and your project is finally getting real. You have a little more breathing room in your bank account and you are ready to accelerate your software development. Life is good!
… But, hang on for one second and consider that if things were moving at a fast pace before your funding, they’re now going to move even faster. And if your back office is a hot mess or even barely exists now, it's only going to get worse.
The more successful start-ups use some of their new-found investment to begin building an infrastructure to manage the boring, the mundane, and… the important areas… like Accounting, Admin and HR.
While not as exciting as bringing your development to the next milestone, the back office foundation is critical to building a scalable, cash-flow-positive, organization that can move faster and with fewer headaches and mis-steps.
Below are some scenarios you definitely want to avoid:
Having someone on the team who has a cousin who’s an accountant rarely makes them the best qualified to do the books. We've seen this play before. An unwilling employee, or one unfortunate soul raises their hand to be a "team player" and agrees to take on the bookkeeping. With only “Google University” or their cousin to rely on, they don’t get very far before the business’ needs outpace their skill set. While it is mostly cash outflow in the early days where the books can be cleaned up by the accountant at year end, serious outside investment (Series A+) will require you have solid numbers on a monthly basis. And if crypto enters that equation at all-- at any stage-- you need to up-skill your team to avoid costly tax or compliance problems.
Firefighting is not a scalable operating strategy. When you are small, your problems tend to be smaller. You put out fires relatively quickly, and you’re good at digging in to find the root cause. By adding money and growth to that equation, the fires become frequent, less controllable and impossible to constantly extinguish, let alone ever getting to the underlying issues. Firefighting is exhausting and distracting from the "real" work that needs to get done.
The partner who drew the short straw is better utilized elsewhere. Another common scenario we see is that one of the founding partners handles areas like accounting, admin and HR… they were the ones who drew the short straw. Typically, those areas are not what they’re best at and while they can manage being the one to add new email addresses to the system or investigate the latest payroll requirements for out of state employees, it’s less than optimal. As smart as they are, we're guessing they are not great at that kind of work, which means they will flounder, potentially miss critical insights, and not be able to dedicate themselves to doing what they do best-- driving your business forward.
So how do you solve your hot-mess problem?
Get professional help. Shed some of your bootstrapping-I-can-do-it-myself mindset and invest some of the funding in professionals who can set your business up to scale. Definitely focus on using outsourced talent because you get the benefit of the skills and deep experience of the professionals at a fraction of what a full-time experienced hire would cost. The good ones will get you to where you need to be faster-- and better-- than where you could have gotten yourself.
Spend the time to fix the root cause of your fires. It's time to put down the extinguisher and have some meetings, dig into numbers, contemplate how and why things aren't working. We find this best done by spending a weekend of quiet time, digging into the problem, laying out the course of action-- and then setting regularly scheduled check-ins with the team to chip away at the problem and make sure the solutions you come up with are sticking. (We love using the EOS system from the book Traction to do this.)
Develop standard operating procedures for the mundane… and for the important. These provide you with the ability to be consistent -- in your product delivery, in the way you measure results, and in the way you train your growing team. The more you document your knowledge, the less you'll get mired in the details-- or have to constantly tell people what to do or how to do it. SOP creation and maintenance needs to be everyone's job. If there is a certain workflow that's effective, document it. If you have a hiring process, put it down in a checklist. The payoff is being able to reliably delegate work, push activities to lower levels of the organization, or outsource/ offshore them. SOPs are the foundation of a sustainable, scaleable operation.
So, as you are putting your best foot forward to your new board, and want to foster their continued confidence in you, you'll need to address your back office. Don’t let a that hot mess interfere with your new relationships. While it will be an investment of money and your time and attention, the ROI will yield a sustainable, long-term operation that can grow with you.
If you feel your back office needs some work, contact us. We'll be happy to help and introduce you to our network of professionals that help you build a scaleable organization.