Up to the Challenge?

Hosted Solutions: Striving for Systematic Growth

Rich Lee, 40, has grown a managed and dedicated website-hosting company to 43 employees and $13 million in revenue in just four years. The Cary, North Carolina, entrepreneur knows that taking Hosted Solutions Inc. to the next level will require different systems, skills and people.

Geographic expansion is imperative. "We are a strong regional player, focused mostly in the Southeast around Carolina and Virginia," Lee says. "Our clients are asking for another facility that is across the mountains or in a different time zone so they can do disaster recovery and data replication [at] a site that is not so close to the three we have now."

He's considering either growing organically or acquiring a smaller regional player, perhaps on the West Coast. But before he does that, he feels he needs to extract and codify the skills and practices his employees have developed so the company can replicate them in a distant location. He also wants to systemize his business so that everything from setting up a new client account to handling trouble tickets is standardized and, as much as possible, automated. "We're coming under a lot more scrutiny from our clients," he says. "They want to come in and see we have best practices in place."

Pribramsky recommends Lee consider assembling focus groups of a half-dozen or so of the best managers and line employees for a particular function, then brainstorm with them to develop rules so that what they do can be repeated across the company. "Those are going to be the gospel going forward," Pribramsky says.

As best practices are identified, a corporate scorecard summarizing important techniques, company values and key metrics will keep Lee and his employees rallied around the new way, says Andrew W. Marcou, director of strategic consulting for CBIZ, a Bethesda, Maryland, national accounting firm. "[The scorecard] will help him communicate with his internal management team and also to external people," says Marcou.

To acquire the expertise necessary to implement the systems, Susan Wilson Solovic, CEO of St. Louis-based online small-business TV network SBTV.com, recommends Lee consider hiring a senior executive with large-company experience. "There is a lot of good human capital available because large companies have downsized, and people with 20 or 25 years' experience doing this kind of work are looking for a job," she says.

The experts' advice resonates with Lee. In fact, he is already studying up on scorecards and preparing to interview a former large-company executive as a candidate for chief technology officer. The focus group was one idea he hadn't thought of, but likes: "That could be a great place to start getting stuff out of people's heads."

Asking for Help
Few people are busier than the founders and heads of growing companies, but if you're an entrepreneur with a question, few people are more likely to take time to give you a well-informed answer. Successful entrepreneurs report that advice from seasoned businesspeople is critical, and these experts are often eager to help.

Any entrepreneur who has overcome the problems you face is a candidate, says Monica Doss, president of the Council for Entrepreneurial Development in Research Triangle Park, North Carolina. The entrepreneur can be in your own industry or a related one, as long as he or she isn't a direct competitor or allied with one as supplier, customer or investor, adds Doss, whose nonprofit organization helps small firms with networking, mentoring and other challenges.

Start with a request for lunch and nothing more, Doss advises. "Most entrepreneurs are not willing to sign on to a long-term mentoring relationship upfront," she says. "Once they've gotten interested, it happens. But they're wary on the front end." It helps if you can get an introduction or referral from a mutual friend or colleague. One entrepreneur Doss knows identifies businesspeople he wants advice from and then arranges to attend a speech or panel discussion they're participating in. He approaches them afterward to request a meeting.

At the first meeting, make sure there are no conflicts of interest. Next, focus on chemistry and whether the person is willing and able to give the advice you need. Should a relationship develop, Doss says, give back by referring job candidates, potential customers and investors to your mentor.

Even if you don't have much to offer your mentor, you'll find other entrepreneurs don't mind helping. Carol Rehtmeyer, president of toy development and manufacturing company Rehtmeyer Inc. in Aurora, Illinois, meets many entrepreneurs through her company, but was so interested in SmartsCo that she called CEO Julie Tucker to talk to her directly about the company's challenges. Says Rehtmeyer, "I just had to touch base with SmartsCo to help them with their pricing and product."

Mark Henricks is Entrepreneur's "Staff Smarts" columnist.

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This article was originally published in the February 2006 print edition of Entrepreneur with the headline: Up to the Challenge?.

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