5 Business Truths I Wish Someone Had Told Me 5 Years Ago
In March, 2010, my wife and I made a bold move.
I left my job, we put our life savings on the table and we started a business. We were committed to building it from scratch -- debt-free and with no venture capital.
Our new business -- a search firm serving churches -- was up against some challenges from the very beginning. The idea of executive search was a new one for churches, and the economy at the time wasn’t too forgiving to young startups.
Five years later, we’re astounded by the good fortune and success we’ve seen. We just posted our fifth straight year of growth, with an annual average growth rate of 50 percent. In fact, every one of our 20 quarters since the start of the company has seen quarter-over-quarter growth.
And yet, as I think back on the success we’ve enjoyed so far, I realize there's so much I know now that I wish I'd known then. Here's a cheat sheet for you.
Related: 5 Ways to Build a Startup That Lasts
1. Virtual is overrated
In the early days of the company, we did a lot of virtual work with contract labor employees. We let them work from wherever they wanted, and it served us well for that season.
But about a year in, a few employees decided to move to Houston to work from our office. That meant more office space and more overhead, but we immediately saw a surge in the quality, efficiency and speed of our work. Full-time, in-house employees give full-time effort and are able to collaborate daily. There’s just something powerful about working together.
The ineffectiveness of virtual isn’t limited to employees. We sometimes have clients request that we save travel costs and time by conducting interviews over the phone or Skype. But we saw client satisfaction drop from 98 percent to 65 percent when the interviews weren't in person. As I like to joke to our church clients, “If virtual worked, Jesus would have Skyped in rather than being born on Earth.”
2. What got you here won’t get you there
Beyond being the catchy title of Marshall Goldsmith’s book, this is a profound truth for any organization.
What was perfect for your business when you had five team members or $1 million in revenue, probably won’t work for you once you hit 25 staff members or $10 million in revenue. Systems are a big part of this truth. When we started, we had some systems in place that weren’t easily scalable. And when we did switch to higher-capacity systems, the changeover was both painful and expensive. Now, if we grew 10 times in size tomorrow, the systems we have in place would be able to grow with us.
The most painful part of this lesson is that sometimes the people around the table will change over the years. And that’s not because of ineffective employees but because the nature and scale of the work evolves as you grow. Not everyone will be able to keep pace. Keep the focus on agility, scalability and constant improvement.
3. Culture trumps competency
I used to put far too much value on a person’s resume -- the letters after their name, the growth they had been a part of and the pedigree of experience were the shiny objects that caught my eye.
As I look at my team now -- the most talented team I’ve ever worked with -- I realize that some of my highest-potential team members wouldn’t have been hired if I only looked at their resume.
Now, culture trumps everything.
Every time we hire focusing on cultural match, the rest has fallen into place. Additionally, we do everything we can to drive our culture and company values into everything we do. We base our bonuses on how our people live out our culture. We conduct reviews based on our values. We actually have a team member we call our Culture Whip who owns the task of making sure our culture and values are apparent everything we do. From weekly Values Spotlights -- much like Ritz Carlton tells of in The New Gold Standard to the coaster my coffee mug rests on every morning -- our culture is everywhere.
4. Growing businesses are violently allergic to overhead
Avoiding overhead consumes your thoughts when you’re starting a business.
I remember considering splitting a roll of duct tape in half so I could get two rolls for the price of one. But as our business grew, my eye for the lovely topline of income blurred my focus on costs. We didn’t go crazy, but we did find ourselves paying for things we didn’t need. I realized how easy it is to drift into corporate excess as time goes by and business grows. We’ve been fortunate to grow at a consistent and robust rate, but we could have had more profitable growth if I had continued to pay careful attention to leaks in overhead.
5. Repeated growth eats rapid growth for breakfast
When we first started out, I was fascinated with rapid growth. The allure of percentage growth caught my eye. I was envious of my friends who had started companies that grew “faster” than ours.
But a couple years in, I saw a lot of those friends’ businesses fold. The more I read, the more I saw the volatility of rapid growth translate into faster growth equaling a more likeliness to fail.
What I didn’t realize was that the real key to sustained growth and health is repeated growth, not rapid growth. According to the Build Network, 72 percent of all new jobs created in the U.S. since 2008 have been created by one percent of all companies. That one percent has a singular commonality: They've all grown year-over-year for five straight years. Their study shows that repeated growth is the singular predictor for future growth. If you’re starting a business, don’t listen to the siren call of percentage growth.
Slow and steady really does win the race.