What Poor Business Systems Really Cost Your Scaling Up Business

Posted by Chuck Kocher
On April 9, 2017

I’ve talked before about the importance of having good systems and processes when you’re trying to grow your business. Sometimes topics like that can sound a bit theoretical. Recently, however, I came across a concrete example of what poor systems can really cost your scaling up business.

In a way, the example almost sounds silly, but it’s a pretty clear demonstration of what happens when systems are out of whack. And one of the things it highlights is that there are very real costs involved with the way we do business—even if many of those costs never show up in the bottom line.

Ryan Holmes is the CEO of Hootsuite—a company that grew from a few dozen employees to nearly 1,000 employees. He knows what it’s like to scale a company. But he recently ran into a situation that highlighted what can happen when the systems and processes of a scaling company no longer fit the company. Here’s the short version of the situation.

An employee wanted to give a simple $15 t-shirt (with the Hootsuite logo on it) to a customer. That should have been simple and inexpensive, right? Unfortunately, by the time the employee jumped through all the systems and process hoops (including approvals that went all the way to the CTO) the actual cost (factoring in everyone’s time) was $200 (plus $15 for the shirt).

Hootsuite is a very successful company that’s enjoyed tremendous growth. They are good about adhering to their systems. But some of the systems they had in place hadn’t scaled up with the rest of the business. The result was that you had key employees becoming enmeshed in decisions that really had nothing to do with growing the company.

When you’re scaling up your company it’s easy to focus on issues such as production and cash flow. Those are absolutely critical. But you also have to pay attention to your systems. If those don’t reflect the changes you’re trying to make, they can slow you down, cost you money, and even make you take your eye off the important goals.

Hootsuite figured out what needed to be done and fixed it. You can read Ryan’s article here for the details on how they did that. Are they done making adjustments to their processes? Probably not, but they know how important it is to stay on top of those things as they continue to grow.

How will your systems and processes need to change as you scale your company? Are there things going on right now that are costing you time, money, and focus that you’re not even aware of?