Systems Can Make Or Break Startups: Learn How To Develop Yours Today.

Systems are vital to building a sustainable company that delivers a consistent and predictable experience to everyone in its ecosystem.

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It is a sad but true fact that most startups fail. They fail for a variety of reasons including lack of market need, inferior product, ineffective marketing, ignored customers, and several others. 

Starting, running and growing startups is not for the faint of heart. However, it can be made easier and enjoyable with systems that also happen to be vital for survivability and growth of a startup. 

If your systems get a poor grade because they are undocumented or seat-of-pants-fighting-fire type processes, the tips described here will help you gain operational efficiencies, so your startup can scale with a smooth and consistent rhythm.

Let’s take a closer look.

Benefits of Systems

Imagine having systems in place that free up your time, deliver a consistent experience to your customers, provide clear expectations to your employees, and much more! 

Here are just a few benefits of having systems in your organization:

  1. Connect your vision and strategy to daily operations across all groups
  2. Work on the business (strategy) versus in the business (tactics) by leveraging processes, tools and people to free up your time with routine tasks through automation or delegation.
  3. Keep everyone happy through consistency and predictability (customers, vendors, employees, etc.)
  4. Use for employee/customer onboarding, expectations and scheduled touch points
  5. Increase quality control, confidence and efficiency in a company
  6. Leverage for exits by showing potential buyers that your business works (without you)

When To Develop Systems

In a post titled Why Successful Startups Stumble at 40+ Employees Steve Blank describes three stages of a company: 

  1. Search (for a business model)
  2. Build (a scalable customer/user base)
  3. Grow (a profitable business efficiently)

According to Blank ‘Unfortunately as you hire more people, the casual, informal “do what it takes” culture, which worked so well at less than 40 people becomes chaotic and less effective.’ 

In other words, going from the Search to Build phase requires formalizing systems.

He goes on to describe that the Build phase is where startups should begin focusing on “culture, training, product management, and processes and procedures…writing the HR manual, sales comp plan, expense reports, branding guidelines, etc.” 

I agree with everything Blank writes except, in my opinion, developing systems should happen earlier, even if it’s just you. By documenting routine tasks early, you’ll be able to determine who your first few hires might look like and hire when it hurts (it’s always best to hire only when needed, since it increases costs and complexity). 

How To Develop Your Systems

I’ve written before, “Operate your company like you’ll own it forever but keep your records like you’ll sell tomorrow.” 

In the book, The E-Myth Revisited, the author, Michael E. Gerber, recommends creating a business that can work without the owner having to be there. He discusses the idea of a potential buyer approaching you any given day and asking to buy your company but only if it works. 

Gerber recommends creating a business that can work without you, even after it is sold; essentially, a system that replaces you. In other words, a business that is run by systems and the systems that are run by the people. He recommends creating documented systems that provide a consistent experience to customers, vendors, employees, and others. 

Systems can include step-by-step documents, workflow diagrams, organizational charts, instructions, and checklists. 

Let’s look at how you might build your systems based on an example of how we did it. 

Case Study: How We Built Our Systems

My former EdTech startup, Big Universe, Inc. served millions of students and teachers across dozens of countries, over a 10-year period.

Thanks to our systems, Standard Operating Procedures (SOPs), we were often credited for operating like a company ten times our size. This structure also gave me confidence during tough times when I just wanted to curl up in the fetal position and cry.

Our SOPs consisted of a combination of charts, diagrams, tables, and checklists. In addition, we practiced a results driven culture. Our goal was to make our expectations crystal clear through visual, minimal, practical, accessible, adaptable, and measurable, processes that also provided us cadence. 

Here are some things we did (see corresponding images below):

  1. Organizational structure (chart) that clearly described each group and who led it; in my opinion, this is a crucial to begin organizing a startup from chaos
  2. Routine tasks for each group organized by department, period (e.g. daily, weekly…annually), and KPIs. 
  3. Checklists for routine tasks.
  4. Diagrams for complex processes (e.g. sales cycle/stages)
  5. Tables for seasonality calendars.
  6. Cheat sheets (checklists, tables, diagrams)
  7. Employee handbook with policies, HR stuff, etc.
Sample Organization Structure
Sample Department Activity Calendar
Sample Sales Cycle
Sample Seasonality Calendar
Sample Routine Checklist

Implementing Your Systems

It takes time to build systems but they are vital for the survivability and growth of startups. 

Start small by documenting routines on a daily basis as things happen, to create repeatable tasks. For example, these can include onboarding steps, login issues, perfected sales scripts, engineering process restarts, hiring policies, and so on. 

Systems should include processes and tools for documents, dashboards/reports, tasks, communications, and more.

Keep the processes in one place, easily accessible and editable by authorized users. For example, Google Shared Drives allow you to create company shared folders that aren’t owned by a single person.

Of course, systems are nothing without people who drive them. The relationship is complementary — people provide the vision, creativity and insight and systems provide the structure and efficiency.

Using some of the best practices described here, you can have a winning combination that helps your startup run like a well-oiled machine.