How to scale up your business infrastructure
Top tips for scaling your infrastructure: ✓ Understand the market and your place within it ✓ Invest before infrastructure becomes a hindrance ✓ Keep your top tech talent challenged and interested
Whatever field of business your start-up specialises in, there will inevitably come a time when you have to scale up your infrastructure, whether it’s your tech, operations, product or physical. This is especially key for tech-focused businesses.
With constraints on headcount and budget, start-ups will often outsource many of their infrastructure needs until they know that their business can be a success. When your business relies upon the tech that you build this could mean that back-office functions are outsourced, or perhaps a series of manual work-arounds are put into place to deliver the right customer experience.
If any of this sounds familiar, perhaps you’re going through the growing pains associated with scaling up. The short-cuts worked just fine for your first few customers, but what happens when you’re serving 1,000 customers, or 10,000? Or perhaps you’ve landed a large contract meaning your tech and operations need to be up to scratch?
So when do you start to invest more heavily in your product and operations?
So when’s the right time to invest in your infrastructure?
Ilya Kondrashov, COO and co-founder at MarketInvoice, emphasises that it is a decision that very much depends on the business and its goals: “If your main objective is market share, it might serve you better to invest heavily in marketing and sales and put up with any manual processes on the operational side until you’ve achieved that. However, if your primary goal is profitability, investing more in making your product as efficient as possible early on will help you get there more quickly.
Kondrashov also highlights that “it’s crucial to know the market you’re in and your place within it. If you’re creating a new market, there’s no point building for scale on day one as you’re likely to spend years convincing people to do things differently. You might have some early evangelist customers, but it’s a hard slog to get mainstream adopters to use your product.
If you’re entering an existing market with a product that’s better on certain features, you need to be able to service a large number of customers on day one. You should also consider how long it takes to build the infrastructure for scale.”
Douglas Squirrel, a consultant CTO who works for several scale-up businesses, advises: “often, for tech-focused companies, the best time to invest is once you’ve proved your concept. When you know there’s a market and that people will buy your product, invest in infrastructure as much as you can.”
By building the scalable infrastructure that you need as soon as possible, you put yourself in a position of strength, hopefully avoiding the situation where your infrastructure is creaking at the seams, becoming more and more costly and inefficient to run.
This isn’t always possible for start-ups which have limited funds and rely on working at pace to deliver growth, but the sooner you can make the switch and future-proof your infrastructure, the easier scaling will become.
Bill Packman, COO of online investment company Nutmeg, agrees: “It can be a very hard decision to invest in infrastructure. We went through a robust research process when we changed our back-office operations in 2015. We changed from one provider to a more complicated combination of several different partners, but the change would enable us to move faster, scale more easily and wouldn’t limit our growth ambitions.”
“It was my job to convince the board that the investment was worth making, and I knew we had to do it before the infrastructure really started creaking. We had to be brave but it was a good decision. The changeover was largely painless and it has enabled us to achieve the growth that we have since then.”
In the 2016 scale-up review, published by the scale-up institute, 29% of leaders identified technical skills as one of the main areas of skill shortage affecting their business, just behind management and business skills (30% and 34% respectively)
The number of roles available for excellent technical minds currently out-strips the supply of those who can build your product. The best tech talent often have multiple job offers per month and can easily move on to the next challenge.
So how do you find the best technical minds and, more importantly, retain them? Start by recognising that their primary motivation isn’t always about money or importance. Squirrel advises “frame your search in terms of the problems your business needs to solve, so that they can clearly see how their input can help.”
Top tech employees are always looking for interesting problems to test their skill, which helps your business to constantly innovate. If the product becomes too dull or the company becomes stuck in its ways, it’s likely that your best tech talent will want to move on to the next challenge.