May 12th, 2017 | By: Joshua Davidson | Tags: Planning
“Remember, teamwork begins by building trust. And the only way to do that is to overcome our need for invulnerability.” — Patrick Lencioni
One of the most under-appreciated and underrated attributions to a quickly growing company is this: business infrastructure.
For most entrepreneurs just entering the space, for any many naive executives, business infrastructure comes secondary before everything else.
Sure, your team is important. Your customers and users are critical. Your branding is key to having that lasting impression you want everyone to have.
I don’t want us ever to miscommunicate and state those aren’t important.
However, the real secret sauce to running a successful company comes down to the partnerships and trust you have, not directly in your control. Without these key components, no matter how excellent you are, no matter how great your team is, no matter how many customers you have, no matter how incredible your branding is, you have a recipe for disaster waiting to happen.
So, what is business infrastructure?
It’s everything you need to run your company, which you do not have the ability, or the know-how to do yourself.
For us, this is our accountant. Our attorney. Our payroll company. Our hosting and server providers.
For large companies such as Apple, for example, this is Samsung for their OLED displays, FOXCONN for their manufacturing, Elephant/Huge when it comes to their marketing initiatives.
Need more examples? Adobe Systems are counting on Amazon Web Services to keep their entire company online, operational and ticking. The National Hockey League using MLB Advanced Media to running their digital properties, websites, mobile apps, digital operations, and distribution of all digital stream of every hockey game on the NHL GameCenter apps. The countless companies that depend on services such as MailChimp, Buffer, Google Apps, Microsoft, Intercom, Atlassian, Basecamp, Sigstr, Slack, and the list continue to go on, and on.
You’re getting the idea now, aren’t you?
If any of these services, people, or companies go down, it could spell Catastrophic results for the operations they depend on them
That’s not hyperbole either. It’s the truth.
Business infrastructure is critical. The partnerships you set up, the services your company depends on, are what will make or break you, especially during times of hyper-growth and scaling.
So, let’s talk about infrastructure now that we’re all on the same page about its underappreciated importance in the business world. Let’s talk about how to determine the right partners when it comes to business infrastructure needs, and how to get the most out of each relationship.
The worst thing you see for an early-stage company is jumping right into a third-party partner to handle your infrastructure needs without taking the time necessary to weigh out all of your options.
For most businesses, the partner you determine in the first 60–90 days of building your business will be your partner for life. Not necessarily by choice, but because, the costs, learning curve, and headaches of trying to move off of a service, later on, could not be worth it.
You might think that isn’t the case, but let’s provide real examples. You decide on using a server provider to host your brand new application. Before you know it, it’s been five years. You’ve grown so much, and the provider you’re on can barely handle your needs. You rushed into this decision without thinking about everything you might need at this point. You need customer service. You need excellent service. You need reliability. You chose a company that was okay when you were small can’t help you much now.
And now you’re stuck.
You can move to another provider; but you need to figure out how you’re going to move everything you’ve built on over, without downtime, without losing anything, without disrupting your employees and contractors as they continue to work. Even a few minutes downtime will cost you thousands, from lost revenue to paying out team members for not being able to work.
When you’re in the early stages of building a new company, or when you are at the point where you scale, you need to find more vendors to support new requirements, thinking long-term is the most critical exercise you and your leadership can do.
Saving a few dollars now, can and more than likely will cost you hundred of thousands of dollars down the road as your operation expands. Don’t let the short-term blind you by what will be a much bigger issue down the road.
Be methodical, be diligent, think long-term when you’re picking potential partners to handle pieces of your company.
“None of us is as smart as all of us.” — Ken Blanchard
One of the first things I did when I started Chop Dawg in 2009 was outsourced all of my biggest weaknesses and concerns. That was the following: legal, accounting, and payroll. These weren’t just areas I felt vulnerable in; these were areas where if the foundations were weak, would cripple everything I’ve been spending my time and energy focused on.
Here is the thing. Since 2009, we have worked with exactly one attorney, one accountant, and one payroll company. We have genuine relationships with all three of them. Relationships that has paid us dividends over the years.
Here is why relationship building is important. These companies, these people, cherish long-term relationships with their customers just as much as you cherish the long-term relationships with your clients and users. Think about it from your perspective. Wouldn’t you always want to make sure your longest-tenured customers are always well taken care of? They’ve been supporting you for years. They’ve brought you more lifetime value than anyone else. They deserve that respect. Well, it’s the same the other way.
However, the biggest asset; is the relationship itself. When you go through years working together, you identify how each other operate, what makes each other tick, and most importantly, go through the hurdles together. For example, with our attorney, we’ve gone through it all. He handles our contract negotiations and edits with new clients. He writes our policies. He manages our internal operation documents and procedures. He’s become so in tune with what we do, and vice-versa, that 98% of what an attorney would ask you for input on he can just do. What does this mean for us? Fewer attorney costs. More reliable and insightful hours being put into what we need. Better protection, knowing the ins and outs of what makes our company. It saves us money. It makes us more revenue. It saves us time. It brings less stress. It’s a win-win situation, all around.
Now sure, we also work with companies who are large; not individualized. You might not have a direct point of contact, but still, being around long enough, companies keep track of that. They don’t want you to go. There is a reason why Ramit Sethi from IWillTeachYouToBeRich.com always emphasizes on having negotiation power when you pay your bills on time for your cell service, internet service, cable provider, etc. It’s because it is much cheaper, and more profitable, for companies to keep you as a customer when they know you’re an excellent client; vs. the amount dedicated to marketing and advertising to find a new one. You have the position of power. You have the leverage. They want you to have the best experience, the best service, the best products because they cannot afford to see you go. Yes, even one company can make a difference here.
Starting back at the beginning of this article; do you want to know why most people talk about teams, customers, branding, and all of the “sexy” things that come with running a company? It’s because they have full control of these things.
Servers, legal, accounting, payroll, taxes… all of these things, for most of us, not only do we not want to spend the time necessary to do them right when running our companies, we either cannot do it or not interested enough to learn them. They take experts, they take professionals, just like how every entrepreneur is a professional in their field.
You shouldn’t just outsource everything your company needs to run. That would be foolish. We’ve talked before about how that is the easiest way for a startup to waste money (which was a great article you could read here). However, anything you physically cannot do, anything that without doing, your company will fail, anything that you require to give the best experience possible to your customers; you should build around.
“It is amazing how much people can get done if they do not worry about who gets the credit.” — Sandra Swinney
Infrastructure is that. It’s the backbone of your operations. It what allows you to run. It’s what allows you to earn revenue. You cannot undersell it. You shouldn’t be cheap with it. You need to find the right partners. You need to build the right relationships. You need to think long-term. Most importantly, you shouldn’t be cheap. Saving a few dollars now, when in a few years, will cost you hundreds of thousands, is never worth it.
You now have a better context for infrastructure. You now have a framework to determine not only when you need a partner, but how to find the right one. You now have the understanding on how to get the most out of the relationships you built. Sure, teams and branding are important. However, infrastructure is what keeps the lights on for all the important stuff to happen. It might not be “sexy” compared to what most discuss in the entrepreneurial world, but it is the necessary aspects that allow us to talk and work with everything else. Choose your partners wisely, and when you do, go all in.
Joshua Davidson is the Founder and CEO of ChopDawg.com. He's a passionate student of entrepreneurship who also builds apps and likes to help grow companies. Co-host of #thePawdcast on iTunes. He's been featured on FOX, MSNBC, CBS, Technically, StartupGrind, Startups.co, StartupDigest, AOL, EliteDaily, Mashable and much more. Keynote speaker. Soon-to-be author (mid-2017). Twitter: @dasjoshua