SOP 164 — Categorize the business at fifty to ninety-nine people

1. The stage

The theme of this stage is to categorize. You graduate from it once you pass 100 employees.

Item	At this stage
Headcount	50 to 99
Your role	Executive
Leadership structure	A lot of times three layers of leadership form here, or at least you would like them to: individual contributors, who manage nobody; managers, your first and least experienced line of management; directors above them; and, what you typically see at this size, an executive team above the directors
The executive team	Usually not fully built out: people are usually more strategic, hiring say two or three executives, or even one, depending on your business and where you need leverage
How many companies get here	Only 1.2 million of the 30 million businesses in the US, like 3 to 4 percent; and only 9 percent of people own a business

Choose the first executives by need. A lot of times, who joins the executive team depends on what your business needs and on your strengths and weaknesses as its leader.

Someone becomes the CEO. Often, at this point, you as the founder, or one of the founders, kind of becomes the CEO, formally or not. A lot of people do not formally identify with the role; a lot of times, if that person does not really identify with it, there is a gap in leadership. Even the directors' team a lot of times is missing a couple of people; that is okay, since you fill those teams out as you scale.

2. Each function at this stage

Function	What it covers	What breaks	What graduates it
Product	The services, goods and results you deliver	Product becomes outdated, since you have probably been doing this for years, and improvements begin to take too long to roll out	Fix one problem at a time, with focused, feature-specific teams
Marketing	Not established on this page.	Lead flow swings because customers reach you by a single route, usually somewhere around the 1 to 2 million a month range	Pay for a second acquisition channel out of a referral process you track; segment the nurturing of leads by lead score; choose the closest platform, or a new one of the four lead channels
Sales	Getting people to give you money	Leads are wasted, and you are not working them consistently	Better schedule coverage, a checklist for nurturing leads, and kudos for top show rates
Customer service	Getting customers to refer, retain, review and resell	It is only reactive: all firefighting, no proactivity	A proactive customer journey and communication, focused on renewals and ascensions
Information systems (called IT)	How you gather, store, analyze and display information	Everything is disorganized and all over the place	Network technology: solutions in the cloud, a data host, and hardware centrally located
Recruiting	Finding and hiring people to work for you	It takes too long to find good people, so they get hired elsewhere; too many roles are open, with nowhere to track candidates and where each one is	An applicant tracking system for the open roles and where everyone is in the process, and specialized recruiting firms paid to keep up
Human resources	Reducing the likelihood that employees and regulators sue you	Employee information sits in too many places, and you have no data	A human resource information system
Finance	Reporting and managing your money	Your team starts spending your money stupidly: you have kind of delegated a level of spending, because you cannot approve everything	Quarterly expense management, budgets by department, cards with limits for leaders (sometimes managers too, for specific things), pre-approved regular spending up to a set level; and, in one practice here, insurance coverage and fancier projections added on top

3. Product: one problem at a time

Aim at the biggest reward. Focus ruthlessly on the problem that yields the biggest reward, not the easiest one to solve.

Why one at a time. The fallacy of concurrent thinking says five things done at once should take one fifth of the time. In fact, it is said, it takes like five times the time, as if you had done them one after another, because the cost of switching is real. Put all the company's resources on one problem, and the problems still waiting create the urgency to finish it fast. Give each problem one team and one measurable goal: people find splitting focus very hard, and a focus split between two is put at like one fifth as effective, not half. This works companywide.

Name the one thing. If you have five objectives and sub-objectives, you have not prioritized. Many things are important; the job is to say which matters most and will be done first. A lot of the times, as the team grows, you think executives and directors let you do more at once. It is about doing more things over a year or two, with ruthless focus on the sequence. It is still one company, and departments draw on resources you may not even know about.

Guard attention, not just time. In one meeting described, once the first problem's plan was set, a proposal to spend the rest of the meeting on the next was refused: the team would split its attention. Ask where the team's discretionary effort goes. Give one thing all of yours, shower time and dinner conversation included, and you will solve it in a third or a fourth of the time, it is said. It is almost like putting blinders on yourself and on your team. Having the time and the people does not mean you have the attention.

Go deep. One big objective has tendrils (the email messaging, the webinar language, the telemarketing); go deep on each. A litmus test: you probably had five goals last year, and you probably did not accomplish them. Think you could do all five by year's end, and the year will come and they will not be done.

Companies die from the inside. A saying offered here: companies die from the inside out, not the outside in. Most fail not from market forces, the economy or the weather, but from how they organize themselves; most die of indigestion, not starvation, taking on too much. That starts with product. A bigger company still goes after one thing, just a bigger thing. In one company it is moving from service to software, with no push for more sales and no price rise; it might take 18 months, 24 months. There is always an unspoken sixth priority, keeping the business running and making money, but everything revolves around the first, however tempting the other opportunities.

Change has a cost. In the experience described, a business left alone would almost always do better. A change guarantees its cost, not its upside: everyone resets at zero and relearns. While your effort goes to the one problem, the rest of the team, transacting every day, gets better at their jobs because they can finally breathe. Some problems end up solving themselves.

Flag: which problem goes first. SOP 157 section 3 re-ranks by highest impact and lowest cost; here, the focus goes to the biggest reward, not the easiest problem. Going for the reward spends the team on the hardest win first; weighing cost clears cheap wins sooner but may park the big one. This page does not settle which reading is right.

4. Marketing

Adding a second acquisition channel, with referrals and scored lead follow-up, is SOP 165.

Flag: the referral process. Here it funds the second channel. SOP 183, section 5, also reads a referral program as that channel itself. Read the first way, a new platform is still to pick; read the second, referrals can be it. This page does not settle which reading is right.

5. Sales: coverage, a checklist, kudos

Coverage. Between two businesses in the same space, the biggest difference in throughput across the funnel is literally the hours a day and days a week each is available. So open every day, for as many hours as possible, with as many options inside them: people pick out of convenience. Do not fake bookings to look busy. Nobody cares, and a fake booking only blocks the time a lead wanted; open slots show capacity. With 20 salespeople, only one needs to be free for you to be available all day. Set hours by your customer: people with nine-to-five jobs might be freer in the morning and evening, while some customers are freest in the middle of the day. SOP 85 works through availability.

Staffing it. You might have to hire more people. If it takes three more salespeople and sales rise by 30 percent, at this size that is called a no-brainer. The recommendation given is low-man status for new people: start them on the worst coverage. If your team works five days a week, sell the other 104 days of the year; you pay rent on them too. New people work Saturday and Sunday and take two days off midweek, maybe Tuesday and Wednesday, and work their way up. In one practice here, the month's top closers pick their schedules.

The checklist.

Make the thank-you page headline more compelling.
Move the scheduler above the fold, for a higher conversion rate.
Change to 15-minute time slots. A time like 3:15 gives the perception of a more accurate time and might work better than three, for a higher show rate; it also looks like more appointments and more availability.
Open seven days a week.
Incentivize setters with 3 percent of sales: an easy thing, if you do not yet.
Send automated reminders, which you should probably have by now (these are called the basics), with manual ones layered on top: the automated clearly automated, the manual clearly manual. In one practice here, reps get iPhones, for the blue message that shows a real person. Reminders are SOP 89.
Introduce setter and closer in some sort of three-way message, if you have a two-step sale or even if not: one shared thread, so the lead knows the setter can still see.
Give daily kudos for what matters. It is a lot easier to get a 20 percent lift in show rates than a 20 percent increase in close rates. Rewarding show rates is SOP 88.
Bribe for show rates. The habit described is some sort of either-or (which flavor? which size of shirt?), or you can give straight cash, such as a gift card relevant to that customer (SOP 87). The idea came from a kickboxing gym with show rates put at somewhere upwards of 70: when booking, it asked whether the lead wanted pink or black gloves, a free custom pair for turning up. Once someone has sweated in them, not signing up feels horrible.
If you are a local business, give reps who text leads a local area code: people are not likely to pick up a number from across the country. If reps are not local, software can match the lead's area code (SOP 91). Highly suggested: tiny things like this affect throughput far more than you would imagine.

If you put these in place, you can often lift throughput by significantly more than 20 percent. Value show rate as much as close rate: the dollars spend the same.

6. Customer service: from reactive to proactive

Typically you realize an all-reactive team is probably not going to cut it. Build the customer journey on the four Rs:

R	What it does
Retain	Keeps customers engaged and satisfied by delivering exceptional experiences and continuous value; one of the first things to build the journey for
Review	Gathers feedback through surveys and reviews, to find improvements, or more products and services to offer
Refer	Encourages happy customers to recommend you, by launching referral programs and tracking advocacy
Resell	Boosts revenue by upselling, cross-selling or renewing subscriptions, to maximize customer lifetime value

A lot of the times, complaints and negative feedback mean there is room for a new product or service, which could be an add-on, could be an upsell, or could be something else to ascend them to. Feedback comes from the people who hate you; reviews come from the people who love you.

Map it. The recommendation given: one line on the journey for each R, beside the two lines a lot of the times used already, for what the customer does and what the employee does, since each R now has enough to it to earn its own line. Outline every point where you attempt to retain, get reviews, get referrals and resell. A lot of the times you will find missed opportunity, because you have been firefighting, and your team will not know how to be proactive unless you show them what to do and when. The journey is a process: once you have it, you can train people for each point, and that is when you will probably configure it into your customer relationship software.

Set triggers. Three kinds, all programmable: time (after a set period, ask for a review, or ask them to buy something else); behavior (once they have done something, ask for the review); and an event, something that happens.

Work them in order. The four are in order: to get referrals and resales, you first need to retain people and get their feedback. If you have none of this laid out, the one thing advocated is to focus on the first two first. Referral and resale should be as easy as possible: not shaking customers down, but customers banging on your door for the next product because you did the first two so well.

Split the team. Once you know every proactive step, you can see whom to hire for it, and you can likely split the team into reactive and proactive customer service.

One company's reset. A company at this stage arrived with every system overwhelmed, disorganized and stalled. Of three main things done, one is described: its mess of products was sorted by the percentage of customers buying each suite, then cut to a simple choice of two offers. That created three efficiencies: new sales reps onboarded much faster; customers were far less overwhelmed, since the offer was easy to understand; and the delivery team had less to learn, so it was easier to recruit, hire, train and manage. Margin rose with revenue, which is not always typical.

On SOP 143 section 3, the milestones after activation may come in different orders, depending on the customer and the business model; here, retain and review come before refer and resell.

When to ask a customer to buy the next thing is SOP 162.

7. Information systems: one place for everything

Often at this level you ask where everything lives and where your data is. You might have systems that half your team does not know exist. The fix below sounds dry.

Back it all up in one place. AWS, or something similar, is probably worth looking into now: it stores all your data in one place, adding a layer of security and backup. Files get deleted from computers or lost on Google Drive; the media team's machine overheats. Someone who hates you and has access could delete every customer record, or four years of media files and logos. Backup, or several backups, is called mandatory. It seemed nonsense when an IT director asked for it, and for roughly two years paying for it was resented. Then the company that had built a custom tool the business relied on went out of business suddenly, taking access to roughly half its customer records and financial information. The backup saved it. It is basically insurance: you do not need it until you do.

Centralize the hardware. Centrally locate every computer. One easy way, which works if you use Macs: Apple can store them on your behalf. In general it is also great if you can keep them with one person: it could be human resources, it could be an admin, it could be you; it depends on whom you are comfortable with. Keep the extra and new computers, the phones and everything else at that person's house if you are remote, or in the office if not.

Name things one way. Set how each department names and stores things. It sounds silly, but someone new cannot remember what happened before they arrived, so ramp-up grows longer the longer you are in business: a compounding disadvantage. Taking that bit of friction on is called a local cost with a global benefit. One way described: ask a newcomer, in front of the whole team, to look around a messy folder; if they have no idea, it is everyone's fault. Sometimes you need a data project to go back, clean it up and name things properly, so the team can expand.

Company devices, security, onboarding and offboarding are on SOP 155.

8. Recruiting

Tracking every candidate in one system and bringing in specialist recruiters is SOP 166.

9. Human resources

Choosing and running a human resource information system, and operationalizing the culture: SOP 173 — Choose a human-resource information system.

10. Finance

Spending authority, insurance and projections are set out on SOP 167.

11. The bottom line

The constraint is that everything is disorganized. To graduate, start triaging everything and put it into buckets: organize what is already there. Near 100 employees the theme moves from categorizing, or organizing, to specializing.

These are themes, not absolutes: continuums across every function. You might notice your advertising is ahead or behind; the further behind a department is, the more likely something bad could happen.

12. What this page does not cover

Head-hunting for roles above any filled before is SOP 163; the next stage, from 100 people, is SOP 168.