What Every $10M+ Software Services Firm Has Discovered
Learn how to grow your team and business sustainably
What It’s About: As a software services firm grows, it must discover ways to make that growth sustainable or it will eventually implode.
Insight: Processes are critical for enabling and sustaining growth. Yet you don’t need to “document” every detail. Instead, focus on the critical 20-percent.
Action: Follow the steps in the following article to learn how to codify the critical 20% of what you do. This will provide enough structure to cover what makes your business tick while not bogging it down in procedures that will quickly become dated.
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What Every $10M+ Software Services Firm Has Discovered
You need to embrace processes.
That’s it. That’s the lesson. Not helpful? Not actionable? Let me explain.
Even if you do “custom” development, you need to have a guiding framework around it to drive predictable and highly valuable outcomes.
“Process” doesn’t have to be a dirty word. In fact, if you want your business to grow beyond you and a small disjointed team, you must craft the way your business will operate across every customer.
The key is not overthinking the journey toward processes. I’m not talking about documenting every detail.
You’d be surprised to discover what can be accomplished by merely capturing 20% of what your firm does for all customers..
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My personal journey to an 8-figure software services business
When I started my first business, a software services business specialized in implementing mission-critical supply chain solutions (complete with highly specific customizations), everything was done by brute force.
I treated every customer project uniquely. This often meant contracts (if I had formal agreements in place) were distinct. My rates were all over the place and I spent much of my time taking orders.
Like a line cook. But without a menu to guide the process.
Everything was custom. Whatever my customer wanted, I attempted to make happen. This was akin to juggling multiple, different-shaped balls at the same time. Possible but definitely not sustainable.
So, I hired a team. Great people who could also roll with the punches. Yet it was not enough to build a real business around our collective expertise.
At the time, our revenue run rate was in the low-7-figures yet, like I shared above, it was propped up by brute force. We were walking the high wire without a balance pole or safety net — likely to fail if any one thing changed.
We needed frameworks, guiding principles, and processes.
Processes were liberating.
Yeah; I know. I didn’t believe it at first either.
But processes freed us from constantly (even if unintentionally) reinventing the wheel with every customer. Without processes, the ambiguity of what we did and how we would do it, was overwhelming and highly inconsistent.
That’s when I invested in business process automation. That’s a buzzy term for solutions that help you build repeatable workflows. Much of the busy work was eliminated along the way, so my business could perform consistently.
From there, growth came easier. Both from capturing new customer opportunities and building my team. We could breathe and customers knew what to expect because we had a proven method for delivering value.
How to build processes for software services
If you boil down a process into its core components, you get a series of simple steps that define how you desire to work. Sometimes you even have tech in the mix, if you’re using software or hardware to manage those steps.
Let’s dive into how to bring consistency to your team if there are multiple approaches being leveraged currently.
After that, we’ll also discuss how to build a new process from scratch for something you only understand conceptually.
Distilling many approaches into one true approach
It’s natural for a young team to create many distinct ways to accomplish the same desired outcome. Arguably, this is how a service business innovates — exploring many paths toward success. Yet you must pick a winner quickly or that variety will frustrate your attempts to grow your team.
Leadership is key when designing one process from the parts of many former approaches. There are likely to be many passionate supporters of the old ways. You’ll need to cut through the emotion and look for the high-impact elements that truly matter.
In my experience, each of the disparate approaches has something unique to offer so leverage that. By combining aspects of each approach, you’ll garner buy-in from your team and help them embrace the new process.
Critically, you must lead with what you want to achieve —a single, consistent process that meets customer expectations in a repeatable fashion.
Sometimes, you’ll even discover that most of the work can be eliminated by making different (potentially even better) choices earlier on.
Here is the approach I use:
Work backward from your desired outcome. At this point, ignore the details and solely focus on what success looks like. Summarize and keep this outcome streamlined.
Focus on the critical steps only. It’s so easy to get bogged down in the details when thinking about processes yet that’s where most people go wrong. They overthink it. Instead, strive for finding the 20% of what you do that produces 80% of your results.
Use only what is working best currently. Now that you know what is critical, look for the best ways to achieve those steps from the multiple one-off approaches you are replacing. Or even enlist your team to brainstorm new ways to accomplish your goal.
That’s it. I know it’s high level but give it a shot and look at your approaches from 35k feet. Stay away from the details at this point and focus on producing a better outcome.
Sometimes, you’ll even discover that most of the work can be eliminated by making different (potentially even better) choices earlier on. Take the win. Eliminating unnecessary work is amazing!
Designing processes to tackle new business needs
Unlike when you have multiple approaches that need to be streamlined to create one consistent path forward, you may have new business needs and no former experiences to leverage at the outset.
Learning to systematize new needs doesn’t have to be hard. In fact, much of the exercise is similar to simplifying existing processes.
You need to start from the finish line. When you know what must be achieved, you can work backward. I’m a big proponent of looking at creation from this perspective because it makes you focus on what truly matters… not the fluff that comes from working forward.
Only build the minimum viable scaffolding. Keep the steps lean and only add them when you can see a clear benefit. You’re not trying to cover all conceivable scenarios. You need to focus on maximum benefit with the fewest moving parts.
Refine and unwind as you go. This is your first pass at a new process for a new business need so you’ll get some things wrong. Don’t sweat them. No one gets it right on the first pass. Instead, review after your first few times through the process to capture what worked and what did not. Unwind what had no real effect and refine what added value but was not quite right in the beginning.
Keep it lean. The key here is striving for 20% coverage of your processes, not +80% because you’d buckle under the pressure. You’ll get the most mileage from the 20% that produces 80% of the value for your customers. You’ll be surprised by what truly doesn’t matter yet has been perceived as a must-have.
How do you know which 20% is critical? Start taking away steps. You’ll see a small portion that must be in place to not fall down completely. Everything else could be (and probably already has been) figured out on the fly.
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What you should take away from this article
Every business needs processes. If you want to build a business that can survive without you propping it up, processes are critical. Any business that has grown to 8-figure revenue now has its core processes defined.
We tend to overthink what “processes” are so they never get created. Yet, when you strive for 20% coverage (the critical core), you focus on what truly matters to create consistent results. Everything else follows.
Those companies that write everything down in an old-school binder are only wasting their time. No one reads them. And they quickly become out of date because they pulled in details that will change as your business evolves.
Even software services firms that create “custom” solutions need processes. These revolve around how you design, define scope, make and show progress, check-in with customers, and define DONE. They should also help you price your services but that’s another topic for another day.