Managing Growth

This post is for those of you who are just starting out with your first companies. You’re faced with a million questions, many of them regarding growth, and how to manage it. You will desperately want to grow as quickly as possible. Sometimes that’s the right thing to do. Sometimes, a more measured approach leads to a healthier overall business.

I started Neya in October 2009. We hired our first employee in May of 2010. We’re now up to 20 folks, and continuing to grow. Overall, it’s been a great experience watching Neya turn from a startup to a stable growing business. (I still have to remind myself to stop referring to us as a startup). I’ve been fortunate in many respects. I’ve been lucky to attract extremely talented employees; I’ve been fortunate that we have been, I think, very good at developing customer relationships; and we’ve been fortunate that the skills and capabilities we provide are filling an emerging niche in unmanned systems. As far as our technology goes, we’ve hit a sweet spot where we aren’t too early or too late.

Having said that, I have been, and want to continue to be, careful about managing our growth. Many folks will tell you to grow as rapidly as you can. If you are selling an app – that’s great advice. But if your business is built around developing custom advanced engineering solutions to critically hard real world problems, then you have to consider a wide range of factors in determining when and how to scale.

Given that folks in robotics tend towards the latter rather than the former, here’s some of what I’ve learned about growth in the past few years.

1. Attracting and retaining talented employees. If you are going to grow, make sure you can attract and retain the caliber of employees you need to successfully handle that growth. Hiring the wrong folks just to increase head count in order to staff certain projects is a recipe for disaster. It’s a mistake nearly all entrepreneurs have made at one time or another. If you’re a young enough company, it may be impossible to recover from that. We are fortunate now to have a strong pipeline of folks we can reach out to, to grow Neya. Our best recruiting network is our employees. To date, out of nearly 20 folks, we’ve hired only two people full time who did not come personally recommended to us in one way or another. Nothing reduces the risk of scaling personnel than growing through internal recommendations.

2. Keeping existing customers happy. I’d rather have fewer satisfied customers who keep coming back, than a large set of grumpy ones who feel as if we are not spending their (and in our case, “their” often == tax payer) money well. Make sure your senior folks are able to transition from being strong individual performers to project and customer managers, and can manage their own teams of folks. You may have two equally strong technical performers, and one may be ready and willing to grow her role, and the other may not. It’s up to you to figure out how your employees want to grow. In a small company, this is not always an obvious or easy transition. You may try to do everything yourself. Don’t. If you’ve hired the right folks, you can grow your business without sacrificing your quality or values. We’ve been fortunate that our senior folks all have had experience managing mid-sized teams. That takes a huge burden off.

3. Yo-yo’ing. Everyone loves to grow. No one wants to shrink. But it happens and sometimes is unavoidable. It’s the nature of business. If you take a risk, sometimes it will have a poor outcome, and the result of that is your business shrinks. I want to minimize the chance of that ever happening. I know exactly how many employees I have, and the total number of spouses and children that depend on decisions I make. The fact that any of my employees could easily find work at other companies (shhh!!!) should mitigate that fear. But it doesn’t. So when Neya hires someone, it’s when our backlog justifies bringing on someone for an extended period of time. That’s enough runway to keep growing. Because of that, to date, we have never had to let anyone go. Does it cap our growth? Possibly. But hiring 15 people tomorrow, with the “hope” that we’ll be able to continue to support that, isn’t the way I want to grow.

4. Capital needs As you grow, you will be shocked how quickly your overhead and capital needs increase. Make sure you have the cash flow to handle that (for you bootstrappers, that is). Also, make sure to invest in capital only when you know you will be able to keep it’s utilization high. Nothing is worse than driving your ROI into the ground because you scaled up for something that could either be outsourced or wasn’t needed at that time.

Here’s a few articles in this area that you may be interested for other aspects and perspectives:

Posted in:
About the Author

Parag Batavia

Parag Batavia is the founder and president of Neya Systems, LLC. He started Neya in 2009, in order to further robotics R&D efforts, and transition them to commercial and DoD product areas. Parag has a Ph.D. in Robotics from CMU, and an MBA from Drexel. He is married, with two beautiful little girls, and is slowly trying to get back in shape now that he's hit the big 40.