May 29, 2015
A group of my customers has grown by 10x, year over year, for four years in a row. By learning from them, I hope you can prepare your own company for rapid growth.
Sharing economy companies connect buyer and seller to make better use of homes, high fashion clothing or cars. They share things. Every time you use your iPhone to order a car, rent a house for a family reunion, or rent a dress for a friend's wedding, you could be helping sharing economy companies to grow. You're not alone in supporting their growth. Among Bill.com customers, this group has one of the fastest growth rates I've ever seen, scaling from a handful of payments to nearly a half million payments a year.
For them to grow at this rate, they needed to take advantage of other trends to enable their workers to scale in superhuman ways. They also used data to hire and retain great people and increase worker productivity.
Fortunately, any business can duplicate these super tools and manage rapid growth. Here's how they did it.
1) Arm each person with the tools to process thousands of bills each month
Each bookkeeper or accountant in a sharing economy company is very efficient, paying an average of 10,000 bills each month, enabling a small team to easily process a hundred thousand payments. Although your business may not need this type of scale right now, I know many small businesses that have a challenge managing payments after 20 transactions a month. A few years ago, a hundred thousand monthly payments meant an army of bookkeepers were processing checks, all day, every day. Sharing economy businesses don't take this approach. They hire a small team of accountants to process their half million payments a year.
2) Get tools to transact money faster to gain savings of 15x
We all know that money is data and that data can be moved very quickly over the corporate network or in the cloud. The bottlenecks are payment approvals or initiation. A typical workflow for payments involves at least three different people: clerk, accounting manager, and approver. This process cripples most businesses at some point in their growth.
Using technology, sharing economy companies have reduced the time and thus the cost of this work process by an incredible level. I have seen savings of more than 15X due to scale and specialized work management techniques.
Realistically, most businesses can't reach the savings of sharing economy companies that are completely focused on efficiency. In my experience, small companies can reduce accounting costs by 9X by overhauling the accounting workflow process.
3) Eliminate paper from your office To move fast and grow fast, you can't be lugging boxes of paper around. In my own company, I ban almost all filing cabinets to force people to store everything possible digitally. I can't afford to pay people to walk a document over to a colleague's desk for approval. Neither can you.
Paper also slows business growth by limiting access to the back office from different time zones and different locations. Scalable businesses focus on making the information, previously stored on paper, available anytime and from any location.
Sharing economy companies take the concept of paperless transactions to a new extreme, running the backbone of their businesses based on paperless transactions and doing it on a massive scale. They're highly focused on streamlining every step of the work process.
They avoid routing paper around an office or between buyer and seller. Just imagine what a pile of a hundred of thousand paper invoices and checks looks like and imagine sending these out to hundreds of thousands of buyers and sellers The labor costs associated with handling paper trails become an insurmountable obstacle to scaling most businesses. Wave your magic wand and make the paper disappear.
4) Share business data and let people see The real key to scale is to be able to see the data quickly and to share the data with other people.
With my first start up, I started off running it with an Excel spreadsheet. I used Excel to track all types of business data, including cash flow, assets, and time. At some point, Excel breaks down.
Most of the 500,000 members in the Bill.com payments network, including many of the sharing economy companies, integrate my products with tools like Intacct, Netsuite, QuickBooks Online, and Xero. These tools allow managers in any type of business to track their companies' status at near real-time. Some of my customers give their staff access to the status of over 100,000 payments. Never before have businesses had this level of operational visibility, giving people throughout the business the ability to react quickly.
Sharing economy companies are successful because they build a culture of efficient sharing, not only helping sellers share with buyers, but also helping their internal staff to share information.
Although sharing economy companies deal with very high transaction volumes, people in every business can feel buried under a mountain of backend operational work and costs. Learning about the super tools of sharing economy companies can help you to scale your own business without hiring an army of workers.
This article was originally published in Inc Magazine