David Lockie, Pragmatic: “How I grew my business from 1 employee to a team of 50”
In a previous post, I recounted how I took my first steps in going from being a freelancer to making my first hire. Now I want to show you how I grew my business, WordPress agency Pragmatic, over the course of the next five years, from myself and that single employee, to 50 people – and all with minimum team turnover.
One plus one equals one and a half
Finding myself with that one employee, I had to quickly learn to be a manager. Despite his undoubted talents and my own nascent management skills, I was still spending around half of my time supervising and directing. So, the productivity level of the two of us was more like one and a half.
Projects were billed based on that one and a half rate but in essence, I was paying two salaries. And that significantly impacted the profit that could be generated.
Becoming a team
In time, and with the amount of work we were generating while still growing, I determined that I might as well manage two people as one. That way, I could bill for two and bring in more revenue.
The reality of teams and human dynamics though is that when you’ve got one person, you’ve got one unit of complexity. But when you manage two team members, you actually have three units of complexity, because there are three different ways that those people can interact with you and each other.
And with three team members, you have six units of complexity, so actually by adding two extra people you’ve made your life six times more complex.
Once we had reached this team size – and this stage of complexity – and had implemented some project management and team communications software to help us stay aligned, the company naturally started to grow.
This was down to the simple fact that, once again, we were facing the same issues I’d had before when I was a freelancer: there was simply too much work.
Looking back, I found this a daunting stage in my business journey. I woke up one morning to the stark realisation that if all the projects that we were working on went wrong for some reason, even if I literally worked 24/7, there was no way that I could backfill projects that were behind, fix issues and plough on through.
It seemed that, below a certain number of people, I could pretty much just dive in and fix problems and crack on by sheer brute force, but above that number, there was too much work and so much going on that there was no way that I alone could overcome those hurdles.
To avoid this nightmare situation, it was critical that I applied myself to ensuring the team remained aligned and focused. I needed to make certain that we were all heading in the same direction, and with the same aims, so the business would stay on track.
Ultimately, this came down to becoming a pretty good project manager, checking in on the detailed delivery and communications around every project to ensure we were on track.
At this point, this project management was primarily qualitative – by which I mean that estimating our progress and profitability was done by my own mental reckoning rather than using time sheeting and more quantitative analysis. That was something I’d only learn to implement later.
Increasing my value as a leader
So, with small team management cracked, we accomplished more and more work. But then it progressively became clear that there were other factors to overcome.
I would have a box of receipts to deal with, or I’d realise that I didn’t know anyone’s address, or couldn’t recall which version of the employment contract I was using, or the accountant was reminding me about the impending tax bill.
And all the time, the proposals were pinging into my inbox but I was struggling to respond to them.
It was evident that I needed help, specialist help.
I looked to add a salesperson to support me, a marketing whizz and someone who could do the bookkeeping, accounting and HR. There was no way that I could spend all of my time doing these tasks – and anyway, there were specialists who could do all that far better than me.
So now, I was employing non-billable people. I had gone from six billable people, to six billable plus three non-billable.
Undeniably, they were a welcome addition that freed up some of my time but they needed to pay their own mortgages and bills. And this created yet another kind of crisis point in the business, because I needed to ensure we generated enough cash to pay for these three extra people who weren’t bringing in any money.
In other words, I had to translate the extra time and focus that these experts gave me directly into bottom-line performance. Looking back, it feels like this was mostly about sheer determination, effort and luck rather than anything particularly clever.
Building an organisation that worked
As you might have guessed by now, no sooner had we accomplished the hurdle of employing non-billable people than into sight came another an incredibly risky time in the growth of the company.
Organisationally, everything was broken. And it was really painful. We needed to get to a point where there was structure in the business: marketing, sales, operations, finance.
With the benefit of hindsight, I would advise others to get to this stage – with a good structure, with people understanding what they’re doing and how to work together – as quickly as possible.
For us, we had some decent-sized projects with enough budget behind them that clients would certainly become pretty angry if they weren’t to go well.
We had transitioned from a small group of people sitting in a room, all easily able to talk to each other, to a much bigger and disparate organisation.
Individuals were working towards their own marketing, sales, HR, legal or IT objectives and the client services team had separate accounts they were responsible for. It had become far harder to make the company work as a single organism.
The need to restructure
There was a level of disorder that played out in our output. Projects were taking more hours than we had budgeted for, clients were getting fed up and team members were getting stressed. It seemed as though everything was difficult and I felt like I was in the middle of four horses, all running hard in different directions.
I desperately needed to restructure the company and address the misalignment, otherwise there was a risk of real business failure.
I was grateful at this time for the support of my non-executive advisers. They recommended a fundamental reshaping of the business and so I divided the company into three mini agencies, each with clear accountability structures and defined roles, and precise KPIs to achieve.
It has paid dividends and now Pragmatic is a more streamlined and smooth-running operation, handling seven-figure projects and with an enviable client roster.
It has been hard work. Running an agency business always is but the result is that I manage a fantastically successful, hard-working and extremely talented team of people who today make up the UK’s leading WordPress agency.
Thursday, April 16, 2020
Thursday, April 9, 2020