If you’re like most scale-ups, your technology team is small but mighty. You’ve been able to achieve a lot with limited resources, and you’re proud of what you’ve accomplished. But as your business starts to grow, you may start to feel the limitations of your current setup. Your team is working around the clock, but there are only so many hours in the day. You’re beginning to lose sight of the big picture, and you’re not sure how much longer you can keep up this pace.
You may have been growing organically so far, but you’re now ready to scale up. This presents a number of challenges. Not least that you may have organisations, such as ours who swoop in to perform tech due diligence on your people, tech and team.
If you’re scaling a team post investment or Private Equity deal there is the added challenge of even more scrutiny so it helps to be prepared. In this blog series, we will discuss some of the challenges that technology teams face during the scaling process, and offer advice on how to overcome them.
The Series will cover these common:
- Scaling the team (this article)
- Considering the type of buyer
- Adapting your strategy and pace
- Target Operating Model
- Hidden barriers to scale
Scaling the tech team
The most common enabler to growth is usually scaling your technology team. It’s almost the most expensive one! So it’s important to get this right. But before you do, there are a few things you need to consider.
Tech industry pressures
- There is a worldwide hiring crisis in tech, it’s difficult to attract and retain staff.
- There’s significant wage inflation within the tech industry and we often find tech leaders haven’t accounted for that in their plan.
- The teams we meet are often operating from high levels of passion but a larger team will need to be managed in a more structured way
When you’re ready to scale your technology team, there are a few things you need to keep in mind. First, you need to have a clear understanding of your business goals. What are you and your board trying to achieve? How will your technology team help you get there? This might be a simple question, but it’s very common for us to meet teams who simply don’t have a plan – or rush to develop one to present to us.
If you can’t answer this question, it’s going to be very difficult to make the case for why you need to scale your team. It isn’t enough to show that you need people, you will need to justify the expense by mapping out (and quantifying) the benefits. You’re going to be under more scrutiny than before, so may as well start now.
The costs and ROI of scaling your team
Second, you need to have a clear understanding of the technology investment and ROI. How much will it cost to scale your team, and how will that compare to the expected return? This is where a lot of businesses make mistakes. They invest in the wrong things, or they don’t invest enough time in working out the operating model of the team and how that will benefit the business.
Don’t make the mistake of thinking that you can just throw money at the problem and it will go away. You need to be strategic about your investments, and you need to be able to justify them to your shareholders.
Consider your risks
Whilst entrepreneurs and leaders in portfolio businesses tend to present the art of the possible, remember that investors want a balanced assessment. So finally, you need to present a clear understanding of the risks involved. What are the risks of not scaling your team? What are the risks of scaling too quickly? How will you manage those risks? These are tough questions, but they’re important ones to answer. Scaling is a difficult process, and there’s no guarantee that it will be successful.
Once you have a good understanding of your goals, you need to start thinking about how to structure your team. Do you need more developers? More designers? More QA testers? Or do you need a mix of all of those things? It’s important to think about the skills that your team will need in order to achieve your goals.
You also need to confidently present how you’re going to manage your enlarged team. Are you going to have a centralized team, or are you going to have distributed teams? How are you going to manage communication and collaboration? What tools and processes are you going to put in place?
How effective will communication be and how can you ensure a bigger team will continue to develop as well as you do today? How will you ensure ideas will be heard, from all members of staff across the hierarchy? There are different ways you can do this, but one approach is covered in the video below:
But if you can answer these questions and make a clear case for why scaling is the right decision for your business, you’ll be in a much better position to present your case during due diligence.
Prepare for Technology Due Diligence
We understand that people/org plans can be hypothetical and key hires are essential to make things work. So we’ll always help to ensure the plans are more ‘investor’ friendly and highlight issues so you can work on them. I personally have a particular interest in self-development within technology teams and helping people thrive. Which I realise sounds a little convenient given the topic of this blog! But having witnessed the car crashes that can occur during M&A due to a lack of thought on how it can impact tech employees I wrote a book called People First. If you’re interested in a free copy please get in touch.
These related articles may help you:
So there it is our top three tips for preparing to scale your technology team. In our next blog post, we’ll discuss some of the challenges you’ll face during the scaling process. Stay tuned! Next, I’ll be looking at the type of buyer and how that may impact your deal. Thanks for reading.