Tuesday, May 27, 2008

Drive Process, Be a Data Gatherer

One of the things I have struggled with at small startups is process and the collection of data to create business intelligence and knowledge. There are certain areas where I think it is important to try to establish process so that a company can gather data, analyze data, build intelligence and then use that to improve internal processes, go to market strategies, product planning, etc. THIS IS IMPORTANT but all my fellow startup and small company members will appreciate that there are oh.......about 500 other competing priorities that seem equally or more important at any given point in any given day! I will use sales process as an example below to try to demostrate why YOU MUST make the time early on to build these processes.
The most important thing to remember about building and implementing process and knowledge is that in a growing company, implementing process will always be easier to do today than it is tomorrow. The bigger you are and the more entrenched you are the harder it is implement so START NOW!!!
Spending the time to build some rudimentary processes to collect data will save you time in the future and will provide you with more than just a gut feel when it comes time to review why something is or isn't working in the future.
Sales process is a good example. Building a sale process and utilizing a simple CRM like Salesforce.com, Maximizer, SugarCRM, (insert your favorite here) will allow you to start to build a better understanding of what works and what doesn't.
From a Sales Ops perspective (a few examples):
-What are the five key questions/pieces of data that you need to get from a prospect on a first call?
-What program or partner is generating the majority of your leads?
-Had the customer heard of us beforehand? If so from where?
-this list is endless and should be customized for your needs
From a CFO perspective:
-how long from first call to to demo and what % get there?
-how long from demo to meeting and what %?
-how long from demo/meeting to formal proposal and what %?
-how long from proposal to draft contract and what %?
-how long to close and how many?
This is neither complete nor perfect and is just an example to make my point that by starting to track data and building a database of this type of info you will have a data driven basis for assessing a pipeline and providing a historical fact based position on what the forecast may look like moving out. This can provide the straw man and starting point for your sales calls, forecasts and budget conversations with sales.
After time you start to link this data to certain verticals, certain geographies, certain partners and look for patterns. Now you are putting the pieces together that will really help the business.
Over time you can build a significant amount of internal knowledge (that is not just gut feel) that will help qualify prospects, pipelines, etc. When modelling revenue growth you can link the growth back directly to the volume of activities (demo's, meetings, first calls) that are required to drive that level of growth and ensure that you are modelling a cost base that will support the level of activity required to drive the required growth.
Summary Building process and collecting data for analysis allows us to create a learning organization. A learning organization is critical to us in our startup world because we have neither the resources nor the time to repeat our mistakes. We as CFO's need to support our organizations and drive improvement through learning from what works and what doesn't work. This can be applied in almost every functional areas our business. Start tomorrow, don't wait it will only get harder.

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