Business architecture

Raising capital conjures images of slick pitching and creating a degree of excitement around value propositions.

There’s no denying that’s part of it, but at a time when most people are talking about survival in the face of a global recession, what about company failure as a result of too much success – or “selling oneself to death”.

Start-up entrepreneurs naturally focus on the top line – driving customer acquisition. As the business begins to snowball, some entrepreneurs find that their very success has created problems that they don’t know how to solve – inventory management; warehouse logistics; IT scalability and, perhaps most important of all, points of indispensability – critical job roles that only one person in the organisation is capable of executing.

More often than not, the founder finds himself in a situation where he has successfully hired a number of junior staff to take care of the easily defined tasks but he has become the hub of an ever larger wheel – turning faster and faster – creating time stress and consequential management inadequacy.

While such a business may well need capital (and superficially would look like an excellent investment candidate), an investor will be very wary of backing an entrepreneur who has been unable to construct a management team that mitigates points of indispensability or has been unable to put in place operational processes and disciplines.

Look to develop a business project plan – a plan focused on a roadmap for operational infrastructure including processes, systems and people (“business architecture”). Such plans are not static and must be continuously reviewed and amended as the business matures.

If you are in a situation as described above where you have successfully allocated 120% of your available time, you may need to bring in an external resource to help develop such a plan and assist you with its initial execution until you have put in place sufficient internal resource to take it forward operationally.

Quality management is not just about understanding products/services and markets – it’s about understanding how to systematically build business infrastructure, processes and execution teams to act as a solid foundation upon which rapid growth may be achieved without unnecessary risk. Failure to give this aspect of business development timely consideration could cost you dearly.

Importantly, the very disciplines you put in place to handle rapid growth, will serve you well in tough times. Good internal management and execution disciplines will greatly assist a business that has to whether a storm, only to emerge from hardship in an excellent position to grow quickly into resurgent markets.

These issues will be studied by quality investors and the best entrepreneurs incorporate business architecture into their business plans to evidence a degree of operational maturity worthy of substantial investment.

Doron Ben-Meir has been an active venture capital manager for the last eight years. He founded Prescient Venture Capital and prior to that was a consulting investment director of Momentum Funds Management. He was a serial entrepreneur over a 12 year period, co-founding five new technology based businesses.