Honeybee is doubling its turnover every ten months, but it will need to be eight times its current size before the business model starts to pay real dividends. Sam Clarke has his sights set on a highly scalable, profitable business that delivers real value to his clients. Here’s how he’s getting there.
Businesses go through phases, and while it doesn’t matter what you call those phases, it’s important to know which phase you’re in. This directly impacts the decisions you make, particularly if you’re targeting specific growth goals.
Sam Clarke, founder of Honeybee, a mobile sales enablement platform for sales reps in the field, calls these phases 0 to 1, 1 to 10, 10 to 100, and 1 000+. Each phase has its own challenges, and each must be conquered before the business can enter its next chapter of growth.
Phase 1: 0 to 1
“This phase is from start-up to when you’ve landed your first client, and you have something that at least one company will pay for,” explains Clarke.
“This phase is all about development and perfecting your offering for at least one client. You’re keeping things lean while focusing all your energy on delivering client satisfaction.”
Related: Jason Goldberg asks are you (realistically) ready to scale your business?
Phase 2: 1 to 10
This phase is all about learning what different clients need from the same product. “You’re not profitable,” says Clarke.
“You’ve got a decent number of clients now, and there are a lot of overlaps between their various needs, but you’re still customising. You don’t yet have enough features for new clients to choose from existing menu options.”
However, each iteration or client change is addressing a client need, which just adds to the overall complexity and comprehensiveness of the product, moving the business closer to its goals. “Our whole idea was to build a modular product that clients could configure based on an extensive menu of options.
“As our core base grew, we eventually reached a point where we only needed to make small tweaks for new clients.”
Phase 3: 10 to 100
As a business scales, it’s refining its processes, defining what is and isn’t relevant. It’s important to analyse every decision and critically determine if it’s attaining the desired results as well. However, with scale comes problems.
“A bug that would statistically effect 1% of use, went from affecting one client once a month, to ten clients once a day, to 100 clients every hour. This has to be managed without everyone getting stressed and the wheels falling off.”
Your team is also growing — often before a management structure can be put in place (or even afforded). For Clarke and many other business owners, this meant he now went from salesman, tech support and business strategist, to HR manager, sales manager, general manager and everything in between.
“This was one of the hardest lessons I had to learn. We weren’t yet in a position to hire an experienced sales manager, but we did need sales reps, and so I found myself in a position I had no experience in:
Hiring and managing sales reps. Good sales people can drive business growth and have an incredibly positive impact on your growth. We learnt the hard way how destructive one bad sales rep can be though.
“He was excellent at signing new clients, but insisted that he train them personally, instead of letting our on-boarding team do the training. It was against our process, but we wanted to keep him happy — he was a super-star, and we didn’t really see the harm.
“We couldn’t have been more wrong. The product wasn’t sold properly and the sales rep managed to keep us from finding this out as long as possible by blocking any external training. It took us a while to realise what was happening, and it was a painful lesson to learn.”
It’s also an unavoidable step in the growth curve. Customer needs outpace revenue growth, and feet are needed on the ground before a management level can be put in place. Clarke’s advice?
“Don’t take everything at face value. This is still your business, and you need to know what’s happening in it. Until that point I knew every one of our clients. They were the heart and soul of our business. Now I was losing some of the one-on-one intimacy, and the result was that I didn’t know what was happening with our clients. You can’t have a relationship with each and every client as you grow, but until you can put a management structure in place, make it your business to sit in on a few sales calls. Make sure every new hire understands and lives the values of the business you’re building.”
Phase 4: 100 to 1 000
This is the ramp-up phase. It’s when you start hiring middle managers and putting teams in place. You start focusing on managing the company and no longer manage clients.
“Although necessary to the growth of the business, this was a really tough phase to enter for me. My clients were everything. I nurtured them. Now I was putting processes and people in place, and stepping away from those clients, but as an entrepreneur, letting go doesn’t come naturally.”
Instead, Clarke has had to have faith that his staff could handle the day-to-day activities of securing new clients and managing their accounts.
“The one positive about such a bad hire in our previous phase was that I became a lot more discerning about who we hired. I understood the crucial role our people play in the success or failure of our business, and we’ve been building a focused, passionate team ever since.” It’s now a team of 34 people.
“The client management and client on-boarding functions are essential to our growth. This is what keeps customer longevity,” says Clarke.
“Get it right, and we’ve got repeat business. If we do lose clients, it’s at this stage. This is where we make sure our business products and clients speak the same language. They need to understand what the product can do — it’s a complex product, but an incredible tool if used to its full capacity. I also don’t believe in lock-ins. We have a 30-day notice period and if you cancel, we send all your data back to you, in whatever format you want it in. We want to keep you because our product is so valuable to your business you can’t operate at the same level without us — not because we locked you in.”
The next phase: 1 000+
The original idea was to build Honeybee and then start concentrating on other apps. However, the platform was such a success that all of the company’s resources started shifting towards the platform. This hadn’t been the original business model, but the success of the product meant the model had to be adjusted.
“Right now, we’re doubling our turnover every eight to ten months. The business model is based on recurring revenue, so our focus is on building our client base. In April 2016 we signed as many new orders as we did in the first 22 months.
“We’ve taken a long term view on growth. We’re reinvesting all of our profits, and will need to be eight times our current size before we become very profitable. We’ve done the numbers and found our sweet spot — the balance between price and number of users that we need to make this investment worthwhile. Price too high and we won’t get the numbers, so it’s important to do those figures. We’ve taken the long view, and so far it’s paying off.”
Related: Inside the mind of the Travelstart risk taker – Stephan Ekbergh
The Honeybee story
Sam Clarke started his entrepreneurial journey in 2007 with a company that wrote software for the design of antennas, an extremely niche market with a business dominated by a few big clients.
When he was bought out in 2012 he knew he wanted to change focus and create a business-to-business product with as broad an appeal as possible. It needed to solve a pain point that every single business felt, regardless of their industry.
His main shareholder in the previous business, EMSS, also wanted to diversify. “They had coders and developers, and the capability to write Android apps. I’m not a coder, but if I could identify a solution to a burning market need, they could create the product."
Finding a pain point
To find that pain point, Clarke started networking, asking everyone he met similar questions: What was their greatest business need? What pain points did they experience? What solutions had been tried and failed?
“I was looking for something widespread, and before long a picture emerged: SMEs and corporates alike consistently have challenges with their field sales reps. Now that I had a problem, I worked to understand this market from the inside out.”
Four weeks of hardcore research followed, and by June 2012, Clarke and his developers were ready to start building their first app.
“We weren’t the first company in this space, but the competitors I found at that time relied on technology that was expensive and high-tech, but not widespread. We were coming into the market at the perfect time: Smart phones and tablets were just starting to be commonplace. We could leverage off of these devices to create something mobile, simple to use, and most importantly, easy to integrate into daily work schedules and processes.”
Growth should be planned and follow a predictable path if you want to see good returns.
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