The Most Important Transition for Scaling Businesses

Remember this?

The last few months we have dug into the three pillars of business.

Boring for some, exciting for a few, and mostly just confusing to my dear wife, who has to listen to my rants. (I love you Kayla)

Nonetheless - writing about this, is tricky, but fun.

My goal with this project, is to create a small, concise, document that will act as a guide for exhausted Solo-operators, who want to make the transition to operationally sound businesses.

Daunting task, but I think its possible.

Anyway, this project has led to some great conversations with other business operators, one of which agreed to write a piece for LTL (you) about the transition stage of Sales and Operations.

I hope you like it.

PS.. This is published on the website, so you can like, comment and share it from there.

PPS... If you are in the asphalt, striping, or seal coating world and want help scaling your business, Cam Roberts works 1-on-1 with operators like you to do just that.

Checkout Cam Roberts Here: stripeitacademy.com

Onto the message - here is what cam had to say:

Separation of Sales and Operations - Cam Roberts

In early 2021, I was offered to bid on a large project in a remote town 9 hours away.

As I quickly surveyed the project scope and drawings, I realized two things:

• This project was going to be worth above $100,000 in revenue. (Great.)
• There was no way I could submit a bid, as only 4 of us were working in the company, and this project would require two people to be on-site for five weeks during an explosive growth year, putting us in a highly uncomfortable situation. (Not great.)

In a perfect world, we would scale our business perfectly to match sales demand with our ability to produce it. As our sales numbers grow, we simultaneously execute a meticulous recruiting and training strategy, ensuring all customer demands are met, with no drop in quality, and perhaps most important of all, no stressed-out business owner.

The reality of that happening perfectly, however, is extremely low.

When I declined to submit a bid, I knew there was no good option if I won that contract. It would simply bend our company too much, potentially causing us - or me - to break. (Ironically, we were awarded the contract 4 months later when a desperate general contractor begged us to do it… but that is a story for another time).

This illustrates the constant push-and-pull relationship between sales and operations.

Sales job is to produce revenue-generating contracts.

Operations job is to execute what is delivered to them by sales and ensure profitable projects.

In new companies, these 2 departments are often run by the same person… the business owner. When the same person is wearing both hats, they know exactly what the company can produce, and can therefore adjust sales accordingly.

For example, if the work is slow, the small company will simply spend more time hammering out sales opportunities.

If the work pipeline is bursting, they will pause sales efforts, and focus exclusively on production.

Over time, companies hire people to assist them in these 2 departments. Usually, it’s operations first - Someone to help in the field is often the first hire.

As companies grow, they hire more experienced production workers, foremen, project managers, and operation managers.

Eventually, companies may hire in their sales department, too. A part-time estimator to make site visits and prepare quotes. A full-time position handling inbound sales. Eventually, an outbound sales rep, designed to hunt and attract new customers.

The progression will look different in every company, but ultimately, one critical thing has to happen - the separation of Sales and Operations.

What exactly does this mean? It means they need to operate independent of the current demands of the other department.

Perhaps the simplest way to explain it is like this: What does a small business owner do when there are lots of sales opportunities piling up, there's already a lot of work sold and ready to be produced, but the business owner does not want to work 90 hours a week in a frenzied effort to sell more work and produce the work already sold?

That’s easy - they let their foot off of the gas pedal in the sales department, focus on executing what is already sold, and sell less work until they catch up on production.

Do you know what happens when you tell a salesperson to let their foot off the gas because the company's operations department can’t keep up and produce the work?

They go find another job.

A salesperson only does one thing - sell. Asking them to not sell is like asking a lion to not sink their teeth into the gazelle 10 feet away from them. A great salesperson has no intention of sticking around in a culture that cannot produce what he can sell, which impacts his income.

This marks a radical change from when the business was small. A business owner who doesn’t want to have a mental breakdown and deal with the stress from having too much work has no problem finding a way to avoid that situation.

When you truly separate the two departments, however, and have dedicated departmental staff, it is not reasonable or effective long term to ask them to not do the job they were hired to do.

It is no different in Operations. If a salesperson drops off 100 new contracts on the desk of the operations manager, winks, and says “Good Luck”, the operations manager has the arduous task of somehow producing that work. If they were to tell the Salesman they cannot produce it, a great salesperson would say “Perhaps I didn't speak loud enough… Good luck.”

On the flip side, if sales is not producing enough work, Operations staff can get very ancy. Slow periods are great times to work on improving processes and training, but if it is too slow, people don’t work, resulting in unhappy employees, and in the worst case, layoffs. No operations manager in the world enjoys those conversations.

What holds many companies back as they grow is they have not reconciled the fact that there needs to be a separation of the two departments. The way it ran when it was just you and a helper simply will not work when the company has 10 or more people.

Even as companies cross into 7 figures of revenue, I commonly see business owners who are undeniably hindering the growth of their company by trying to serve in the two departments. They are frustrated that the company is struggling to increase revenue yet do not properly separate the two departments. This can come from fear of “losing the balance” of the work pipeline, not trusting others to run a department, a lack of systems and processes to separate the departments, and many other reasons.

Of course, one can go too far and build a wall between the two departments, causing a breakdown of culture and team morale. The separation of the two departments doesn't mean they work exclusively independent of each other. The two departments must work together, ensuring communication is made about progress on project opportunities, executing what sales has handed off to Operations, and many other key areas. However, it is very uncommon to hear of stories from small business owners who have this issue. Most struggle to have enough separation.

I would challenge business owners who are overworked, stressed, and lacking motivation to analyze the current level of separation between the two departments. It is not feasible to continue to grow a company when the two departments are not properly separated.

When a business intentionally slows down one department to accommodate the other, it actually causes tension rather than reduces tension.

If you feel your company needs to make that transition to separating the departments, feel free to contact me and we can discuss the situation together. I work with companies 1 on 1 and help them with these growth hurdles.