Will growth kill your business?

How to plan for the future

As a marketeer I had the opportunity of working for several startup companies in the past. One company, launched in 1999, offered similar services as Ebay and had an European footprint in The Netherlands, United Kingdom, Spain and several Eastern-European countries. When I came in the office on my first working day, the office consisted of 6 desks, 6 computers and that was about it. We did not have a working site and sales collateral was not available. Basically, your typically startup situation; highly motivated employees working on materializing a great idea.

After one month we got the site up and running and started to contact local and national businesses about offering their obsolete products on our site for auction. Since auctioning products online was pretty new in 1999, only some businesses were interested in putting their products online. So, we started off with a handful of simultaneous auctions.

Success with a big bang

After we nailed a great deal with the television show Big Brother in The Netherlands we were able to auction all products that were shown in the Big Brother house and our site was also framed within the Big Brother site. Our brand awareness just exploded. For example, we had an average of a million daily visits on our site the first month and consumers were emptying their attics and putting the products on our site en masse. Then we closed a deal with a major airline company and auctioned all seats of a Boeing airplane, which created huge free publicity for our company. Within 5 months after we started the company we had 28.000 simultaneous auctions running on our infrastructure every day. Sounds like a great start of a company, right?!

Wake-up call

In our business plan we did not anticipated this kind of quick success. Our site, for example, had a hard time keeping up with the growth in number of visitors and auctions and the IT-staff was continually buying new hardware, installing and maintaining it. They did not have any time to work on new features or improve overall performance. Unfortunately, the available technology back then was not able to offer us a scalable infrastructure that would automatically grow with our success, so we could continue focussing on growing our business and not having to worry about the underlying infrastructure.

You could say that the growth almost killed our business.

Lessons learned

When I look back, I can conclude that I have learned some viable lessons working for this startup. Things that definitely worked and things we should have done differently. I will share some tips with you on the lessons learned.

Lesson 1 – Plan for the unexpected

Don’t stop at looking only 6 months to 1 year into the future, but think 3-5 years ahead. Where will your company be in 5 years from now? How many customers will you serve then? How will this impact your infrastructure? How easy will it be to extend your infrastructure? Which technologies should you (already) use to cope with this anticipated growth and will it become obsolete in 5 years? And so on.

Try to think in different scenarios like worst case, average case, best case and translate these to your infrastructure needs by picking the best possible solution for every case. Talk to the experts if you need advice. Most of them are happy to answer your questions.

Lesson 2 – Focus by outsourcing

As stated in earlier blog articles, If your core business is not managing IT-infrastructures, I advise you to outsource your platform and the management of it like we should have done with our startup. By doing so, you can continue to focus on your core business and don’t waste unnecessary time – and money – on keeping your infrastructure up-and-running.

Lesson 3 – Keep costs down

Choosing a cloud computing solution is not only advisable when your company is (heavily) dependent upon the uptime of its platform and when visitor amounts constantly fluctuate, but also lead to potential cost savings since you only pay for what you actually use and don’t have to invest in overcapacity to cope with these fluctuations. This way, you keep your (infrastructure) costs as low as possible which positively contributes to your ROI.

More Stories By Arjan de Jong

Arjan de Jong is Sales & Marketing Manager of Basefarm and has been working in the Internet industry since 1997.

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