When rapid growth
takes place in a young startup, pressure is on getting business and ramping up.
During this critical stage, the weakest link is generally the systems that have
been put in place to manage the growth.
Most promoters and managers
under pressure for growth tend to cut corners and take short cuts assuming that
once the business starts to roll in, systems will take care of themselves. Weak
systems always have long term implications on the organization but in the short
term, the concerned manager is able to “show” that he has met his short term
and immediate targets.
In the early years
after I founded Guardian, I was faced with many such issues as we grew quickly.
Some of these were:
· Operations:
With so much pressure to open stores and lack of trained staff, our operations
leadership was constrained to move store staff from one store to another. This
led to a significant increase in pilferage of stocks since store staff realized
very quickly that no one was watching. Stocks would disappear and neither store
management nor operations leadership would be willing to take responsibility.
· Projects:
Though the company had a standard store opening checklist which outlined every
single step that had to be completed before a store was opened, in the hurry to
open the store, the check lists were ignored. Non completion of the store
opening checklist as a result of sub optimal opening was another casualty.
· Contractors:
Since the contractors who were building the stores were under pressure, they
started using substandard material and this resulted in entire shelves coming
off the walls where they were grouted after the store had opened, resulting in
a loss of stocks. If standard operating procedures that were well documented
were followed the contractors would have been managed better.
· People:
Our need for people was large since we were opening more than five stores a
month. We had walk in interviews going on in our head office and our process of
putting every new entrant through one week of training was a failure. Instead
of training people, we started hiring and asking them to report at a store the
following morning. Our customer service suffered and we started to get negative
customer feedback.
· Technology:
While we had a robust system to manage our stores, we realized that some of our
hardware had started giving trouble and therefore computer bills could not be
issued. Some stores started to use manual bill books and these manual bills
were not regularized on a daily basis. This resulted in lost sales and lost
cash because if a manual bill book disappears, there is no way to track what
has happened to the stock till it physically counted.
· Cash:
Reconciliation of cash collections on a daily basis which is sacrosanct for any
retail company was stopped because it was seen as too cumbersome. When this was
brought to light by the auditors, the finance department of the company had to
go through very intensive work for over one month to get this reconciliation
done prior to our audit.
· Stocks:
While my colleagues in the loss prevention department were mandated to conduct
stock checks every quarter in every store, this schedule fell by the way side
and physical stock checks were not carried out as per the agreed procedure. When
we did conduct the stock taking exercise, we found large quantities of stocks
were missing. The staff who should have been held responsible for these stocks
at the stores had resigned and gone. The company, once again, had to absorb a
loss that it should not have borne had systems been implemented correctly.
It is quite clear
that unless systems are followed by a startup from the very beginning, losses
will mount from all sides before the promoter of the company can get his act
together.
*******************
The author is the founder Chairman of Guardian Pharmacies
and the author of the best-selling books, Reboot. Reinvent. Rewire: Managing
Retirement in the 21st Century; The Corner Office; An Eye for an Eye and The
Buck Stops Here - Learnings of a #Startup Entrepreneur.
Twitter: @gargashutosh
Instagram: ashutoshgarg56
Blog: ashutoshgargin.wordpress.com
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