20th May, 2018
The highest performing new business concepts can be hampered by limiting, outdated software platforms. Embracing the cloud will allow you to avoid scalability issues.
Getting a startup idea off the ground is one thing. Generating consistent, strong growth is something else entirely and this is an area any potential investor will look at closely.
In every season of Shark Tank at least one of the Sharks will raise concerns around the scalability of a business concept. Often, they identify a constraint regarding production, intellectual property or the logistics of delivery that will eventually put the brakes on the startup’s future growth.
But one of the most common limiting factors for a new business is technology that doesn’t deal well with scale. This issue usually arises because the software was chosen for a purpose (or size) that the business has since outgrown.
Some examples of core business platforms:
When a business is just starting out, founders will often use spreadsheets to manage these tasks. But as a startup grows the need to invest in technology arises, and that’s when a business owner needs to think about which product offers the best functionality, integration, and scalability for their needs.
Before Jaypee Abraham appeared on Shark Tank, he already had a burgeoning product business, selling coconut-based food products online. But not everything was going to plan.
“Due to the growing interest in coconut oil, we went from bringing in $100,000 to $300,000 in our first two years of operations,” Abraham said. “But I was juggling a few different businesses at that time, and things became difficult in 2016.”
By the time a friend suggested Abraham should consider applying for Shark Tank, he’d run out of capital and was on the verge of selling his business.
“Fortunately, we struck a deal on the show and by May last year we’d secured the funding we needed to resurrect the business.”
But in gaining an investor, Jimalie benefited from more than just a funding boost, as the additional mentorship has highlighted a number of key operational changes that were required.
“We’ve been recommended to switch to a new eCommerce platform that will allow us to integrate our accounting, inventory, POS and logistics software.”
“Until recently, all these processes were being handled in a very manual way, meaning we’d have to enter the data multiple times from one system to another, which takes more time and increases the likelihood of errors occurring.”
Abraham also said that his new business system is cloud-based, which means all his critical data is stored and managed securely, distributed across a network of servers. As opposed to a local data storage solution, cloud-based technologies can’t easily be compromised by accidents, hackers or natural disasters.
Peter Kuhlmann has seen a lot of change in the business landscape in his time. A practical man with a practical product, Kuhlmann developed his Mini Pallets after watching a pair of young café staff struggling to haul milk crates.
The idea is straightforward, and it’s received significant interest before and after Kuhlmann’s appearance on Shark Tank. So far that interest has been for distribution of his products, but until those deals are finalised, Mini Pallets has also been operating an e-commerce store for direct-to-public sales.
“It takes time to get the distribution piece right,” Kuhlmann said. “Until we’ve locked in a few key retailers, we’re operating under something of a mixed sales model that does add some complexity to the business.”
But Kuhlmann is first to admit he’s “a little computer illiterate”, so how has he managed a predominantly online sales business?
“There’s no doubt that modern technology is crucial for the success of any business these days,” he said. “But you don’t have to be a tech whizz to source and set up the best software. You just need to find the best solutions partners and treat them like any other supplier.”
LEARN MORE: 8 tips for outsourcing your business tasks
For Kuhlmann, integrating software into a business isn’t really any different to buying and rolling out new machinery in a factory: you just need to work with your suppliers and develop the expertise within your operations to manage it.
“Do the due diligence,” he said. “You should be asking all your suppliers what their terms and conditions are, as well as what support they provide. It’s a bit of work but it doesn’t have to be highly technical.”