Growth is the double-edged sword on which too many entrepreneurs end up falling. Its fundamental to making an enterprise prosper, yet it can become a Hydra that is a colossal pain to manage.
Angela Llamas-Butler saw all too well the difficulties encountered by large organizations that attempted to execute large projects. Perhaps more important, she saw the limitations she had to growing her company, Delta System Designs Inc., effectively.
Llamas-Butler faced a decision that one-person shops often anguish over: Do I continue to operate independently, unencumbered by the multiple issues involved in running a larger organization, and accept the limitations of my own growth potential? Or do I take the plunge and form a larger corporate structure with employees, offices and the complications that come with such a move, all in the interest of growing my business?
Youre going to reach a point fairly quickly where youre going to need some help, says Jeff Krakoff, president of Krakoff Communications Inc., an advertising and public relations firm that started out much like Delta Systems Design, as a one-person operation. Eventually, Krakoff realized growth could come only if he abandoned his role as a lone wolf and became an employer.
He found that larger companies want to make sure a vendor has the resources to handle a project, so they are often reluctant to deal with individual consultants. For his company, expansion that includes four employees in addition to Krakoff has opened doors to companies such as American Express and Bayer Inc.
For Llamas-Butler, however, the decision appears to have been less a question of if or how than when.
I think I knew back in 1989, when I first registered Delta System Designs as a company, that it was an inevitable evolution, says Llamas-Butler.
The Zelienople-based startup began modestly. Llamas-Butler, a New Orleans native, moved to Pittsburgh in 1987 at the urging of friends, in search of opportunities the computer science major couldnt find in her native city. Once here, she landed a job with a Butler firm.
When company politics got in the way of the work, she struck out as an independent consultant, first through a contracting agency, where she logged vital experience in designing software solutions and working with relational data bases and software, and later, on her own. Early on, she landed a small project at Westinghouse, then a much bigger one at one of the corporations largest divisions. A five-year project with the Society of Automotive Engineers followed.
Llamas-Butler admits she recognized the limitations in being but one consultant cog working on a large project. Consultants often had little incentive to keep costs down for their client companies, and the oversight for projects at the corporate level usually resided with a manager who had multiple other responsibilities.
Projects tended to drag on, and costs often ballooned out of sight. Llamas-Butler saw an opportunity to offer services that would be delivered by a managed, integrated team of professionals on a fixed-fee basis. By describing up front what the scope of the project would be, and deciding on a fixed fee, Llamas reasoned, she could offer clients a better, more cost-effective service.
While she had had an operational business for nearly a decade, Llamas-Butler discovered the transition to a company with several employees meant extensive work to create an organizational structure that would support it. She turned to the Butler County Chamber of Commerce, which recommended a lawyer, who in turn referred her to an accountant. The Pittsburgh Technology Council then suggested several marketing professionals.
One of the most valuable resources, says Llamas-Butler, has been PowerLink, an organization that acts as an advisory board to women-owned businesses. The group was demanding but gentle in its advice.
Id go in and say I had a plan to hire people, says Llamas-Butler. Theyd say Forget about hiring people. Wheres your budget?
There have been other decisions as well. I need a network, Llamas-Butler says, so, do I climb in the ceilings or pay someone else to climb in the ceilings?
When you grow, a lots got to change, says Charles Popovich, a professor of marketing at Robert Morris College and a business consultant.
He says entrepreneurs often make the mistake of trying to micromanage every part of the operation, a strategy that is doomed to failure because they often lose sight of the bigger picture and what is needed to make the company grow. Surprisingly, another thing many entrepreneurs fail to do is plan effectively.
The most critical thing is to sit down and put together some guidelines for growth, advises Popovich. I cant emphasize how important planning is.
Llamas-Butler suggests that entrepreneurs who are considering a similar move make a checklist of what they need to do, move through it, be decisive, especially when it comes to decisions that can be changed later, and be open minded and open to criticism.
Popovich suggests business owners put together an organizational chart with no names but with specific responsibilities, competencies and skills needed in those positions.
Delta System Designs at a glance
Delta System Designs employs information technology professionals who work as teams to design information system management solutions. A team of appropriate staff members is assigned to each project, and most projects are completed on a fixed-fee basis. An up-front plan outlines the scope of the work, the costs and the schedule.
Such an arrangement, says Llamas-Butler, allows clients to more effectively manage their budgets and allocation of staff time. An in-house technology center allows staff to investigate new products and clients to try out new technology and stay abreast of whats available.
Llamas-Butler launched the expanded version of her company with cash from her consulting business, credit card debt, loans against equity in investments and real estate, and a small amount of cash from family. In 1997, she secured a $50,000 line of credit.
The administrative and planning activities she undertook during 1997 to put together the company structure meant that Llamas-Butler was able to generate just $80,000 in sales, a fraction of what she would have otherwise taken in. It was a sacrifice, but Llamas-Butler says she viewed it as an investment.
I knew if I didnt step away from the technical work and do some of the administrative work, she says, I wouldnt be able to put the company together.
Delta System Designs exceeded $700,000 in sales for 1998, and Llamas-Butler expects revenue to reach the $3 million mark in 1999.
Llamas-Butler says Delta System Designs will concentrate its efforts in the Pittsburgh region for at least the next two years, generating leads through a marketing director she hired last year. In the future, she says, she intends to expand into other markets, possibly Philadelphia, Washington, D.C., Cleveland or her native New Orleans. She figures the Pittsburgh office should reach a maximum size of about 50 employees.
As in many information technology businesses, Llamas-Butlers biggest challenge likely will be to find and retain qualified professionals. She acknowledges it wont be easy to grow and find the right people, but has taken steps to improve her chances.
She has established a college internship program (see sidebar). And she got off to a quick start early last year when a group of IT professionals became available when North Pittsburgh Telephone reorganized its work force.
Entrepreneurs need to be ready to take advantage of such unexpected developments. Be prepared, she says, to seize the opportunit ies when they come.
How to reach:
Delta System Designs Inc.
Angela Llamas-Butler, president
508 Main Street, Suite 204, Zelienople, Pa. 16063