Yoni Kozminski is the Founder and CEO of both Escala and MultiplyMii. Escala offers consulting services for ecommerce companies and Amazon sellers who want to scale their businesses. On the other hand, MultiplyMii specializes in affordable offshore staffing solutions and HR outsourcing for ecommerce businesses. Both companies provide different solutions aimed at taking ecommerce and Amazon businesses to the next level.
In addition to being a scaling expert and entrepreneur, Yoni also hosts the podcast Successful Scales, where he interviews leaders on what it takes to build successful businesses. He has a background in digital marketing and advertising, and has worked with companies such as Mercedes-Benz, Mastercard, and Sony.
Here’s a glimpse of what you’ll learn:
- How Yoni Kozminski uses his background in digital marketing to help businesses scale
- The best ways to successfully scale an ecommerce business
- Taking inventory of your venture from the top down
- How to simplify and organize your processes
- Getting your company on the same page through systemization
- Company wikis and how they’re used in practice
- Yoni talks about why it’s so important to constantly teach and grow your team
- The importance of relinquishing some control as you scale your business
- Making incremental improvements for huge changes down the road
In this episode of the Ecommerce Wizards Podcast
As your ecommerce business scales, it can be difficult to keep track of everything. Your small, focused team starts to expand and your simple business plan has to adapt. There might be that initial urge to micromanage and keep a tight hold on your company, but there’s a better and more natural way. In fact, it might even directly contribute to your continued growth.
Organization and systematization are crucial to the success of your company. More specifically, the ability to automate and structure your business can work wonders for your day-to-day and bottom line. It’s difficult to do it well; but, it helps to have someone who has done it a thousand times before. That’s where Yoni Kozminski comes in.
In this episode of the Ecommerce Wizards Podcast, Guillaume Le Tual talks with Yoni Kozminski, the Founder and CEO of Escala and MultiplyMii, about the best way to systematize your ecommerce brand. They go step by step through Yoni’s process of evaluation, education, and organization. They also talk about the specific tools and lessons that will help your company scale effectively. Stay tuned to find out more!
Resources Mentioned in this episode
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This episode is brought to you by MageMontreal.
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Guillaume: Hello everyone. Guillaume Le Tual here, host of the Ecommerce Wizards Podcast where I feature leaders in e-commerce and business. Today’s guest is Yoni Kozminski, CEO of Escala and MultiplyMii. Today, we’ll be talking about how to scale your e-commerce store via systemization in business, process standardization, which is the focus of his Escala company. So before we get started, I have two things. First, a shout out to Steven Pope from My Amazon Guy. Thank you Steven for the introduction, otherwise today’s podcast would not have happened.
Our sponsorship message, this episode is brought to you by MageMontreal. If a business wants a powerful e-commerce online store that will increase their sales or to move piled up dormant inventory to free up cash reserves or to automate business processes to gain efficiency and reduce human processing error, our company MageMontreal can do that. We’ve been helping e-commerce stores for over a decade. Here’s the catch. We specialize and only work on the Adobe Magento e-commerce platform. We do everything Magento, if you know someone who needs development, design, maintenance, training support, we got their back. Email our team, [email protected] or go to magemontreal.com. Alright, Yoni, welcome to the show.
Yoni: Thank you for having me, Guillaume. It’s a pleasure and thanks Steven, for hooking this up too.
Guillaume: Yeah, exactly. And now it’s your turn to be the guest on my podcast, I was formerly a guest on yours. Thanks for having me as well, then. Tell us a bit about you and your Escala company?
Yoni: Sure. My background stems largely in the agency world. I grew up in creative and digital marketing agencies effectively growing up with those businesses, working with large enterprise clients but always from the eyes of a small to medium business. So I was the 10th employee at an agency that grew to about 35. While there, I was looking after everything that relates to web development and design, so much like what you’re doing over Mage, all the way through to social content strategy and production and media buying. This was for clients like MasterCard, Mercedes, Sony, you know, large enterprise clients, but always from, like I said, from the eyes of a smaller business. And that was really how I found my way into the world of e-commerce and digital marketing.
Today, as you mentioned, Escala is one of my companies, it’s a management consultancy focused on process improvement. The goal really is how do we help businesses build their internal systems, so that they can run and operate at scale rather than just trying to stack another person on to it. Trying to figure your way to a needle in a haystack when you haven’t been there before and you haven’t done things at true scale insights.
Guillaume: Out of curiosity, in your entrepreneurship journey, was it influenced by where you live? I mean, you have a bomb shelter in your condo, this is not exactly common to see. Here in Canada, I would not even know where to find the bomb shelter, it’s not a concern I have, you know?
Yoni: Yeah, I would say the biggest influence for me, or the biggest sort of impact has definitely been growing up in agency land. You know, having a pace that is agency life, unless you’ve lived it, it’s very hard to sort of quantify what it is to be around the clock and answerable to clients. I’m sure you can be acutely aware of when a website goes down, don’t ever launch on a Friday for anyone who’s stepping into the game.
Guillaume: Never, and try to go even earlier than Thursday.
Yoni: You know, there’s cardinal sins that you learn when you’re going through this journey. But for me, growing up in a business that had 10 employees that grew to 35, and another 115, to 40, I sort of went through that journey of what it was like to not really have middle management. There was senior management, and it was very one dimensional to how we build more expansive teams and create single threaded leadership. I never really saw it effectively achieved in my personal experience for businesses that I’ve worked for. This is definitely something that we work really hard to do internally and what we do inside of the Escala business model in itself.
Like you said, I grew up in Australia. I started off by launching Mercedes Benz in Australia, New Zealand, and social channels. That was the time where there was no Facebook or Instagram or YouTube for brands, it was still unknown and taboo about 10 years ago now. When I came to LA, I saw things at a big scale. Working with Medtronic, which I believe was a small arm of the Medtronic business, diabetes on time was about $6 billion. So I would say that the visibility of seeing what an effective process and scale looks like from the eyes of someone who, as a business, was just trying to figure it out, was pretty influential.
Now I live in Israel in Tel Aviv. That was really where I dipped my toes much deeper into the water, that is e-commerce specifically, you know, working in and effectively growing an e-commerce business from two to 5 million that was acquired by one of the aggregators that are acquiring all the Amazon FBA businesses. So I’d say in terms of what’s played a big part, absolutely seeing what scale looks like and experiencing that in the US. I mean, there’s few markets on planet earth that behave like the US market does and the opportunities. I would say this was the most influential. I don’t feel that I’ve taken a whole lot from outside of personal development since living here in Israel. It sort of feels a few steps backwards in terms of the level of sophistication and systems that exist internally. But living and working with so many different cultures and countries and time zones has definitely had an impact too.
Guillaume: So let’s dive into it now for the e-commerce business. I agree that very often, when it’s not a question of a sales problem, let’s say it’s not a question of I’m having a hard time having traffic that converts on my website, not that kind of foundational problem. The other foundational problem that typically appears once you do have good stock level, good financing to buy more inventory, and you have plenty of traffic on your website, it’s typically the founder who quickly becomes the limiting factor for the growth of an e-commerce business, or the leadership team when the founder has a leadership team in place. So let’s talk about that, how do you scale an e-commerce business from your point of view?
Yoni: I think everything in life is understanding where you are and where you sit, you know, in your current state. So in order to scale, you have to have the visibility and understanding as to what the limitations are. Where do I sit today, and where do I want to head tomorrow. So if I’m talking to scholars, specifically, we look at how systemized the business is based on people, process, and technology. So building a baseline and a fundamental as to where you sit. I can really drill it down all the way back and make it really simple. We each have 168 hours in our week, for a lot of these founders that struggle, they are the bottleneck and senior leadership becomes the bottleneck too like you mentioned. Now look at the breakdown of your hours and how effectively you use your time. I don’t know if you could call it a game, but I would call it a game where you look effectively at your infancy. How is my time being distributed throughout my week? So for tasks that need to be specifically for me, or the founder of the business or the leadership team, I would rank as a five. And for things that really don’t need my involvement or my input, let’s say, for e-commerce businesses’ customer support, it’s the same questions effectively coming up, you know, that might be a tool.
When you start to get control of the baseline as to how you’re investing your time and what’s actually moving the needle, then you can start to understand how you can either as a baseline offload things, or how do I start bringing professionals in to help actually take me to a whole different level. So before we can even start talking about building a system, which we will, and I’ll gladly step into it in a moment, you really need to understand who you are, where you are at as a business and what does that next step actually look like? Without having that visibility, or that understanding, it’s very hard to move forward. Just like what we say in Escala, everyone always wants us to build a future state. Build as the future state processes is, we’re doing everything wrong today, ignore what we’re doing, let’s just build a future state. And the reality is, it’s way too ambitious to build a future state if you already don’t have control of your current state. So it’s the same from a personal level to get control of your week, get control of your day and understand what your 30 days, 90 days, six months looks like before you start really trying to build in that BHAG, the Big Hairy Audacious Goal 10 years down the line.
Guillaume: So basically you start with an inventory of the current state of affairs for everything in the company, where it’s in terms of the people, process, technology, and how sophisticated it is. And once you have that inventory, which is very logical, you need to take stock of the situation, then you build that future state and say, how do we get from here to there, but of course that’s the stark difference.
Yoni: Sure, as you start to evolve that further, one of the topics, it’s not the sexiest topic to talk about, I think for people who are trying to scale their business is SOPs, the standard operating procedures.
Guillaume: It’s a must, it’s vital. You must understand, as soon as you try to scale, it’s going to blow up in your face unless you do that, and then you understand the value of it, and then it becomes interesting because that’s what will help you to achieve your goals.
Yoni: 100%. And it’s like going back to taking that stocktake of where you sit. When you figure out how you’re investing your time, then you need to start thinking about how do I empower my team members to invest their time wisely too? So building out the standard operating procedures and understanding what are the stages? How does the business function as a business? And how does that next move down to my individual tasks? And how is that connected to the overarching business objective? I mean, I could go all day about this stuff.
Guillaume: Yeah, there’s a lot to talk about, that’s for sure. So first, you take stock of the situation, you get your inventory then you get your future state you want to be in. Then you plan how to get there. Interrupt me anytime if you want to add something to those steps. Once you have a plan on how to get there, which is already a huge gap that I’m leaving here, maybe we can discuss that. How do you first of all, come up with the plan and then maybe we can talk about implementation and all that.
Yoni: So I’ll give you some really simple baseline things that we like to educate people on. Again, this is basic stuff, it’s nothing like what we’re delivering. The first stage is comprehension, understanding the current state. I’ll give you a few bad examples of what people tend to do when they look to approach building their current state SOPs. So the first thing I would say is the most typical is that, let’s say you’re trying to teach a new developer, and you’ve been developing your own Magento sites for years, all of a sudden you want to onboard the next developer. What typically will happen is, there’s a specific function inside it that you think is the easy thing for him or her to deliver on. So you’ll straightaway start building up. I’m not the most technical when it comes to Magento.
Let’s say, I want to jump into this specific line of code in the CSS, and I want you to effectively audit it and add these baselines, whatever that might look like. What we would call that is taking a bottom up approach where you, the individual, have looked at a specific function inside of the delivery mechanic, and are trying to deliver that. Whereas what is going to serve you much better is to take a top down approach, where does that actually sit inside of the operation, inside of the business? So you want to take a step back first. How do each of your different departments work together? So how does the developer talk to the designer? These are two clearly distinct, different departments. Then from that communication flow, how does that then handle client services and the relationship to that? So you build out the top down approach, and you understand what’s happening at a business level before you start moving into the sub processes. Because what happens nine times out of 10, you’ll build this SOP, it’ll be the way in which you’ve defined it and you’ll be the only one who can find it and it’ll be for a very small subset of what’s happening.
I can give you another example of how you can sort of visualize that. So if you’re listening in, think about an effective folder structure in Google Drive or Dropbox. It’s very frustrating, if I’m saving things one way, Guillaume, you’re saving things another way and then the rest of the team is saving their way. I can never find the files I’m looking for. Whereas if we built a very clearly defined, here’s the CSS, here is the HTML, like client name, CSS, HTML, design, banners, logos, brand book, all the different folder structures, I can go to each one of your clients and figure out. Okay, I found the stuff, there’s something missing, I know where to go. So it’s the exact same with building process, you have to have one overarching methodology where everyone can understand how it actually works and how you can dive deeper into each specific function of the business so that, you know for us like our litmus test is, can someone who’s never worked in the business and has a baseline understanding of how our system works, find the processes that they need within 10 seconds of jumping on our process map, all the way down to SOPs?
Guillaume:That’s a big challenge. Every good search engine may help.
Yoni: You’ve got a great methodology.
Guillaume:Yeah. Okay, because that’s always a challenge. How do you even name your SOP for that specific thing or how do you find it? People will not categorize the stuff in the same way, that is a challenge. Do you use a specific tool to stay organized with this, we just put that in folders and Windows Explorer?
Yoni: We use a free tool, it’s called draw.io. It’s like any mind mapping tool, there’s other things you could use to deliver it too, but effectively, we build like a visual structure, like decision matrices of what’s happening. I mean, this will be hard to follow along, but stop me at any time. So when we’re looking at it at a high level, you build out process groups and our core processes to start with. So we look at it as a core process, like what are the four or five functions in a business that need to happen so that it functions? So for an e-commerce business you’d have, let’s say, inventory management would be one, customer support, you’d have your marketing, and your brand management, for example, might be four of the five core processes.
Now, from there, you actually get into the details of what happens in each of those from customer support, you get a new ticket, it moves through to being vetted. And that’s your process group and your core processes. From there, we move into our sub processes, so this is the third layer down, and this is where we start to define who the individual is. So let’s stay on the line of customer support, the customer support representative, what they do to actually deal with the ticket becomes even more detailed around the specific functions. How does customer support relate to, let’s say, client services? How does that message get communicated to your client when you’re dealing with a ticket?
So, we have five layers of our methodology on how we build a process and it goes to working activities, and then full SOPs would be levels four and five. So again, just explaining that too, we don’t have a great search function because everything is uniformly defined. So when I look at a core process and the process group and then those sub processes, we use a numbering convention, so for the first one is one point one point one and then the next stage, one point one point two. So every single one of those numbering conventions, will be connected to the SOP, will be connected to the core process, the process group, the sub process, the working activities. So you always have a marker as to what is this connected to at every single stage of the process. I don’t know if that’s too much to absorb. For me, it’s very visual in my mind, but hopefully, that was clear.
Guillaume: I think it’s a little clear. Core process, you have a process group, and then you have sub processes, and then you have specific work activities?
Yoni: Yeah, and then below that would be the SOPs. Now, I’m not even going to try and distinguish the difference, because it’s even harder, as in it’s very nuanced. Again, we’re consulting practice, we build processes for businesses, so you don’t really need to go to those levels. That’s a professional level where a lot of methodology originally stems from a wise methodology. I can actually give you an example now of how very small changes in how you would describe an SOP will actually have much more value. So let me give you an example that we typically give out, let’s say we’re using Google Adwords, and we’re looking to identify potential keywords. So, if I wrote, ‘click here to download the keyword search term report’, inside of Google Analytics, or whatever the tool is, for a lot of people that’s how they would approach it, it seems relatively clear.
You’ve listed the technology, you’ve told them to download the search term report, you’ve given them what they need but what is typically missing and where we look at as a business is systems are the combination of people, process, and technology. So we’ve named the technology but we haven’t defined the person who’s responsible and we haven’t defined the process. So if I do the exact same thing, ‘click here to download the search term’ the marketing analyst will ‘click here’ to download the search term report every Monday. A very small tweak but all of a sudden, I’ve defined the cadence in which I’m going to deliver on it. I’ve defined who is responsible, the marketing analyst, and I understand the tool you use. So, again, the sentence is about the same length, maybe a few words extra. But realistically, it’s a totally different output and a totally different outcome, when that individual knows when and who was responsible.
Guillaume: Yeah, that’s a big difference, similar to the agile methodology of how to write your user story, who’s doing this? What needs to be done? Why do you need it? And here you have cadence without agile, typically, unless you decide to add it. It’s very interesting there because it’s always a big challenge for people to even find processes. The other software you were talking about is just a mind mapping software, which is actually a free part of the Google Drive Suite. So, you mind map your core processes, your groups, and all that. A company can hire you to do that, or they can do it themselves or they start themselves, and then they say I’m going to hire someone, that’s likely to happen. And then you get the work activities and SOPs. That’s a good start. We still have a lot to do, getting from the current state to the future state. So this is what you’re saying here is just mapping SOPs for the current state. So this is not necessarily how we want to do things, this is how we’re currently doing things?
Yoni: Correct. I think also, depending on the size of your company will also dictate how far the truth is from the daily delivery. So for a larger company, and I’m not even talking hundreds of people, I’m saying the difference between a five person company and a 15 person company without processes built in, will create evergrowing gaps because I’m going to say it one way, someone else is going to say it slightly differently. The other person involved, if we take for example, web development, the graphic designer is going to see it one way in how to build that out from a design function. But the developer is going to say, well, that’s not really possible for us to build out specifically, and then the account manager is going to say, I’ve just sold all of this in, you guys have to figure it out. So all of us are slightly in a different position.
I can only talk from what we do, internally for our clients. What we do is we deploy consultants typically into the business, and we’ll interview, shadow and review all the documentation and get all the information around how everyone is actually delivering. So, if you don’t have an external consultant it might be helpful to leverage someone from a different department to ask all the questions, because inherently, there’s going to be some level of bias. I’m going to say, well, this is how I’m doing it, this is how it works. So having someone else interview and understand and validate what’s actually happening, already brings a lot more clarity to a business. You can already start to find a lot of the bottlenecks, a lot of the limitations, a lot of the challenges, just by asking the questions, getting the material, and then quantifying where those gaps are.
The building blocks for building the future state is getting 100% clarity on what the delivery mechanic looks like. Throw out some examples here, someone’s using notion, someone else feels more comfortable using Monday, you’ve got someone using ClickUp, slack communications are happening all the while. But this is really a task that should have been delivered and then I forgot about it, because I was using my momentum, which is a plugin. So it becomes very convoluted very quickly in a business, especially as it’s growing. So standardizing everything is good, from those folder structures to everything in between.
Guillaume: And do you go a bit further in terms of keeping or not keeping some level of creativity to go down to the nuts and bolts I could say, in these SOPs? You could say tie your shoes or could you explain how to tie your shoes, and it’s going to be very different. So one SOPs sort of assumes that the person is qualified to do the job and has perhaps a supporting software or training program or LMS, the learning management software and supporting it and these are the SOPs, assuming you’re competent or do you favor SOPs that really tell you how to tie your shoes?
Yoni: Great question. I would say you’re better off being inclined to building things all the way through to how to tie your shoe. Because the reality is this information can be leveraged to onboard new talent. Nothing is more costly than having the CEO step in, to educate someone on how to tie their shoes effectively. So I would say, as a baseline, putting in all the details is critical for you to remove yourself from that function in the business. But what I will say with a caveat is that it’s a living breathing organism. So if you’re not focused on updating these SOPs on a regular basis, if you’re not doing things like upskilling, we have upskilling days where we as a company come together and think how can we improve the processes further, and how can we continue to add more value. I would say, as you become even more sophisticated, you hand over ownership.
So we have single threaded leaders across functions. Part of that deliverable is that they have to continue to evolve the service offering. We have to be better than we were yesterday. We definitely can’t be worse than we were today. So the whole notion of really driving these processes forward and always questioning the status quo, even if we built a process that lives in our company wiki, it’s not untouchable doesn’t mean that that’s how things will live and remain to be in perpetuity. Anyone can inject a new idea into it, you just have to effectively pitch it. Why is this a better idea and a better process, a better technology, a better person, a better structure? What is going to have the most impact in supporting, in our case, our clients, to achieve more with less?
Guillaume: You touched on two points, one about leadership, ‘keep those SOPs’ is very important, we can come back to it. And the other one, to keep up the discussion about how SOPs tie in with internal training programs, because of course, you want people to have continuous improvement, continuous training, and so on. And if the SOP is so specific that it tells you how to tie your shoe, like how it will be used. Perhaps the psychological profile of people who have to use this at one point might be fed up with using such an exhaustive checklist and say, look, I know how to tie my shoe, I want a summarized version of this and just keep the learning into a separate learning process.
Yoni: Yeah, you’re saying all the right things and you’re hitting all the right chords. Building a company wiki, this is how we structure effectively, ‘the how to tie your shoe’ is inside the company with you. It’ll teach absolutely everything that you need to do to the most granule of the details. Now, there is no reason you have to be going back to that every single time you want to deliver. What we do, we use ClickUp and we are huge fans of it. What it will ask you to do is to build simpletised processes, let’s say you are bringing on a new client, I’ll just duplicate that entire checklist and you can streamline through. You don’t need to go back to, ‘how to do’ every stage, it is always connected. So your numbering and naming conventions are always connected. So, if I forget a specific process of a function it’ll take me back to the company wiki but effectively, if I am doing this day in day out there is no reason why I need to go to that level looking at it every single time. That would be a waste of time. So, how we look at our company wiki is effectively in LMS, learning management system and from that we build a template that allows us to build the projects and together they really work harmoniously.
Guillaume: And what about the leadership team that they solve, because that can be a challenge or ideally to have people that are perfect and fully autonomous that will upkeep it all the time and there will be no fuss. But the reality is that you’ll probably need some checks and balances, or a process or system in place for people to be able to keep those SOPs or some leaders may heed them some won’t. How do you manage that?
Yoni: I would say that that is a company wide objective. You look at the culture, for us we inbuilt it in performance management. So for us to have updated SOPs we have regular meetings. Inside Escala business we have weekly leadership meetings where they talk about topics that relate to how we are progressing and how we are pushing forward, which is different from the weekly learning sessions that they have. Where they go through a new idea, a new concept. We actually spend a long time listening to a podcast called, ‘think like Amazon’ where they interview top Amazon execs on great podcasts by the way. Tyler Wallets is his name. So they were listening to that each week. And we were thinking, what can we learn from some of Amazon’s leadership principles that can be applied to our business? So, to your point, having people responsible and accountable as it relates to their overarching performance, helps it massively. And having some sort of regular cadence where you’re meeting around the idea of what’s happening in the process in the business is critical too.
Guillaume: Regular cadence, weekly, monthly, whatever, would like to see what is changing in the SOPs and RDP. To hold people accountable so there’s a buddy system there. I like your weekly learning session. We do a luncheon lunch. It doesn’t happen every week, systematically. But I like that, to share the team’s knowledge with the rest of the teams so that the knowledge circulates in the company. I like that, weekly learning sessions are a pretty good idea.
Yoni: It’s great. We just went through that. So the beauty of having a consulting practice that focuses on processes with our other businesses, our staffing business, they’ve just been deployed for 20 weeks into MultiplyMii. And we just went through a two day upskilling day which was incredible. It was amazing to be a part of what we are now going to implement probably once every six months, because it’s pretty intensive. But we effectively as a
company, sat together, broke off into teams, and we built the perfect process, from defining the outcome that relates to success in a role to how do we build a job description against that outcome, to how do we then interview to make sure that that outcome relates to that job description, to how do we then onboard that person and what does that onboarding plan look like for specific roles in the business.
So what we effectively did was, we built this end to end. So you can take that any way you want but if you were to do an upskilling day like that inside of the business, it actually turns it into something almost competitive. It felt competitive to me where every single team wanted to outdo the next team. And everyone got lunch on the company. It was a really fun couple of days, and it was a great cultural experience, too. But that was a really great way to continue to have everyone involved in the upscaling. Because the reality is, each of us is one individual, your team are the ones who are living and breathing every single day and have most of the really intrinsic and high value knowledge that relates to how the business operates on the day to day. So, activating them and enabling them to really be the drivers around it is probably one of the most valuable ways to build the process and to get the most out of the time in business.
Guillaume: Then if we bring that back to let’s say, the e-commerce store owner, basically, it’s a question of auditing your own time where your time goes, and making yourself being replaced in the company, which is not a new concept. But it’s very challenging to do, especially if you’re a self funded growing company and not a venture backed company. So auditing where your time goes with the objective of delegating absolutely everything, and then standardizing each process. One thing that I find useful is each time I do something, I record a video of myself doing it then I just say out loud, ‘my thinking process’. This way the next person can take over and I hope that this is the last time I ever do that, it is in the past. Then somebody else in the company will take over.
Yoni: Absolutely. I mean, it’s key. One word of advice when you’re doing those recordings is keeping them really concise. So like, how we’re building the process is when you think through in terms of efficiency. If you were to think through a two hour informational video around whatever it is you’re working on to find that one nugget of insight might waste two hours of the next person’s time. So how we recommend people to build out those learnings is, document the process out in written form at the different stages and then record no more than three or four minute videos on those specific functions because it does two things. One, it saves time on the other side where people are coming to search for it. But also, if there’s one little thing that changes, Magento makes an update. You don’t want to have to rerecord the two hour video so, really cutting down to that lowest common denominator of what I need to find and what that function is, is really helpful. And yeah, we’re huge believers in loom, it is obviously a great tool. Anything like that is a must these days.
Guillaume: And of course, a founder putting this in place will need to give himself some time for the employee to execute correctly, even with an SOP and explanation in this training, there’s going to be mistakes, we’re all human. So personally, I find that most employees are really good after a year and a half doing a job. So if they leave then that’s kind of sad. We all hope employees stay for many years. Because even with very detailed SOPs, clear priorities, and so on, unless it’s a super low skill level job, they will need a year and a half of learning the industry, learning all the SOPs and how they connect with each other and then just have some patience with the staff. But if it’s put as a clear objective, I can look back and see how many processes like that that used to be my day to day tasks. I haven’t done invoicing I don’t know in how many years now. But it used to be my number one concern when we were a smaller company. I come in and I want to do the billing and invoicing to make sure that is going out because cash flow for the company was sort of the most important thing. Now I don’t need to bother with that. So it’s really a big transformation for an entrepreneur to be able to let go of all those responsibilities one by one. I was grateful to look at all the things that I had crossed off the list that I don’t need to do anymore. That’s kind of fun.
Yoni: I think you touched on a really important point, though, for the entrepreneurs out there listening in. At some point, when you want to grow a business to any real significant scale you have to be okay with relinquishing some level of control. It would be impossible for you to run your business in its current state right if you had to double check every entry that’s come through, invoicing in accounts payable, accounts receivable, and looking at every dollar that’s come through. I mean, that would be the start and the end of the business right there. It’s not the most effective use of your time. I had mine too and we have accounts payable and receivable, financial controller and a fractional CFO now. I mean, they’re critical functions but there’s going to be people who are both more passionate, and at least in my case, more capable. I’m not a numbers guy.
So yeah, just going through that process and understanding that it starts with building a process, so that you can start to relinquish that control. And once you have that comfortability knowing that it can be performed accurately, that’s when you can start to sort of breathe a little sigh of relief and say, I don’t need to be directly involved in every single function and aspect of the business. I know we talked a little bit about the notion of burning out in one of our previous conversations, but the reality is, the fastest way to find yourself burnt out is when you’re trying to absolutely handle every aspect of your business. I’m the first person to always put my hand up and say, I’m really not good at a lot of things but there’s some things that I am really good at. So my goal every single day is just how do I lean in to all the things that I’m best at and taking process. I can build processes, sure, am I the best at following through with it? Definitely not. But that’s why we bring in project managers, that’s why I’m looking for an executive assistant now, that’s why I’m bringing in the infrastructure around me, so that I can play to my strengths and be the best version of myself and add the most value to the company because it’s a team effort.
Guillaume: Yeah, I had an interview with another entrepreneur during this session and he was saying, if somebody is a good CFO, they’re typically not a good controller, if they’re a good controller, not a good CFO, and vice versa. It’s a different psychological profile. He knows he has dozens of controllers working for him, that’s his business, basically. For the checks and balances that I see that work, for example, we have a bookkeeper, then we have another administrative assistant bookkeeper that verifies that work and then it is verified by the controller. Once that is all done it goes to the accounting firm that has all the staff and the tax specialists and all that. So check and control is by having I believe many levels like this people that verify the work and are held accountable. Also, if you’re having a lot of issues, or you’re having issues with some specific areas of the business that never seem to be working right even though you have the SOPs, documentations, trainings and all that, sometimes it could just be that you’re not hiring someone who’s capable enough or skilled enough or high level enough for that specific job or function.
So, for example, my HR Director is way better than me at all that HR stuff. It’s like quite a relief to have all that burden taken off my shoulder. But you see I had been running the business for 14-15 years and I hired someone with 12 years of professional experience and that person is way better than me in that specific field. And I was like, wow! He does really help. So if there is a specific area that doesn’t seem to be quite working out, well, maybe you need to sort of upgrade the level of the person that you’re hiring. This might mean a slightly higher salary as well for the quality of candidates that you’re looking forward to, perhaps this is too demanding for the level at which you’re currently hiring.
Yoni: Definitely true how you outlined it, different psychological profile, the balances and checks is one thing and it’s critical. Like I said, we’ve got accounts payable, accounts receivable, they validate each other, we’ve got a financial controller who sits and validates over the top of them. And then there’s something that’s more strategic, we go to our fractional CFO, who will actually tell us, what’s the valuation of the business today? What will it look like five years from now? And what are the levers that we need to pull to invest our capital wisely, as opposed to simply just saying cool. Of course, you know I could talk about this topic too, about lead and lag metrics as well, like, it’s one thing to be checking your budgets every month and effectively knowing like, that plus minus is profitability, but it’s a very different thing to understand strategically, what does this look like as a financial model and how can we evolve it three, four or five years from now to add more value and make more money?
Guillaume: Yeah. That’s a good point, your SOPs can totally cover your lead and lag metrics, especially accounting is purely lag metrics, it’s like looking in the rearview mirror, you don’t know what’s coming. Sure, you have account receivables, accounts payable, but that doesn’t mean your sales are up, to upkeep all those levels, and so on. So for sure, you need to have both of those metrics. Anything else that comes top of your mind in terms of helping entrepreneurs in e-commerce stores to unblock the founder or to scale to the next level in any way?
Yoni: Yeah, great question. I would say these typical things that we say a lot of the time. I don’t know if I have an answer to your questions because I feel like I’m a bit of a politician now. I just circumvented your question and I’m going to answer the question.
Guillaume: Put on pause and think for a minute.
Yoni: Yeah. There’s a few things that we say that happen really often and this is what SOPs really solve. We call it the hero product syndrome, where you might have 50 skews that you’re selling, three of them are the ones that are doing the best. So you start to focus all of your energy and attention on those high performing products. Now, if you build the systems in the process, where you actually build in resource and time allocation to all 50 of your products, not just the top three, then all of a sudden you give the ability for all of them to grow. So that’s one really simple thing, that having a process and building an engine actually unlocks the Pareto Principle 80/20. If you as the founder, or the key driver of the business is caught up on doing inventory management, or customer support, it means that you’re not doing new product development, for example.
I don’t know if I have any more necessary tips here, I feel like we’ve gone through a lot of different areas. And it’s one of those things too Guillaume, where I’m always cognizant that I’m very much in it. This is what we do as a business day in day out and without visual markers, it can be a little bit confusing. So that’s why I’m always trying to go into the folder structure example or things that people can really sort of bite and chew and digest. Because if I start going on and on about this, you know, I lose people pretty quickly.
Guillaume: You have a good point, yes, that will be applicable for very early startups. The concept of still doing customer support for sure, as a founder, you want to get out of customer support as soon as you can because this is something that can totally be delegated. Or you can do like hosting companies or IT firms where you have support levels 1, 2, 3 or whatever so that people know that you can escalate this to the next level if you’re concerned that the junior might not give the proper level of service. Then just declare the person as a junior and in this way you get support out of the way, but that’s valid for every other task, you said inventory management or whatever else it is. I’m pretty happy that hiring happens without me for developers. You know, I just green light that we need one more person and we need by this date, and it just happens. And then, the HR Director will get that person and review with the other PMS and so on. I’m almost done replacing myself in the business but not quite. And I believe that’s the goal for every business owner so that you can then transition to what I would call, fully the CEO role and have no CEO role left, no operations role left, and then you can purely focus on those big partnerships, marketing activities, like having podcasts and other kinds of interviews. Then for the very large deals you just come in as a closer if it’s a service business, or even product business, close the large ones, negotiate the deals by your staff for inventory or whatever direction. So yeah, I think we’ve covered the topic pretty well. Any last thoughts?
Yoni: I would say, if you’re going through the journey of building process, simplicity over complexity. Just start with something. Don’t try to build a Ferrari, get your Toyota out on the road. Just start putting a few things down on paper, build those core processes and process groups, and then start to focus on the areas in the business that require the most attention or the easiest to offload. I just read a book, Atomic Habits, and it talks a lot about, effectively just making sure that you’re showing up and delivering 1% improvements over a day or a week or a month or whatever, it’s incremental improvements. So don’t try to change the world in a day. Just start somewhere and just commit to building it out, and you’ll soon find that when you build a process people will follow it, an enduring business without having a process is pretty hard to scale.
Guillaume: Well, thank you Yoni for being here today. If people want to find you, how will they do that?
Yoni: If people want to find me they can email me at Yoni, [email protected] or [email protected], Yoni Kozminski on LinkedIn, I’m pretty active there. Any of those channels you will get me or check out our websites. There’s the show notes I’ll send you over there and the links. I feel like you’ll be the show notes kind of guy.
Guillaume: Yeah, for sure. All right. Well, thanks for being here today, Yoni.
Yoni: Thanks for having me. It’s great.