Building Scalable Systems and Processes to Support Business Growth

When you get to a certain number of assets on the construction management side, I would say, it can be challenging to handle things in Excel. Because one of the challenges is when you're dealing with a bajillion invoices a month, how do you know that every invoice is valid? How do you know that you didn't already get billed for those set of appliances? Having a system in place that can catch those types of things does impact your bottom line, because why buy two sets of appliance for the same unit when you should have only bought one? If that happens too many times, or if a vendor either maliciously or not maliciously bills you twice for labor and materials, that will impact your capex budget and ultimately, you won't be able to achieve all the value-add that you underwrote to achieve. So I had built a monstrous Excel tool that catches all that. Turned out, I was the only person that could use it. That's really not scalable, because I'm the single point failure there. We're going through the challenge of trying to procure a software tool that works for the team. It can't just work for me. It has to work for the team, the people doing the work. We're in that process and just being able to handle all the paperwork and then the lender requirements, withdrawals and keeping track of all the dollars and the integrity of the invoicing and the bills we’re paying. That's definitely something that will show up once you reach a certain scale.

On the asset management side, there's having a system and process in place where you are able to collect the key performance indicators of each of the assets and measures that do basically a pro forma to actuals analysis, so that you have your finger on the pulse of what's going on. If you're trying to do all that in Excel, what you end up with is a double entry going on between Excel and your bookkeeping system. We were living with the pain of double entry for a while. We're pushing very hard to get into a system where it's only single entry. So all the financials and all that, it's all in the same tool that you're entering the data once and that you've got your pro forma in that tool and you've got your actuals in that tool and the tool generates the analysis that you're looking for and you don't have to enter that stuff into your accounting system. Then also enter it into a spreadsheet, or download from your accounting system into a spreadsheet and then do all this data processing, which opens you up for error. Unless, you're a boy genius computer engineer and you can write macros that do everything for you, a lot of this is a little bit manual in Excel. We're trying the best we can to get out of Excel tools, though you have to be careful that you don't get out of an Excel tool into a tool that's more complicated than Excel and it's taking up more of your team's time than it was in Excel. Procuring tools is critical, I think to long-term success. It's critical to your team members not killing you, or quitting. I would say having a solid system in place to do pro forma to actuals, prior to acquiring your first asset is good. Don't just focus on the tool that allows you to get into the asset. Before you get in the asset, think about what tool am I going to use to do the budget actuals and actually do a proof of concept before you throw yourself into that?

Listen to full episode: https://lifebridgecapital.com/2019/09/ws331-building-scalable-systems-and-processes-to-support-business-growth-with-ben-risser/