Time For A (very Rudimentary) Internal audit

What is actually going on here? — Chaos Log 02 This post was originally published on my blog as part of the Chaos Log series. If you don’t want to miss the newest updates, make sure to subscribe to my newsletter. When I accepted to run BIGSEO a couple of weeks earlier, I didn’t base my decision on hard facts. I went with my gut. I knew Romuald, and liked his different approach to entrepreneurship. With any other company I would have done a brief due diligence to assess their situation and based my decision on the output of this audit. Not in this case. I was intrigued by the challenge of turning a seemingly chaotic but somehow successful agency into a profitable and scalable company. Later that week we ironed out the details of our agreement and we were set to go. So, with very little information at hand, I was curious what I had to expect when I entered the office for the first time. My personal objective for the first couple of weeks is pretty clear: I want to be able to make sound decisions as fast as possible, tackling problems and help where ever needed in order to lift this company on a promising growth trajectory. For me to be able to do that, I have to understand what is actually going on here. So I thought if I manage to ask the right questions to the right people, I should be able to understand the fundamentals of the company within a couple of days. That’s the theory. How does that translate into praxis? Well to start with, I spent the morning preparing a set of high-level questions I wanted to find answers to. Here are some: How is the team structured? How are the hierarchies, what the profiles of the employees? What is the financial situation? Are we burning or making money? How does the cash flow looks like? What is our customer base and are they happy? What’s the average deal size and what is the churn? How does the sales pipeline look like and how do we acquire new customers? What is the status of our products? Are they any good or do we need to fix them? … All the answers to those questions are hidden in the data that surrounds BIGSEO. Let’s gather the data then. So next, I put together a Information Request List and handed it to Pablo, the former General Manager. While I was waiting for Pablo to put the financial data together, I myself spend time with the team in order to get a better understanding of its dynamic and the individual strengths and weaknesses of each of its members. I started by talking with each team member individually. I know that getting a new boss can be a stressful event for some. So whenever possible, I caught them casually in front of the water dispenser or outside of the office while in their smoke break (which was a bit awkward as I don’t smoke). Besides the obvious, I also used this chance to get a first glimpse on their personality and their role within the company, their professional motivation and their background. Understanding your team’s dynamic, the overall mood and the structure are important factors when creating a high performing team. Who are the thought leaders that take control of tasks? Who is the silent one that constantly falls under the radar? Who are friends and meet outside the office? Observing the team became a part-time job during my first couple of days. Especially, when leading a small team of 20ish people where you are going to be in close contact with everyone on a daily basis, such details are more important than you might think. Spoiler: In the next couple of weeks I should learn the hard way that I was right and probably should have invested even more time. At the end of the first week Pablo came back with the first batch of requested data. The results were … disillusioning to say the least. Gathering business data the hard way Instead of receiving one nicely composed financial overview I received a bunch of spreadsheets that all looked something like this. Jesus. I didn’t expect nicely business-school prepared financial reports or well-organised insights. But this? I mean, look at it. This must be the most colourful spreadsheet I have ever seen. Or am I the only one that feels reminded of this? The bad thing is, the design was not the worst part about it. The data just didn’t add up. After long and painful digging through multiple data sources we found out that the data was outdated; incorrect and incomplete Bingo. That’s three out of three. As a fact, up until this day there was virtually no financial reporting present within BIGSEO. All the spreadsheets I received were quickly pulled together from different sources in the moment I requested them. I remember the end of the 2nd or 3rd day in the office, sitting alone and exhausted at one of the corners trying to make any sense to the numbers in front of me. It was in this moment when I, for the first time, thought to myself: where did you end up here? Little did I know that I just revealed the first layer of chaos. The following days I should discover that: nobody knows the status of most of our customers (In fact, two weeks in we discovered that we received money from a customer that nobody knew we were working for) there is no centralised customer relationship management. Nobody knows for sure what we are billing whom and why. salaries of team members are agreed upon in net instead of gross, which leads to weird payment rolls there is no overview of our costs. Where do we spend money, how much and why? there is no inter-department communication. People that are literally sitting 2 meters apart from each other have parallel conversations with customer, agree on different things and don’t update each other frankly, nobody talks with anyone about anything. … I realised I stood in front of a meter-high pile composed of horse shit. A pile that I had to take a part, examine and somehow make sense of, if we ever want to make sound and informed decisions within this company. I was faced with two choices. A) run away or B) dig into it. So, I guess it’s time to roll up my sleeves and start digging. I am going to have a couple of fun weeks ahead of me. If you liked this article make sure to give it some love and follow the story line on sebastianjanus.com >