If you don’t know what Operational Debt is, take a look at our article What is Operational Debt. In short, it’s a type of time-based debt where you borrow against the time spent on company processes.
Generally speaking, you can put off defining the systems and operations that are going to make your business function to focus instead on sales, marketing, growth or other areas for a good while. Wait too long, though, and your company will be forced into a reactive state where it can feel impossible to catch up or get your head above water.
Does this already sound like you? You can check out our Operational Debt Assessment to see how much operational debt you’ve already built up.
Before diving into whether or not you’ve waited too long to pay this back, let’s go over when it’s actually reasonable to build up some of this debt.
When is it ok/not ok to have Operational Debt?
Adding operational debt is a business decision, I’m not going to say I’ve completely avoided it when scaling my previous businesses or this one. The reason it’s worth discussing at all is that it’s a viable decision to make when circumstances are correct.
To reiterate, this type of debt is related to the time you need to put back into your business after borrowing to get ahead in other areas.
Unfortunately, you have to be a little psychic and know that the end-result of that choice is going to be good for your business (which is asking for the impossible). And unlike financial debt, or even technical debt, it’s unlikely that you (or anyone else) is acutely aware of the interest rate.
Just how much is it going to take to pay back the time you borrowed? The answer can be astounding.
That’s a big part of what BGBO is trying to solve. By being early in implementing proven workflows and procedures, getting help with your SOP development, and helping you master the tools you need to manage your projects internally you can reduce your operational debt before it becomes a problem.
With the tips below, you’ll be able to make the most educated decision about whether or not you’re in a good position to add some operational debt, just remember to keep an eye on it so you can pay it back before you develop some massive culture issues.
- Check out our Operational Debt Assessment
- Determine if you’re in a growth phase, and if so, how far through it you already are
- Look at your long-term goals – do you expect to have periods of lower activity where you can reinvest some time?
So, have you waited too long already?
Here are 10 indicators that it’s time for you to start tackling your operational debt, today
- Projects aren’t getting done on time and you have no idea what anyone is working on
- Teams are constantly “reinventing the wheel” and everyone has a different way of doing things
- Internal communications are filled with friction points
- There’s a dramatic lack of focus across teams
- KPIs and performance metrics are impossible to measure and track
- Competitors are speeding past and gaining market share faster than you’re able to keep up
- Growth opportunities are being missed or skipped
- Customer experiences are completely inconsistent
- Everything takes longer than it should
- You’re worried that additional growth will only make things worse