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SurePayroll is a payroll processing company put together by a group of Chicago-area entrepreneurs in 1999. Currently, the company supports over 12,000 small business customers and will process over $2.5 billion in employee and contractor payments this year, making it the largest online payroll service in the country and the fifth largest overall payroll service in the country. Most of that growth is based on word-of-mouth referrals.

Contributing writer Ben Bradley recently sat down with Michael Alter, president of SurePayroll, to talk about the secrets of learning from mistakes and riding herd on rapid growth.
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What is your background?

Michael Alter: Before SurePayroll, I was at McKinsey & Co. for six years. But I’ve had strong entrepreneurial inclinations ever since I was a kid. I remember sitting with my father, hearing him talk about the family heating and air-conditioning business, and we’d brainstorm about business ideas together. As a consultant, I enjoyed advising others but it wasn’t satisfying for me in the long run. I wanted a startup opportunity, and fortunately I found it. It’s been a fast ride and I wouldn’t trade it for anything.

You seem to know a fair bit about mistakes. What can you tell us to save our trip on the learning curve?

Knock on wood, we haven’t made any big mistakes. We probably wouldn’t be around if we had. But we’ve made a lot of small mistakes.

We think of the cost of small mistakes as “tuition” on the way to learning more about how to make the business better. We even have an annual SureChoice Award that we give to the employee who made the best NEW mistake. This fosters a culture of learning from our mistakes since mistakes are inevitable in a growing business. We have a culture where it is okay to make a new mistake but not okay to make the same mistake twice.

Any company that says it doesn’t make mistakes isn’t telling the truth. Examples of the small mistakes we’ve made include things like hiring the wrong person for a job, losing sales leads because of a technical glitch, or putting too much energy into low-yield partnerships. Typical stuff.

Fixing a problem once you’ve identified it is pretty easy. The challenge is creating an environment where you don’t have the problems in the first place. That’s what I spend my time on.

The main thing I’ve learned from my mistakes is to avoid them in the first place if you can. But if you have them, take corrective action to get rid of them quickly. I f your attitude is “We can live with mistakes; it’s OK,” that propagates throughout your organization and everybody gets careless, sloppy and complacent. That’s the kiss of death for a business.

What was your biggest successful gamble?

The gamble I make all the time is to give talented people more responsibilities than an outsider might think they could handle. I challenge them to rise to the occasion. Countless times, that gamble has paid off for me. I recently promoted one of my sales reps to handle partner relationships. It’s worked out phenomenally well. And, these are low-risk gambles. If it doesn’t work out, we can take the necessary corrective actions to change their responsibilities back to a more comfortable level and reassign the tough tasks to others.

What would you have done differently?

In this business, you constantly learn lessons that you wish you had learned earlier. Getting great strategic partners like Wells Fargo, a partnership we established a few years ago, was very beneficial to the business. If I had to do things over again, I’d have increased our concentration on acquiring such partners and would have focused on that earlier instead of just directly soliciting small businesses.

I also would have anticipated competitor responses better. ADP and Paychex now frequently match our low prices to lay landmines in the road for our sales reps. In hindsight, I’d have started earlier to build perceptions in the market about SurePayroll that went well beyond our price differentiation. The key thing we’ve identified is that our service is simpler than any other payroll service out there. For our external positioning and for our internal brand-driven culture, I’d have embraced simplicity as a rallying cry much sooner.

What advice would you give to others about growing their businesses?

I don’t think there any silver bullets when it comes to business advice. The main thing I advocate is to be contemplative about your business. Wake up early every day and go to bed late. Spend the time in between thinking about what’s going on in your business and what you can do to improve it. Create an organization that is contemplative as well, that thinks about how to do things better and takes the initiative to implement the improvements.

There’s an old test for insanity that I’ve heard about: You put a person in a room with open faucets spewing water and a mop to clean up with. There are no drains in the room so the water starts to fill up the room. A lunatic will grab the mop and start mopping – a sane person will turn off the faucets.

Based on what I’ve seen out there, I think a lot of businesses are mopping when they should be turning off the faucets.

Ben Bradley is the founder of Growingco.com, a provider and facilitator of peer-driven intelligence, interactions and insight.

Copyright © 2004. Darwin Magazine.