One of the common discussions I have with my clients is around how they scale their business. I could not include all my thoughts and tips in one short blog, hence my commitment to share a number of free resources to help you develop your business.
However, in this Blog I wanted to share some headlines that will help you consider and even start to scale your business.
Firstly, be clear on your purpose. As a young business, your purpose can be easily controlled by your individual actions. However, as you scale and are then only part of the day to day contributions, then your purpose has to be crystal clear otherwise it will be diluted by others.
Know why you really want to scale your business and consider if it is likely to be achieved with the growth. For example, I’ve seen businesses scale for size, but as a result seen some reduction in their profit margin. The result was a reduced income for the owners, which was the opposite to their expectation of having a ‘bigger’ business.
Focus on what you want TO BE – not what you are. Many businesses reach a point where their organic growth has max’d out. A point where working harder or longer hours is not the solution. I recall a conversation with a respected leader in my network who once described how their business changed and often the leadership team had to change as they reached 5, 10, 25, 50, 100, 250 employees.
As best as you can, predict the future. I appreciate we don’t have a crystal ball but your growth plan should be based on more than a whim or a finger in the air. What is your business telling you? What is the market telling you? What trends are you seeing in your numbers? How is your sector performing overall? What are market experts predicting in their commentary? From this gained knowledge, can you map out a plan and related financial model that predicts the opportunities and the related investment to bring those opportunities to fruition?
Where will your growth come from? Will it be from your existing customer base or will it require new markets? Will the growth be generated via your existing or new revenue streams? Can the existing business deliver the growth plan or will it require strategic partners or even a merger or an acquisition?
Ask yourself if your foundation is strong. You should ensure that you are ready for growth. Is it the right time to scale your business? Do you have the right foundations and are they strong enough to support your growth? I’ve picked up work from other coaches that simply focus on sales and as a result their clients business has nearly fallen over, as the rest of the business is not structured to cope. I work with my clients to ensure that the platform is created. Much like building a house. If the foundations are weak then there is every chance it will fall over.
There are many barriers to scaling a business. If there wasn’t such barriers then everyone would do it with ease. It’s like any goal, for some, when it’s found to be more difficult than considered, then they bail out. So approach your barriers like an ant approaching a stone. It appears big, it appears a barrier, but the stone never stops the ant as it finds a way to go around it, over it, even move it. Can you identify your potential obstacles and any barriers to your growth. If so, consider the solution to that obstacle in advance. The most common barriers I see are:
- A lack of strategy
- Lack of working capital / cash or the ability to raise finance
- Not finding the right, quality, people to build a team
- Lack of ability of owners to let go
- Change management & the reaction to change
Considering one of these points, know what money you need. It is rarely wise to start the scaling of your business if your finances are stretched. You will struggle to scale if you need every penny that you currently invoice. For example, if you don’t have the working capital or don’t want to take the risk of borrowing money, then the cost of hiring people to recruit more customers or deliver the promise will of course have to come from somewhere and if you are already max’d out then it’s not going to work as it will often fuel your doubt or procrastination.
So what working capital do you need? Have you forecasted your cash requirements and know what the business has to do to meet the financial model? If you don’t have the working capital or not willing to take a risk in financing your plan, then the other option of reality is to scale back your expectations. That may mean missing the opportunities you can see for scaling the business, but this reflection does keep it real.
It is rare that you will scale the business on your own, so build a great team, who delights your customers, by investing in the right people in the right place. You will hear many successful business owners quote how important it is to be surrounded by good people and even people better than yourself. From my experience and observations, I encourage you to seek people of good character and good attitude. Anyone would struggle to change these personality traits, but we can train the skill and competence required to do the role effectively. I also encourage my clients to hire people who can initially follow the current systems and processes but who have the ability to influence and improve them in the future.
One question I always ask the business owner who is looking to scale: “are you ready to let go?”. It is the biggest challenge for most business owners I meet. Can they trust anyone to do it as well as they already do? As you scale your business, you have to be prepared to delegate as you can no longer do everything or have a hand on everything. Trying to micro manage everything would not be a good use of your time. Additionally micro management primarily indicates that the team are not trusted and this is a common reason why people leave their jobs.
One way to help you feel comfortable with letting go is to have well considered, robust systems and processes. These will have been initially created by you as the person who knows how to best deliver your business model and your promise. In time these initial systems and processes should be developed by others to a point that they demonstrate best practice and share ‘how things are done well around here’.
One book on my recommended reading list is the E-Myth by Michael Gerber. The E-myth talks about 7 areas for systemisation. Leadership, finance, management, lead generation, marketing, lead conversion and customer fulfillment
If you’ve not started with your systems at this point, then which is your priority?
Of all the systems you could create for your business, you should certainly have a process that creates a sustainable marketing and sales function that constantly generates and converts leads. After all, you could have the best other systems but if you have no or too few customers, then they won’t be tested. Often scaling your business enables you to move away from the feast and famine behaviour of many businesses that only market their business when they are not busy. Once you start to scale you often need this constant flow of new business to support the overall plan and financial model.
Another way to help you keep control of your business with confidence, is to consider your Leadership dashboard. Imagine being the captain of your ship. Stood on the captains deck all you can see is the horizon, so you need indicators to provide you with the confidence that you are heading in the right direction. So what are your key performance indicators? What should you be measuring? What should you be keeping an eye on? I encourage you to measure some outcomes such as revenue, but primarily focus on your activities. If you purely measure your outcomes, then it may be too late before you realise that you’ve already gone off course.
As there is so much to consider when steering your ship in the right direction as you scale, then one key consideration is to firstly perfect your offering and then use systems, processes & automation to deliver your quality consistently.
Over recent years it has become common place to outsource some of your business activities. This can be a useful way of bringing in specialist resources that you don’t need full time or can’t blend into another role. Could an outsourced resource add to your team and give you something you don’t have?
In the long term and certainly in preparation of your inevitable exit of the business, then you need to take yourself out of roles, out of the day to day operation of the business. To reduce what you do day to day, to give you more time to work ‘on’ the business, then what can you let go of? For now identify your ideal role for your business. Where do you add the most unique value to your own business. What do only you have to do or can do?
Finally, for sure there is much more to think about when scaling your business but I encourage you to have a process that helps you make tough decisions easier and quicker. That may be knowing those triggers that give you confidence in your decisions. It may be someone who can act as your sounding board. It will often be related to how you process and analyse risk.