In the current economy, it’s possible for your small business growth to become stagnant. It’s possible for your business to flat line. How do you get your business scaling? How do you move it to the next level? Think of scaling, in its very basic form, as a sequential set of events that connect all of these key components. Scaling implies alignment, control and predictability within your organization. In other words, fast—yet safe—growth.
In order to successfully scale your business, you first need to recognize the key components of a successful business, then understand how to optimize them.
The components of scaling
- Positioning: Creating a unique positioning, thereby placing your company in the minds of your target prospects.
- Product Innovation: Crafting a product that is new or improved, and fit for your sector and target market.
- Marketing: Successfully communicating the vision and value of your product to your customers. Telling your story your way.
- Sales: The process of selling your product to customers, informed by your marketing story and position in the market.
- Operations: The recurring tasks that need to be done in order to keep your business running and generating profit. Examples include everything from facility management and the delivery of goods, to measuring customer data and analyzing financial performance.
- Production/Development: The processes and methods necessary to create and build a product.
- Customer Support: Services provided to a customer to ensure they can use your product.
Scaling begins with positioning. Creating an identity for your company—positioning your company in the market and the minds of your target audience — drives what you want to build, and the story you want to tell your customers which drives leads to your business. That, in turn, informs the sales team’s scripts and their engagement strategy. Operations and production are then driven by both your company’s place in the market and the agenda of your sales team, and customer support and installation teams take these objectives and ensure that customers get what they were looking for.
To put this in perspective let me share a recent success story from the small business world. ADMET manufactures and sells systems that test the mechanical properties of metal, rubber, plastics etc. However several years ago the owner spotted an opportunity to add a new niche as a specialist in the Biomedical sector. This is involved building systems that could test the strength and durability and all relevant mechanical properties of molecules. Thus a new story for the company was built, new sales talent recruited, production altered to build the new systems and customer support created. Several years later the company has built a multi-million dollar business and are now ranked as one of the fastest growing companies in the country by Inc. Magazine.
Sounds simple enough: all the moving parts are connected and aligned. So why don’t all small businesses scale?
“Leakage:” The downfall of many small business
As businesses grow, “leakage” often creeps in. People don’t perform, processes are not put in place and follow-through is missing, all resulting in lost revenue and a leak in forward momentum. Ironically leakage only really occurs as you become successful, as you grow, as you add more components. As founders gets stretched, leakage occurs all over the company. Orders are late, cash isn’t chased, metrics aren’t put in place to measure things and momentum is lost.
Without addressing these issues, it’s nearly impossible to grow your business, whether scaling it or not.
Some businesses fail to define their position in the market, while others create products that aren’t fit for their sectors and, thus, not useful for their customer base. Other issues that may arise include weak marketing strategies and, as a result, weak lead generation; patchy product knowledge and sales scripts that are not connected to the marketing story; poor analysis of financial performance; inefficient workflow or poor quality control, resulting in costly re-runs and corrections; no formal processes for the onboarding of new customers; and/or ineffective communication between sales and customer support.
For example it’s quite common in small software companies when the product starts to sell but the owner doesn’t get ahead of the curve. Instead of investing in sales and marketing teams to scale the business, the owner builds the product, answers queries on the phone, builds enhancements to the web site, and then late at night does the book-keeping! It’s the classic long hours and potential burn-out scenario.
How you can address issues and minimize leakage
Scaling is often about relentless execution, because you have to set weekly agendas and drive progress within your organization. You need to ensure that you and your team are working cohesively, and on the right stuff—the stuff that builds value. Instead owners often drop back to their comfort zone. It could be programming more code. It could be tinkering endlessly with the packaging. It could be handling all the selling for the company. So instead owners need to look at the components of scaling as highlighted above and decide what can be delegated.
Develop and implement processes at the right times
It’s important to realize that growth is a never-ending process—not a one-time event. It’s not as if you get to stop working on your business once it gets to $1 million or $60 million in revenue. You need to put in place the appropriate processes at the right times which, if properly aligned with the goals of your business, will drive your team forward in a balanced, powerful and focused way.
For example as you scale you need to formalize lead generation campaigns. How many leads are you trying to achieve from what activity. Email marketing, blog posts and social media, trade shows, network events, and publishing white papers. As you scale you need to consider the sales process you want your sales professionals to follow. Process is important, but try to avoid focusing on it too heavily, too early in a company’s development. In most sectors, it’s hard to justify a Chief Financial Officer while hovering at $2 million of revenue. But at $20 million in revenue, it’s pretty dangerous to operate without one.
Fill your company with talented people
In any organization, no matter the industry, people are key. It’s important to begin hiring early in the scaling process, before you and your staff are overwhelmed with new business and have no time to train new employees. Staff your company with workers whose skillsets match the goals of your company, and reward your key employees in order to retain them. Ask yourself some hard questions. Are you compensating for mediocre employees out of loyalty to them? Does the skillset of your team match what you’re trying to accomplish? It’s admirable to want to help your employees, but if you fail to staff your organization to match your goals, the opportunity cost is huge.
Take a hard look at the big picture—then look closer
It is reasonable to assume that weak sales performance is the fault of the sales team. While that could be the case, it’s just as likely due to be poor positioning, poor definition of your target audience, or unremarkable marketing content and anemic lead generation. Zoom in on the problem to review and measure intensely the effectiveness of all the component parts, from marketing and sales strategies to talent acquisition and structures—and everything in between. Are these pieces working, and are they aligned?
Zooming out to look at the big picture as well. Is the market changing? Can you see bends in the road that require agile changes in tactics? Change comes hard and fast, and your weak sales may be the result of a failure to be proactive, or at the very least, reactive, to change.
Scaling often requires opening up the mind to bigger plans. Businesses evolve through various stages, and you need to be open to all of them. If you have experienced strong growth in the past, it’s likely you had a remarkable proposition for the market. But in the current networked world in which we trade, it’s easy to become invisible, to flat line and to be ignored. The challenge for every small business is to cross the bridge from entrepreneurship to a professionally managed business, and scaling can help you do this effectively within your organization.
The Portfolio Partnership are currently scaling businesses in the Technology, Marketing, e-Commerce, Travel and Manufacturing sectors.
Adapted from my first blog for Equifax published this week – link