The Smith Report - Operational Playbooks

Why Scaling a Business Fails

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Scaling a business is not the same as growing a business because there’s more to it than that. Otherwise everyone would scale! Scaling implies alignment, control, predictability, fast growth but with safety.

Reasons why owners/management fail to scale
  1. Black Elk Energy grew revenue from $13m in 2008 to $340m in 2011 but in their own words: staff were doing their jobs but they weren’t measuring what they were doing, managers lacked the metrics they needed to boost the company’s efficiency and productivity. (source Inc Magazine)
  2. FM Facilities Maintenance grew revenue from $36.9m in 2008 to $349m in 2011 but in their own words they were hiring reactively. Solution involved bringing account managers on 120 days before you truly need them. Let them absorb the culture and training. (Source Inc Magazine)
  3. And standing back I like to think of scaling as getting a business off the ground, flying high enough. Looking at the image above, every business whether sporting $1m in revenue or a $1Bn in revenue, scales by using the fuel of  people, money, metrics, and alignment to drive your Positioning, Product Development, Marketing, Sales, Production/Service/Operations, and Customer Support. Failing to scale is always about leakage within these core functions. Leakage is not a good thing when flying!
  4. Positioning: You fail to define your special space you are capable of monopolizing.
  5. Product Road Map: Products aren’t fit for their sectors. They lack specific functionality needed by customers.
  6. Marketing: Blog posts aren’t frequent enough, story isn’t compelling, lead generation is weak, web site narratives lack consistency.
  7. Sales: No process in place, sales scripts are not connected to the marketing story, product knowledge patchy.
  8. Operations: Wrong stuff is measured, access to key ratios is tortuous, analysis of financial performance is weak.
  9. Production: The workflow of the factory is disconnected from POs coming in from sales, weekly shipments aren’t driven to generate cash, quality control is weak causing costly re-runs and corrections.
  10. Customer Support: Onboarding of new customers is not formalized, communication between sales and customer support is weak.
Scaling a business is all about working on the right stuff at the right time.  It requires management to cross the bridge of change from entrepreneurship to a professionally managed business, thereby launching growth that is predictable, aligned and safe.

On June 5th in Boston, The Portfolio Partnership, Silicon Valley Bank and Choate Hall & Stewart LLP will be hosting a fun packed breakfast on Scaling at Choate’s offices. I will be presenting the essential playbooks for scaling your business and chairing a lively discussion. More details will follow.

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About the Author

Ian founded The Portfolio Partnership (TPP) in 2010. TPP is an operational consultancy focused on scaling private businesses safely. He believes his resume of building 4 previous businesses from publishing, investment banking to software in Europe and the States gives him a unique set of skills and a sense of humor. He remains a competitive masters track & field athlete and in 2012 was ranked #2 indoors in the world for his age at 400m.

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