So what are the secrets of scaling a business? Well let’s define scaling in terms of sales growth. Let’s say you are on a path of scaling from $5m to $75m. Let’s assume you are not growing at say 25% per annum, or if you are, your have concerns that the situation is stable, controlled and predictable.
Using my experience of scaling businesses from $5m to $75m over the last 30 years, in Publishing (Thomson), Technical Recruitment (Parc, Intertech), Construction (MP Burke), Telcoms Distributor (Comtec), Investment Banking (Livingstone Partners, Capita Corporate Finance), Software (Teamstudio, Net Atlantic), Manufacturing (ADMET) I can share the following:
- It’s important to realize it’s a never-ending process NOT an event. You don’t get to $6m or $60m and tick the box. You need to put in place the appropriate playbooks and processes at the right time. These playbooks if properly aligned will drive your team forwards in a balanced, powerful, focused way.
- Clearly you can go heavy on process too early in a company’s development. It’s not practical or necessary to justify a CFO at $5m of revenue in most sectors but at $20m it’s damn dangerous without one!
- Given as stated above that you have achieved say $5m or more of revenue, you’ve clearly validated that there is a market. So the issue with controlled growth or lack of it is to find the LEAKAGE. Where is the power of forward momentum leaking?
- Take sales. It is reasonable to assume the problem with a weak sales performance rests with the sales team. It might. But it’s just as likely to be poor positioning. Poor definition of “who you are”. Poor definition of your target audience. Unremarkable marketing content and anemic lead generation. The sales team might be first class.
- So scaling is about the appropriate amount of zooming in and zooming out. Zooming in – to review and measure intensely the effectiveness of the component parts: positioning, product road maps, content marketing & lead generation, sales processes and strategies, metrics management, talent acquisition and nurturing, production, customer service, organ structures, internal training. These are the key components. Are they working and are they aligned? Zooming out is key as well – is the market changing? Can I see bends in the road that require agile changes in tactics? Think, Blackberry, Dell, Nokia, Barnes & Noble, HP. Think the record industry, the publishing industry, the printing industry. Change comes hard and fast.
- Scaling often requires opening up the mind to bigger plans. In a recent manufacturing case we restructured the sales team around NAICS codes not regions. We gave each Account Director the power to build a business in the Plastics sector or the Biomedical sector. We opened the Account Directors to creating $5m businesses each!
- Scaling is often about relentless execution. Relentless because you have to set weekly agendas and drive progress. It’s not always pretty but it’s necessary. Execution needs to be the right busy work. It’s so easy to work on the wrong stuff. To work on stuff that really doesn’t build value.
- People are always key. Are you waiting too long to hire? Are you compensating for mediocrity due to loyalty? Admirable but the opportunity cost is huge. Too much of an old skillset in your team not enough writers, designers, analysts?
- As the founder are you still in your comfort zone working in the business not on it? Do you really still need to be coding? Does change scare you? Does your leadership skillset match your scaling ambition?
- Are you flying too low? Businesses evolve through various stages. 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 we trade, it’s so easy to become invisible, to flat line, to become ignored.
If you are passionate about scaling your business reach out for a chat and ask for Ian.
The Reason Behind Flat Growth is Leakage
Scaling CD Baby – Observations
Scaling a Business – A Chat with Joe Alsop
Scaling Issues – Inc 500 Case Studies
Thanks for providing such great information on scaling for business. It’s so important for beginning entrepreneurs to understand, in particular, the difference between this and merely growing a business. Some growth may ultimately not be sustainable, but, done right, scaling is all about finding a solution that lets you grow your business in a controlled, sustainable manner. Scaling should feel easy once the plan is laid out, but creating that plan in the first place is the real hard work.
Thanks Heather. A scaling plan ensures we are working on the right stuff. The stuff that builds value. I wouldn’t underestimate the difficulty of executing the plan but at least you know the rewards for success are huge. Also I believe if entrepreneurs adopted a scaling mindset they would have a lot more fun than just growing a business!
Ian – Great insight and ideas. I consider Apple to be great example of how to scale your business. Till the problems surfaced in the last couple of quarters they were really good at understanding what they have to do to scale the business – either through new product, extension of product, geographic expansion, carrier expansion (in case of iPhone) and so on. The trick they did not try to do it all in one quarter. They took the measured approach to scale one step at a time.
Harry, I agree I always admired their controlled approach to growth and their ability to release great products that actually worked.