How to scale your business: a summary of my experience around growing numerous businesses over the years
There are tons of articles and advice around how to start a business.
But starting a business is a very different beast from growing a business. I learned this the (really) hard way. Here are my notes to make it less hard for you...
(as with all my posts, remember to enjoy this as food for thought vs a step by step guide. Your circumstances will be different from mine so adopt and adept accordingly).
You don''t need to scale!
First piece of advice: not every business needs to be scaled. There is absolutely nothing wrong with starting a wonderful business around your expertise, earning a living and having a good quality of life. So please don't feel that you need to grow because everyone says so. I know amazing little businesses that have decided to stay small, look after their customers and just have fun. In fact, I would argue this ought to be your first priority no matter how ridiculously ambitious you are.
Personal example: when we started a healthcare company we were doing really well in one large city and then decided to expand to another city 1.800km away. The rise in complexity and costs (think supporting clients, traveling to sites, etc) made the prices in that new city unsustainable plus it impacted our home city offerings as our energy was now spread thin.
Quality of life
Obviously "quality of life" is a very personal thing, but remember that handling a few clients is one thing. Handling a lot of clients and the corresponding resources (technological and human) to support these comes with a very different set of pressures.
Personal example: in one of the companies I co-founded my partner and I had the best time starting and growing it in the early days but as we grew it our time stated beng consumed by project management, control systems and hiring and team management challenges. For some this will be fun, but be prepared for this leap. It is very different from the startup days where you are innovating and inventing and speaking to customers each day and pivoting your idea etc. And no, you won't have enough income yet to hire a CEO to handle all the stuff on your behalf.
Running a startup vs a growing business are two very different things
In a startup taking your business from one where you are a key part of it to one that is not reliant on you is a major leap and in my experience most first time entrepreneurs are unprepared and truthfully unqualified to do this. I myself failed a number of startup to growth leap initiatives exactly because I underestimated how challenging the jump can be. And it isn't a case of just having access to more resources (more about this below):
Watch this short(ish) clip to understand why:
But I really want to grow!
Ok. So you decide that you do want to grow. Hopefully you heeded my first advice (about starting a solid local business with paying clients first)...
Actuallly... let me rephrase that: do NOT plan to grow UNTIL you have achieved a solid local business. By all means dream, scribble ideas, network and identify resources and opportunities etc but first and foremost start local. I say this because in your startup phase (anything up t 18-24 months) your business will constantly change (it has to or you're not listening to your clients).
Personal example: I grew really fast with one of my businesses. As great as it sounds as we grew we learned what clients wanted. Going back and changing all the existing clients setups etc was a painful experience (think of having to re-educate customers, change agreements, etc).
But if you are dead set on growing here are a few things you can work on:
Processes and systems are something most innovators and entrepreneurs are allergic to (think how often you properly use a CRM system for example). Yet these are the foundations that will allow you to scale. Thanks to the day and age we live in systems are dirt cheap and often free. But if you use systems use them properly. Eg. Trello is an awesome free tool to manage your pipeline, projects and resources but most people only use it as a glorified board. My hack? Google GTD Trello guide (GTD = Get Thingss Done). It is circa $10 to buy but the GTD methodology is just phenomenal in terms of introducing you to processess and sytems that really work and make your life easier. There are GTD guides for all sorts of tools so pick the tool you like and then master how to use it for your company.
Simplying your business offerings and customer onboarding and servicing steps. We entrepreneurs have a tendency to want to offer a lot of services and features which complicate development, support, staff training and maintenance. If you want to scale you need to keep your offering focused and "simple", even to the risk that others might copy you (in business your best defence isn't your IP but your relationships with customers).
Simplify internal processes as much as possible. Remove any administrtive fluff that you can. Focus on steps required that do the job, both internally and with clients. Why do I mention this? Because non essential bureaucracy is a major drag on your time and people, and it makes it harder to close deals and service clients. Observe how the water flows and then create the structures around that flow. Similarly, observe how you close the succesful deals and the design processes around that. Tip: not everything can be automated: keeping a personal touch cab be a competitive advantage, but it must be so easy to manage that you're not needed.
Do not hire in the hope the new team members will solve your challenges. Usually they won't. I have made the mistake many a times. My rule of thumb? Only hire someone to handle a specific responsability after you and your partners have handled that responsibility 100 times at least. I suggest this because then you will really know what you are hiring for and you can look for the person to join your team that can do that role. Plus bringing in someone to do something you have done 100 times makes it easier to train that person. But once you hire that person please also give them an incentive to make themselves redundant vs just doing their job: invite them to learn but also to improve the process as much as possible to the point that they can move on to another role and something more fun.... I suggest this because hardly anyone wants to do a routine for life, but almost everyone is motivated by projects and tasks with a finite timeline. Huge motivator!
Fire yourself. And quickly. As you grow the company will become more important than you. It also means that the company will start changing to something that isn't what you imagine or do things in a way you would't do them. Get out of the way. By all means have a say, but don't be a control freak (aside from being an anchor to the company your need for control will generate enormous resent by those wishing to really add value to the company and you will drive them away).
Bring truth tellers as partners or service providers. At the beginning you probably did the bookkeeping yourself (or maybe someone did it for you). As you grow you need a whole new level of counsel...and the best is to find people who will not mince words. For example: have a financial advisor who actually tells you that you can't afford that fancy office space based on current financials. This is a powerful strategy because you are actually bringing in on board the collective knowledge they have often at no additional costs as the service providers WANT you to succeed and be a long term client so DO involve them as advisors too!
I personally did this mistake, taking on a beautiful office because I was absolutely convinced that the conversations we were having with prospects would materialise... this action alone doubled our breakeven point and made us have to work and stress much more than is necessary.
This is a cliche', but in the early days you probably managed to sell your services/products to a wide range of clients probably in part by sheer power of persuasion. As you scale the best advice I can give you is to focus on a segment of a segment of a segment of your customer type. This is far more important than you might realise: at the beginning of The StartUp Journey I didn't know who my clients were and was pitching to everyone because I believed it could be used across sectors and industries. I still think that but I don't act on it. Today we say no to opportunities left right and centre that even if alluring would distract us from doing a brilliant job with our target market. This is MUCH harder than you can imagine BUT it has some enormous benefits, perhaps the biggest one is that you don't waste time searching for random people and organisations but know exactly who you wish to speak to. This also means much less time spent on meetings with people who are not part of your strategy. I am sure I missed a few good opportunities in that, but it also means I have much more time to think, improve our service, enjoy a nice walk in nature with my wife, listen to great content, etc. I literally have "boredom" built into my strategy as in the boredom you find the time for your brain to actually process information and come up with interesting new links and ideas.
This is a bit personal, but you'll never grow your business alone. Find the right partners and find them quickly. We operate in 27 countries and not a single country outside our original country was opened via our efforts alone but always through local partners (and sometime it didn't go well, but that's ok). I know a few companies that thought all they needed was a bit more advtising budget and all would be ok and then went bust. Facebook, LinkedIn etc are as close marketing budget scams as it gets. Do not even consider these unless you have lots of cash to waste (I don't say this in malice to the organsations that - kudos to them - have grown far more succesfully than I have but rather from a perspective that by taking the easy route - paying for ads - you are increasing your cost of sales permanently).
Talking about cost of sales... Know your TRUE cost of sales! In your early days it didn't really matter, but as you grow it really matters. We owned a safari lodge many years ago that was ranked 7th best out of 322 lodges. One day we did a cost of sales calculation and it was a shock. We were literally paying for clients to visit us (once you factor in commissions, brochures, promotions, staff, electricity, wifi, accounting cost, time on emails replying to customer, etc). It was a real wake up call and ended up swallowing a lot of cash until we turned it around.
Make cheap mistakes. Internally and externally. If you are reading this you know me from linkedin... and if you paid any attention you might have seen some posts by me from time to time announcing a new idea, service etc. What I am doing is actually testing demand for the idea. What you don't see is me picking up the phone to those sending me a message or engaging with my post and testing if there is real interest or it is just social media engagement fluff. Want to launch a new product? Test it with a free landing page with ability to purchase etc (at checkout you can reveal that the service is not ready but wanted to test if someone was truly interested... obviously without taking their money!).
Be prepared for a change in roles. I personally love (and am quite good at) launching and early days commercialisation. When you grow your business your role and responsibility will change dramatically from the innovator/creator to and administrator and HR manager as well as financial controller. There isn't a shortcut around that. Be prepared... but also be prepared at recognising when it is time to let go of these responsibilites if you aren't good at them or you'll - as I personally have done - sink your ship because you're juggling too many balls.
Enroll in an incubator please. I can't stress this enough. You need your business to go through a proper panel beating. Don't enrol for the funding part. Enrol because you want to be exposed to a good reality check... Not sure where to find one? Ferdinand Mühlhäuser 🇺🇦🌍 Berlin Founder Institute is a good one (full disclosure: I did this one - 4 months of hell - and hated it but I grew so much out of this experience and my businesses is really taking off thanks to them!) or Keith Jones SW7 SaaS incubator. Find one that is not a year long program and that has some really experienced people running it.
Don't search for an investor if you can. Focus on cashflow, profitability and ability to tap into financing. Financing is much more readily available and you aren't diluting your shares.
That's all for now. Hope it helped.
And if you decide to stay small and nimble, that totally cool too: whatsapp had 51 employees when it was bought for 20 billion :-) - Find the size that is right for you and that you enjoy. Much rather grow slowly and enjoy my work than being wildly succesful but completely stressed out.
Have a great week....I'm going back to my nice coffeeeee
