“How can I scale my empire?” If you've ever asked yourself this question, then keep reading to learn about the top 5 challenges entrepreneurs face daily. You may just discover what's holding you back.
Scalability is your business's capacity to cope and even thrive while it is experiencing significant growth. If your business can maintain or even improve productivity, efficiency, and overall performance while expanding, then your business is scalable.
There's no question here: in order to stay alive and relevant, your business has to be scalable. But, there are inevitable challenges that all businesses go through no matter how adaptable and relevant they remain. And, many of these challenges can cause even a growing businehis forss to crash and burn.
If it's not scalable, things can get too big too fast and end up crashing down around you. That's not exactly a good problem to have!
If you don't know where you stand finance-wise and you're not clear on your growing team's feelings and commitment, you run the risk of not only losing your environment but big client accounts as well.
These challenges, which we'll get into in this article, effectively seem as though they'd require you to be working at your business 24/7. If you're not prepared with the proper systems in place, you'll be running around putting out fires all day.
This is not why you went into business, right?!
So, what are these most grating challenges and how can you best deal with them?
#1 Growing revenue while maintaining profit
Something's happening! Something that you thought would never happen fast enough.
You and your team have been grinding it out, busting at the seams with innovation, creativity, and sheer burning desire for the past few years, and it's happening at last.
Your revenue is finally growing at an unexpected and significant rate.
This is obviously a result of a larger clientele, among other things. So, not only is your income growing but so is your team—someone's got to manage all of the increasing workload.
You might even consider setting up another office interstate to take advantage of all of the new opportunities. Your business is expanding just as you'd hoped.
On paper - mostly your Profit & Loss (P&L) reports - your numbers look solid but there's a lot of extra time and effort that goes into dealing with growing revenue that you may not have expected.
Cash flow, on the outset, never used to be a problem, especially when your numbers are going up and are showing you to be in the black. Yet handling the cost of that revenue is not a walk in the park for a growing business.
While handling increases revenue seems like a good problem to have, the sign of a healthy business lies not necessarily in its top line but in its margins.
Related Article: Maintaining Margins as You Grow: Why It’s Important and How to Do It
We like this statement from Vinny Antonio which John Hall shares in his Forbes article on the challenges of fast-growing companies,
“It's almost a full-time job staying on top of who owes you what and who you owe, and then prioritizing those payments. All the while, you're pushing for more growth, but with that comes additional expenses—most notably, your executive team.”
As we go through the rest of this article, keep in mind a fundamental question on the efficiency required to scale your empire:
Is this system we have in place efficient, productive and competitive for the new, 'mid tier' market we are entering? Does our revenue justify the bigger problems that come with the extra money?
These questions may be tougher to answer than you think.
#2 Getting paid by automating your client billing
If you're expanding your business that usually means your client base is also growing.
This is good—more and more people recognize the value you bring to the table. Some of them even put their own credibility on the line to back you up or refer you to other potential customers in need.
The exponentially growing number of clients can quickly get out of hand, if your client billing system isn't scaling with your own business growth.
It may be time to chuck your good ol' trusty spreadsheet for something a bit more sophisticated. A spreadsheet might have been handy on a smaller scale but with business growth comes a definite need for an upgrade.
Don't take this challenge lightly or put it at the very bottom of your list of priorities. This isn't simply about having fancy tech or pretty and color-coordinated letterhead.
If you've been operating on a system that could handle a dozen or so projects, try and visualize that system incorporating, in turn, a dozen or so clients, each with a handful of projects of their own.
That's pages and pages of timesheets trying to be lined up with project cost codes, and then you have to work out what needs to be billed. Can your billing system easily assimilate?
With this type of basic system, a bill can be all too easily missed. Sure, you'll be able to recover it but you'd have to have an awkward conversation with the client next month. And, now your cash balance isn't so balanced anymore…
Can you see how this kind of inefficiency can be quite costly? Not just in terms of awkward situations but the overhead alone just in trying to bill clients is insane!
Billing automation is the key to solving this.
In a growing business, the types of jobs you take on, the varying schedules of payment and the effort required to generate your client bills can be overwhelming. With a billing automation system you can be billing out your work at the click of a button or on a regular schedule (great if you use retainers for your clients).
Managing your payment terms after the invoice is fired off is just as important.
Again, another process that can be automated is your client billing follow-ups. This not only saves potentially hours of emailing or calling each week, but makes sure no bills fall between the cracks.
Related article: 10 Common Recurring Business Challenges: Learn How to Overcome Them
#3 Letting go and empower others to work for you
Now that your business is growing, you have to manage managers. It's become practically impossible to oversee, let alone have a hand in, every part of every project.
There's no way of getting around it: there are going to be some things that you'll have to let go of and trust others to handle for you.
It's time to let go of your inner control freak (to some degree)!
Alternatively, your business is most likely experiencing compound growth, creating more tasks to manage and people to coordinate. So, it's highly unlikely that everyone will know exactly what to do in every situation, just the way you like it.
On the one hand, you can't manage everyone in and every aspect of your business. And, on the other hand, everyone will have their own way of doing things, their personal system to follow.
Back when you had a finger to every pulse of your more modest business, you could easily monitor everything, even if you weren't directly involved in every stage of a project.
But, now the challenge is that there's no set methodology, no basic template, no single go-to system for everyone to follow.
And, with the exponential growth your client list is seeing, you'll have an equally exponential variety of demands and/or requirements.
You might begin to see things fall through the cracks like work being incomplete or released before going through the proper processes of editing and approval. This inevitably leads to some clients being disappointed.
Losing credibility at this stage of the business game would definitely be a heavy blow and a tricky (but not impossible!) defeat to come back from.
You have to systemise your business to empower others to work for you, in the way you envision your business should serve your customers.
Begin to brainstorm on the kind of overall system you can put in place to help coordinate your various projects with the inevitable and varying methodologies of your people.
Think about the customer experience you want to create - what are all the steps required for someone else to recreate this without you being involved.
With that, how do we create accountability from every employee at every stage of a process?
It's not just great process that you need, but people as well.
Putting in the time and capital to hiring a good management team is anything but risky.
Find people that can not only manage the work of your business but also effectively take your quantity and turn it into quality. This leaves you free time to work on your business and not in your business.
And, trust your managers—let them do their job. Not only would it be confusing to your employees if you were to constantly “go over” your management's heads but you're not allowing your employees to instill trust in your management. This makes it difficult for your management to feel like they can, in turn, trust you.
Related Article: 5 MUST HAVE metrics to measure the success of your services business
#4 Forecasting to get visibility over your growing Empire
As a growing business, you might find getting clear visibility over your sales, team’s productivity and cash flow, is becoming frustratingly difficult.
According to your revenue and even your Profit and Loss sheets you're in the black—great!
But are you actually making the margin you could be? The key is knowing if your projects themselves are profitable. This is actually fairly important because, if you want to keep growing, knowing exactly what goes into carrying out a project is fundamental to stably scaling your empire.
If you can understand what works for making your operations not only functional but efficient, you can learn where to invest most of your time and effort and even where you can afford to cut back.
Despite growth, you can continue to invest in your business in a way that is modest for your pockets but effective in production. This keeps your margins nice and wide--a truly healthy and profitable business.
Related article: Five Ways to Boost Your Business’s Ability to Stay Competitive
Remember when we talked about systems and processes?
Well, the downfalls of not having a proper system in place to manage every project at all levels will definitely show up on your accounting ledgers, despite the positive feedback from your P&L.
Now, if you're running a growing enterprise then you have most definitely set up some company metrics already. But, again, you have to gather all of the data from each individual working on a project.
Chances are they have their separate way of accumulating data and using your metrics. Deciphering all of that from every person in each project is, no doubt, time-consuming and strenuous (depending on how easy it is for you to decode your people's personal systems).
After all of that, your data may not even be all that accurate. With growth comes complexity and this is definitely showing up on your balance sheets, making it difficult to even try any kind of financial forecasting.
You don't need visibility merely for visibility sake.
Instead, you need visibility because knowing exactly what’s going on in your business and, most significantly, why it’s going on is the key to continued growth and success.
Visibility is your ability to see what lies ahead for your business. Forecasting, then, is your ability to call some pretty important shots based on that visibility.
In other words, if you want to have continued success, then what you see for the future of your business better be as accurate as it can be.
Don’t merely rely on the P&L. Rely also on other accounting documents like your balance sheet, and your income and cash flow statements.
With these financial reports, you’ll be able to better gauge how your profits are coming about based on actual operations. You can also create for your business a system that can truly help to crack down on that project profitability factor we talked about earlier.
To help make sense of the numbers make sure that you’ve got experts on your team whether it’s an outsourced Chief Financial Officer, or a trusted accountant and bookkeeper.
Knowing these numbers can help you put in place newer and better metrics to help you better scale your empire.
#5 Team Productivity and Culture: They can Drastically Alter Your Scaling
When you think of your growing team of managers and employees, the last thing you want to be thinking about is overhead. But, it does take quite a bit more resources to manage it all.
There’s a lot more activity—a nice way of saying problems—where timesheets, payroll, and all of the other expenses are concerned.
You absolutely need someone to manage the HR side of your operation. This calls for a lot of extra administrative work, so you’ll likely need not just accountants but admin staff as well.
Then, there are the people and culture requirements. You’ll need someone dedicated to managing all of the expectations, demands and potential conflicts that come with a growing team.
In your growing business, a lot of your successful scaling will come down to this one challenge: team productivity.
This factor alone can change the tide for all of the other challenges on this list. How so?
People, all with different strengths and backgrounds, working together cohesively while valuing and respecting sound and already-established principles will attain business goals and create new innovations.
In a recent interview Virgin CEO Richard Branson shared the following:
“My philosophy has always been, if you can put staff first, your customer second and shareholders third, effectively, in the end, the shareholders do well, the customers do better, and yourself are happy.”
Makes sense, right?
But, if you’re just now experiencing the growth of not only your revenue but your team as well, you may be stepping out into new territory and don’t know how to get that synergistic vibe going just yet.
In fact, you may feel like that hustle, that euphoria of the daily grind is quickly dissipating in the expanding team your business is generating.
The way to keep team productivity buzzing and the culture at your office alive is to stick to your principles and remember the values your company was founded on.
Seems a little cheesy, no?
Well, people tend to work a lot harder and devote not only more time and effort but also heart and passion into what they’re doing when they know why they’re doing it.
Why did you found the very business you’re working to keep thriving in the first place?
If you hire people based on the shared values and common goals they have with the company then it pretty much doesn’t matter what kind of work you throw their way.
If you treat people with the same respect and trust that you expect then you’ll find it quite easy to ask your employees for just a little bit more.
Aligning what you believe with what you say and do is the quickest and most organic way to create harmony within your business.
Prepare yourself for success
Transitioning from small to medium is not going to be easy but the process can be simple.
While growing revenue, team size, and client accounts will undoubtedly cause you and your team to stretch itself thin for a little while, you can see the benefits of a constantly growing empire.
Prepare yourself by having your founding principles, an efficient system, and the right priorities in place.
Make sure your vision is clear and that your team values and respects it. Have a functioning system at every stage of a project with accountability to follow it.
Most importantly, be prepared for the growth that is about to come your way.
Your current business success may make it seem like you’ve got it made.
But, don’t forget the grind, the teamwork, the responsibility, and the sheer determination it took for your business to get where it is today.
Looking for an in-depth and step-by-step guide to scaling your empire? Download our free digital transformation checklist to assess your company’s technological readiness to truly transform into a digital enterprise.
About the Author
Scott Gellatly developed his reputation as world leading cloud technology implementer and small business enabler in his previous businesses, Bollo Empire and TrackZEN. He’s now taking his roots in enterprise architecture and project management and bringing it to his passion for helping Founders to scale their business.LinkedIn: linkedin.com/in/scottgellatly