“How do 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 with 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.
But simply growing the top line and expecting the business to follow suite is a trap that many (now) experienced entrepreneurs have fallen victim to. I you haven’t established a foundation for scale, the house of cards you’re launching is bound to fall.
There’s a combination of strategies that go into building a business that can scale and do it profitably – from your unique selling point to the way you setup a team to deliver. It might seem like an insurmountable task, but businesses do it every day and it can be boiled down to just a few things to get right to give you the best chance of making it.
So, what are the 5 most important things you can do to build a solid foundation to scale?
#1 Picking the gap
Are you really here to build another mouse trap?
The very first question I ask when I speak to a business wanting to scale is – ‘what makes you unique in the market’.
I’m invariably met with a few ‘umms’ and then a ‘we really care about the results we get for our customers’ or ‘we can do the same thing but at a lower cost’ or some such.
Well guess what, I have news for you.
Nobody sets out to do a terrible job of servicing their customers.
For sure, that larger firm you left to start your own gig has probably had to make some tough calls on their customer experience to stay profitable.
As they’ve grown they probably don’t have the startup mentality and high performing team you have in your early years.
But they aren’t sitting around a table cackling evilly about how they are going to do a rubbish job and get paid for it.
If you are planning on just starting another consulting services business doing the same thing everyone else is doing, rebadged, at a lower cost and with improved services, let me tell you where you are going.
High quality typically requires a higher cost (no matter what rainbow you’ve been sold on by that cheap outsourcing company) with a low price = The Dead Zone.
If you want to raise above the competition, turn heads and really generate scale, you need to be be doing something different.
Consider what the market is doing today, where the market will go in the next couple of years, then pick the gap that needs to be filled.
Even better – understand your purpose and build a business around a fundamental shift you want to create and a person or persons you want to impact.
This exercise is really about developing a brand led business not a skill or product led business as so many of us that “leave corporate” tend to do.
A great example of a brand led business, driven by purpose to change how an industry functions is Aureus Financial. Jackson, Sam and the team have spent a great deal of time in understanding the shift in the industry they want to create then building a business around that.
It’s a fundamental change to how you may be used to building a business and one that will guarantee you stay relevant and competitive for years to come.
#2 Grow revenue while maintaining profit
OMG you are making cash hand over fist! Revenue is pumping and you’re ramping up the team.
But with that big team comes a killer overhead.
Keep this in mind – revenue is vanity, profit is sanity and cash flow is reality.
As the business scales, the team grows and so do the overheads. And in ways you may not have thought of.
A larger team may require more non-billable admin staff and managers. It might also require larger and more expensive office space to create that cool agency vibe that will attract the top talent. Not to mention recruitment has now become a major project with its own cost centre.
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.”
Another, perhaps more insidious impact to profit is “utilisation”.
A fancy sounding word for what basically means ‘how much time your team spend on the bench vs delivering actual billable work”.
As the team grows it becomes inherently more complex to keep the team scheduled into client work and hold them accountable. As the work grows, people can feel overwhelmed with indecision and end up delivering less.
Project management and resource planning are something of dry topics but essential to the stewardship of a success business.
You’ll need to structure your client delivery to maximise margin then monitor that margin closely. Likewise you need to have a clear view of the teams capacity and optimise their schedule to lower that overhead, non-productive cost in your organisation.
A team spending half their time on the bench, blown up to scale, is a massive drag on your bottom line and quite often where the house of cards falls down.
Thankfully we cover this in a more entertaining fashion in our blog, “The Top 5 metrics every agency needs to measure for growth’.
Ultimately if you are not monitoring your costs, keeping projects profitable and the team optimised you will be at the very least missing a huge opportunity to generate profit that can be fed back into growth (or rewarding yourself for the hard work) and at worse, seeing your hard work come crashing down when poor cash flow prevents
#3 Empower a team to work for you
If you want to scale a services business, it goes without saying you’ll need to hire a team to deliver for you.
But simply hiring and expecting they’ll do things like you do is a trap that will lead to certain collapse.
One of the reasons you may have started your business to begin with is the fact that you are good.
Like really good.
You’re a creative marketing genius with a knack for inspiring a team that actually understands what your clients are going through day to day.
Sales are a breeze because you connect at such a deep level with your clients. You’ve been there. Delivery is easy as you leverage years of experience and (let’s face it) hustle above and beyond the call of duty.
But when it comes time to scale, there’s a bit of an issue.
We haven’t master cloning yet.
Sure, we’ve cloned a sheep or three, but we’re some way off building an army of you to grow the business upon.
And as the business grows in complexity you’ll find you can’t master every discipline.
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.
I’ve found business owners tend to fall into one of two categories – they either treat delegation like a spot of ‘two up’ and hope the team will do the right thing, or go full on control freak and micro manage. Neither method works in the long run.
The challenge you have is that there’s no set methodology, no basic template, no single go-to system for everyone to follow.
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.
But what does that even mean?
Well you cannot expect a team to just deliver work ‘like you do’. You have to give them the steps and the tools to follow to create the customer experience you want.
It’s all about systems – people, following a process, using a platform to achieve a result.
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.
Then, work out who will deliver each part of that experience – what are the responsibilities, skills and experience required to do sales, or a particular part of delivery.
Then a platform is your multiplier. For sure you can do just about anything with paper and pen or a spreadsheet, but once you get into more advanced technology platforms you can start to automate parts of your business and sharply reduce the cost of work while increasing the volume of work that’s being delivered.
The thing about technology is that is has one other really important benefit – data. Or more specifically reporting on that data to give you the insights you need to make smart decisions that will drive your strategy for growth.
#4 Know your numbers
Feel like your business is a black box?
Being able to make informed decisions around marketing strategy, sales process, project delivery and staff planning is absolutely paramount to scaling your business.
Your small team and client portfolio is growing fast and it’s getting harder and harder to keep your finger on the pulse of every single project.
Hopefully you’ve taken our previous piece of advice and systemised your business to the point you feel confident the team can deliver things for you. But that’s only step 1.
Being able to measure and hold the team accountable to the key success indicators of your business is critical.
Also, like we mentioned earlier, your profit margin is at serious risk of taking a dive as you grow the team. Being able to pinpoint where the problem lies and address it proactively is key to maintaining profitability – and thus your ability to continue growing the team.
So knowing what metrics you need to track and creating the habits in your team to enter the data and check the results regularly is a vital part of scaling your business.
To make it easy for you, we’ve got a list of core metrics to track in our recent blog, “The Top 5 metrics every agency needs to measure for growth’.
#5 Technology, the great multiplier
Technology automation, whether its software and workflow, robotics or advanced Artificial Intelligence, is the next ‘Industrial Revolution’ of our time.
Till now, everything we’ve covered is elementary, good business practice. Entrepreneurs have been picking market gaps, systemising processes, focusing on profit and monitoring their numbers since business was even a thing.
Over the next decade we are going to see a convergence of social and technological trends that will literally redefine the way we work as a society.
The businesses that leverage this almighty revolution today are the ones that will lead the market tomorrow.
And it’s not an expensive prospect anymore.
In fact, the types of sales and project delivery platforms that were only available to large corporations, costing multiple $100,000s to setup, can now be purchased on a monthly licence for less than $100/month!!
These platforms have a raft of benefits – they allow you to work from anywhere (potentially cutting office costs or even traditional ‘regional’ sales boundaries period), automate mundane tasks that used to suck up your team’s time and produce keen decision making insights across huge data sets that would normally have taken months to process.
But it can feel like a bit of a minefield trying to work out what technology platforms are right for your business, how to integrate them together and then how to set them up with the team effectively.
Thankfully there are people that can help, including yours truly at Scale My Empire (shameless plug).
Going only a few years into the future, we’ll start to see Artificial Intelligence (AI) become pretty familiar and infiltrating every part of our business. Provided we don’t give it keys to the nukes, AI can literally change the game of business and free us up to focus on uniquely human activities – exploration, creativity and relationship building.
We’ll align our work, to our purpose.
The future is indeed interesting and those that harness the multiplying power of technology platforms will both highly scalable and in the driver’s seat of the next business revolution.
Prepare yourself for success
Scaling your business isn’t easy, but it also doesn’t need to feel like an impossible task.
While growing revenue, team size, and client accounts will undoubtedly increase revenue, how solid your foundation is will determine if you capitalise on the opportunity or crash like that veritable house of cards.
Make sure you start the business ‘brand led’ and choose your market carefully to make sure you stay relevant and top of mind.
Be prepared for that growth by constantly revising your system, making sure it stays efficient, productive, and competitive. This will assure that your margins stay healthily wide.
Keep on top of your numbers – they can be driving force behind your decisions and the canary in the coal mine.
Also, get your systems automated as much as possible. Technology is the great multiplier that will enable you to do more with less and compete on a stage larger than you could have dreamed of.
Be prepared for the growth that is about to come your way!
Chief Tech Guru – 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.