“Scaling up” is a popular buzzword these days, especially among online businesses, but it’s often used incorrectly. Scaling doesn’t just mean growth. It refers to a particular kind of growth.
Growing a business just means adding resources at about the same rate you create revenue. Scaling, however, means adding resources at an incremental rate while creating revenue at an exponential rate.
Example: A freelancer charges $75/hour for his service. If he wants to bill more, he has to work more. For every $75 he earns, he has to add more resources (his time). It’s very hard – basically impossible – for him to scale his business.
Example: A software-as-a-service company charges $20/month for access to their tool. Once the tool is operational, it costs them little-to-nothing to activate new users. This means they can scale up rapidly and indefinitely because they don’t have to add resources in order to collect more revenue.
Scalability is a spectrum. Some businesses are easier to scale than others. An ecommerce store is easier to scale than a web design service, but harder to scale than a software tool.
Should You Scale?
Scaling is attractive, but it’s not right for every business.Before you decide to scale a business, you have to ask yourself why. Why do you want to scale a business? What do you want your life to look like that requires a scaled business? Click To Tweet
Before you scale a business, ask yourself why. What do you want your life to look like that requires a scaled business?
For instance, a consultant who can earn enough to provide for his idea life without working many hours may not need to scale his business. Instead of scaling up, the right path for him may be to keep his business small, lean, and easily manageable.
So first you have to decide what you want out of life. Then ask yourself if you can achieve that type of life without scaling. If you can, there’s no reason to scale.
But if your ideal life requires a scaled-up company, you’ll want to do it in the most efficient method possible (or convert it something more scalable). To do that, you’ll need to build these essential components into your business.
The first step to scaling your business is to break down all of your challenges. Identify bottlenecks, friction points, or labor-intensive and repetitive tasks.
Then ask yourself if they honestly need to be done. Do they align with your strategy? Can they be done better? How? Or could they be eliminated?
Once you optimize your tasks, turn them into systems that guide what’s left. Successful companies that scale learn to systematize their complex tasks by creating repeatable processes and workflows.
Systematization frees up your time so you can focus on strategy, growth, understanding your market/customer, and innovation. Systemazation also makes your business more valuable if you ever try to sell it. New buyers like seeing formal processes in place to guide the team’s work.
Recently, our founder Meryl Johnston gave a talk at the Accounting Business Expo conference in Sydney. She explained how to systematize a business based on our approach at Bean Ninjas. We like to start with the big picture and work downwards by following these steps:
- Identify potential areas within your business to systematize. This could be product (bookkeeping, in our case), marketing, finance, etc.
- Break each area into processes (e.g. Generate weekly finance report)
- Break each process into step-by-step procedures and record a video demonstrating how to complete the procedure.
- Document the procedure in a Google Doc and then assign someone to test.
- Finally, load into a procedure tool (we use Sweet Process).
- Set a review date to maintain and update the procedure. This makes sure our procedure never fall too far out of date as things inevitably change.
In order to scale, systematize everything you can. Your systems should govern the entire customer lifecycle – from the customer’s initial awareness of your product through service and billing.
Turn the key areas of your business into simple processes that give your employees the tools they need to stay engaged and complete tasks efficiently, without interruption.
Once you’ve turned your tasks into clear, repeatable systems, the next step is to automate as much of it as you can.
Leveraging software and technology is the best way to perform more work and serve more customers. Implementing automation can have a powerful impact on your business.
The most obvious benefit of automation is time. By automating, you’ll gain time to focus on your broader strategy, business growth, and new ideas. This vastly increases your output without increasing your resources (the key to scaling, remember).
Automation software gives you access to sophisticated analytics to measure your business’ performance. This information rarely exists when you do the work manually. For instance, an automated lead generation funnel can tell you precisely how well your landing pages and offers work.
Automation also lets you better use your human capital. Yes, you could reduce your staff by automating some of their work, but businesses find the most value in automation by redirecting their team to tasks that require a human mind. By automating menial tasks, you can give your team more engaging responsibilities that require creativity, intelligence, and critical thinking that software can’t replicate.
Here are just a few ways businesses use automation to reduce their workload:
- Manage and prioritize support tickets.
- Subscribe/enroll or unsubscribe/un-enroll customers.
- Organize and sort contacts and customers.
- Manage projects and tasks.
- Identify opportunities and leads.
- Move, transfer, and manipulate data.
- Move prospects through your marketing funnel.
- Alert your teams to tasks that require manual attention.
- Turn raw data into insightful analytics and build reports.
Don’t be afraid to find your own ways to automate your tasks. You might even consider building a custom tool to handle your unique needs.
All businesses depend on people, but not necessarily more people. Instead, you need the right people. You need high-performing people who care about their work and the company; people who invest themselves in their job.
Hiring people who will help you scale can be challenging because their jobs should change over time as the business changes. For example, you may hire someone who’s adept at managing calendars. But that person also has to be able to help you transition to an automated calendar management system, and then find other ways to add value to the business.
We like to hire people with entrepreneurial mindsets because they help our business grow, but there are some potential risks, like their appetite for risk-taking and being able to keep them around long enough.
Entrepreneurs strive to grow, so you should retain them by giving them the space and tools they need to grow the business. It helps to build their personal and professional goals into the company’s broader goals. For instance, if they want to live in a radically different timezone, find ways to structure their work to accommodate.
If you do it right, your people should constantly create solutions that eliminate their own jobs (at your direction or their own). They should be focused on growth and actively look for ways to make their own jobs easier, reduce repetitive tasks, and turn complex tasks into processes that can be performed by anyone.
It’s tough to find people with the right skills, dedication, and work ethic to help you scale. If you find them, hang on to them. Pay them in equity if you must. Invest in their development and growth so they continue to push your business.
“People are the backbone of the business, so invest in their growth and development,” says Zach Cutler, founder & CEO, Cutler PR. “Enroll employees in online courses to expand their skills and send them to conferences and industry events to keep them informed and connected. Show employees the potential career paths and the opportunities available within the company to keep them motivated and working toward new goals. When people grow and develop, so does the business.”
When you’re growing a business, it’s easy to become distracted by new people, opportunities, and ideas. You might want to develop a product because one customer promised to buy it, even though you aren’t sure you could sell it again. You might offer a consulting service to make some cash today, even though you know it won’t scale.
Or you might make the worst mistake: Diving into a new business opportunity that’s completely unrelated to your current business.
Trying to move in too many directions is almost always a recipe for disaster and it certainly won’t help you scale. It takes you away from core projects and tasks, taxes your cognitive load, and forces you to spend resources on things that don’t address your business’ primary purpose.
If you devote yourself to too many things, you’ll fail to do any of them well. You’ll waste time building new systems and processes, creating new automations, and training your staff. You may even need to hire new people to address new needs. Investing in so many new resources is the opposite of scaling. Ultimately, you’ll rob yourself of the momentum you need to grow.
One of the ways we maintain our focus at Bean Ninjas is by not allowing other people dictate our schedules. We find that if you’re constantly in a mode of responding to emergencies, it’s easy to lose track of your priorities.
We do this by structuring our business to reduce emergencies and planning our workload ahead of time. Automation and systemization are important here. They allow us to schedule our own days with plenty of time to focus on the business’ strategy and goals.
Focus on the key activities that move your business forward. This means focusing on your business model, value proposition, customer, and marketing strategy and balancing both short-term cash-flow with longer term innovation projects
The final component of scaling a business is leadership. You need someone in charge who can see what a scaled-up version of your business looks like and drive the rest of the company toward that goal.
The leader needs a forward-thinking vision. They should divorce themselves from the day-to-day work of the company so they can work on the business, not in it. They should come into work every day to build something that’s greater, leaner, and more efficient than the day before. They should inspire the team to find ways to automate and streamline their own jobs.
We try to create this type of leadership at Bean Ninjas by making our values and goals part of our everyday work.
We held a whole team workshop where we asked everyone to contribute their ideas about our mission statement and values. We then created a hard copy of our mission statement and values and sent a copy of that document to everyone so it wouldn’t get lost in a computer folder somewhere. Each person can hold it in their hand and see it every day.
We’re also transparent with our team about our two- and ten-year goals and update each other on our progress every week. This shapes our decision-making so we’re always pushing toward our goals.
It also helps if the leadership team are being rewarded for results which align with the overall goals of the company.
Most importantly, the leadership needs patience. Sometimes today’s opportunity is a distraction from the ultimate goal, even though it can help the company make this week’s payroll. Leaders should exude the focus we mentioned in the previous section.
In order to scale your business, you need a strong infrastructure in place to handle a large volume of work without demanding too many resources. If you build these five essential components into your business, you’ll have a great business!
She has travelled to 31 countries and regularly visits her Tasmanian homeland. She is an avid surfer and yogi and spends her time between the Gold Coast, Australia and Argentina.