Can you scale your business (and do you want to)?

So, you’ve been running your own show for a while now.

You have services/products, customers, staff and most of the other accoutrements that go with a business and business life. You want to grow but you just seem to be missing that ‘spark’, that one thing that could help you leave the ground and take off.

“If we could just land that one BIG customer, we’d be golden.”

For many businesses that I’ve worked with, actually, this is the last thing they need. Why? Because this new customer would overstretch them so much that they’d be in danger of failing before they even leave the starting line.

Think about it for a second. Do you have the capacity to fulfil new orders should you get a rush? And, could you do this while still selling to others AND servicing your existing customers? Could your cashflow handle it? It is nowhere near as simple as it seems.

One of the reasons many small businesses never become big (or bigger) businesses is because they don’t know how to scale. To me, scalability is the number one objective of any growth model that most businesses should look to implement. With scale comes endless possibilities and potentially a significant increase in value. If that’s what you want.

Is scale for you?

Some businesses understand scale well enough to know that they want nothing to do with it. That may sound counter-intuitive but if you’re running a business that you literally don’t want to grow beyond a certain point then scale is of no interest to you. These are typically what we’d categorise as ‘lifestyle businesses’ where the owner/workers are prepared to take on a certain amount of business and no more as they know they won’t have the resources to handle it. Their business won’t grow but that’s just fine with them.

There are also businesses where a lack of scale is also a business strategy; it creates demand. We can all think of brands where goods are only made to order and they make you wait an eternity for them to arrive, even in today’s world of instantaneous product delivery gratification. This is not done because of some incompetent process model, it’s done to create competitive tension, which in turn leads to higher prices and, of course, higher profits.

However, if you put lifestyle businesses and certain ‘uber’ brands to one side, the rest of the business world craves and needs scale to survive and grow.

Scale isn’t just more cash from revenues

The first thing to understand about scale is that it’s different for everybody. For instance, it can be significantly more logistically complex for product businesses versus service businesses. Conversely service providers have many more ‘unknowns’ to manage as scale for them is usually based upon people, ‘activity rates’ and the dreaded ‘bench’.

One thing to understand for sure though is that it’s not just about sales. Yes, sales (and of course marketing) will have an impact on growth as you would expect, but real scale is where the ability to sell more and delivery, meet.

Lots of businesses are in denial about this. Their fixation on sales cashflow leads them to overlook delivery at scale as psychologically they’re content that the business is growing (“We’ll sort out how to deliver this lot later”). However, if you don’t have a plan for scale this will seriously come back to bite you in the end.

A Model student

So, how do you go about understanding what scale means to you? You model it.

It’s possible to model more or less every business in terms of deliverable scale in order to see where growth bottlenecks, lack of/poor process, cashflow, resources, single points of failure, reliance upon suppliers, logistics and a host of other potentially idiosyncratic items that may hamper you from supporting growth in your new sales just when you need it most.

You’ll be glad you did. I have never completed this exercise without the team it was delivered for learning a huge amount about how the significant growth of their business would change virtually everything about how their business works. This is how it should be; there is no ‘switch to flick’ to go from being a small to a medium size business (or bigger for that matter). It’s a constant process of evolution and learning along the way, and along with it I can guarantee you that your definition of scale will also change from what you consider it to be today.

Don’t be in denial about overtrading. Scale is what every business wants but if you’re not ready to handle it, it can become very problematic.

So, model your future, and stay in control!











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