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3 Fundamental Shifts You Need To Make To Scale Your Business

Growing your business is fun -- but if you stay stuck in fun, you'll never get the scale that could make you great.
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It's one thing to grow your business (and a lovely thing it is, too)--but it's another entirely to scale it.

Scaling--the ability to grow rapidly and at a compound rate, compared to the arithmetical, two-plus-two-equals-four rate of growth that non-scaling businesses achieve--requires new skills from the business' owners and managers.

Many business leaders never achieve scalable growth because they fail to realize that they need to change their attitude and approach toward what they view as irritations at best and 'growing pains' at worst. Here are the top three areas in which I see leaders hobble their organization's growth by failing to recognize the need for a personal change in perception:

1. Hiring

In the early, Fun stage of growth, hiring people is typically a highly personal, intuitive, and largely enjoyable, exercise. During Fun, founders do most of the hiring themselves. And in doing so, we hire people who remind us of ourselves. We hire people who lack skills but have the right attitude, knowing we can spend the time necessary to mentor and coach them. We hire with little or no consistency in job specifications, individually negotiated compensation packages, and idiosyncratic variances in titles and responsibilities.

Then, at some point--usually when the organization hits the growth spurt I call Whitewater--hiring is no longer fun any more. The rate of hiring accelerates. We might previously have hired a few people each year, but now we're hiring people every month. And because we're hiring at speed, we can’t trust our judgment so much, and we don't have the time to mentor and coach those we do hire.

Result? The quality of hire drops. The growing pains of Whitewater are exacerbated by an influx of less-than-stellar employees. The answer is not to see this shift from occasional-to-frequent hiring as an aberration. Now that your organization is scaling, and not just growing, you will always be hiring. So you better, as an organization, get good at it.

2. Process-izing

The second shift that occurs as an organization starts scaling is the need to systematize what until then has remained un-systematized: codifying and standardizing the patterns and dynamics that underlie how the organization operates from day to day.

Making this shift is typically agonizing for the visionary founder-owner. While their young, vibrant business is growing in Fun, systems and processes are anathema. If instituted too early, systems and processes slow down the organization's growth and staunch its creativity and flexibility.

Typically, and rightly, the founding team resists the installation of processes from the outset. This intuitive reaction against systems and processes serves the company well during early growth, but stalls the organization's ability to scale at the crucial moment in Whitewater.

How do you know if your resistance to systems and processes has become problematic for the growth of your business? Look around at your most productive people. If they have ceased being productive and are instead spending most of their time instead fighting fires, then you've hit Whitewater. You need to review your stance toward systems and processes.

3. Focusing on the internal customer

Remember the relative ease with which you used to serve your clients and customers? An order or an enquiry would come in, and you or someone on your team would spec it out. Someone would order whatever raw materials were needed, someone else would add value in whatever way was required, and finally you'd ship your product or deliver your service to a happy customer.

Such was the relative simplicity of growth--an almost seamless flow from initial enquiry to delivered product or service. Now that flow is a distant memory. Your team is frequently dropping the baton as the customer's order is handed from department to department, from team to team, from individual to individual. You spend most of your time refereeing disagreements about where or why an order is stalled or inefficiently processed.

What was previously a tight, focused team now appears to be hunkering down in silos rather than working harmoniously together. The reason? Now that your business is scaling, not just growing, the supply chain from initial enquiry to happy, fulfilled customer is too complex to self-manage. And simply focusing on the needs of the external customer isn't enough to overcome that complexity.

If the groups and teams in your organization are frequently dropping the baton as a customer or client's order progresses from initial enquiry to completed sale, then the time has come to focus on the concept of the internal customer--not just the external customer. Your company’s functional groups need to learn how to exhibit the same respect and attention to the needs of their internal customers as they do to your external customers.

Otherwise, you'll be stuck in mere growth mode, and the complexity of scale will beat you, every time.

Download a free chapter from Les's WSJ best-seller, "Predictable Success: Getting Your Organization On the Growth Track - and Keeping It There" to learn more about how to move from growing a business to scaling it.

IMAGE: Getty
Last updated: May 29, 2013

LES MCKEOWN | Columnist

Les McKeown is the President & CEO of Predictable Success, a leading adviser on accelerated business growth. He has started more than 40 companies and was the founding partner of an incubation consulting company.

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.



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