When you're building your business, it seems everyone wants to offer up their two cents about the best way to scale. While some advice may be worth considering, how do you ensure you don't fly too far off the tracks chasing the next thing that will help you achieve scale?
Rapid growth solves cash flow problems
Growth does not solve cash flow problems, cash does. As founders feel the pinch of growth and the company's ability to fulfill on its promises to customers in a timely manner, the first inclination is to hire. A novel solution, but one that will eat up profits quicker than a whale in a sea of plankton.
"Most fast-growing companies hire fast and fire slow," said Todd Belfer, managing partner at Canal Partners. "I say do the opposite. Hire slow and fire fast. You know when you have the wrong employee so don't waste time trying to turn them around."
Aside from beefing up the staff, growth, in general, stresses the business's resources, staff, finances, quality controls, supply chain, and ability to market. When a company grows before it's actually ready, challenges abound, particularly if it's built upon a faulty structure. As such, you have to be sure the organization's structure is ready to endure this added stress.
Rapid growth with the wrong people in the wrong seats driving on the wrong path will throw your business into a tailspin. Spend time working on your processes, tightening up your operations, getting your finances dialed in so you can remain cash-flow positive as you make calculated steps towards growth.
Similarly, hone in on growing in balance. It's alluring to stack up the sales team, after all, sales are the lifeblood of most organizations, but doing so can lead to imbalance.
"Oftentimes you see companies become very sales driven and dominated by sales," said Jon Miller, CEO and founder of Engagio. "Or they become very engineering dominate, because they're product focused. But building a great, long-term, scalable company is very much about building in alignment and growing everything in lockstep with everything else so things don't get out of whack."
Casting too wide a net
Diversification may be a great investment strategy, but when it comes to growing a business, focus pays. This is true for the products and services you offer as well as leads you pursue.
"Most people try to launch with too much product," Belfer said. "I always say launch one thing and do it really, really good. You can add to your product later. It's much easier to sell to an existing customer than to a new one."
On that same token, it's tempting to "take any sale you can get," particularly in your early days, but this leads many business leaders to cast too wide a net. As a result, many businesses end up with high customer churn and customer acquisition costs. Instead, zero in on finding the right customer the first time and building that relationship.
"A lot of companies are fishing with a net. They throw the net out there, start catching fish, and don't care about care which specific fish they catch, but how many they catch," Miller said. "When you fish with spears, you don't wait around for the right fish to land in your net, you reach out and catch the whale."
In this regards, you become more customer centric rather than lead centric and you're better able to break through the noise by being helpful, relevant and resonant, Miller added.
Go big or go home
We hear it often, "Go big or go home." In some scenarios this is fitting, but in business, casting too wide a net with the vision can do more harm than good. This may seem counterintuitive, but the more narrowed the focus, the better equipped business leaders are to predict, create repetition, and pivot when needed.
"One of the biggest myths to scaling a business is that you have to think big," said Bob La Loggia, CEO of AppointmentPlus. "I know, it's blasphemous to think any differently if you are an entrepreneur. But, my personal experience has been that thinking too big, too early can cause a lot of stress on staff and can create a feeling of hopelessness."
La Loggia added, set a meaningful vision, but think small. Then set 90-day goals that help achieve that vision.
"Celebrate when you achieve those goals, remind staff of how these goals are contributing to your vision, then create the next set of 90-day goals," he said. "By doing this, you'll ensure that everyone stays motivated and the company is moving forward."
Scaling alleviates strain
A common belief among founders is that as the company scales, things should get easier. That with more resources, more employees to help execute on the vision, and more customers to bring in more revenue, the strain on the founder will decrease. The truth is, with growth comes greater complexity for all involved.
In his book, "Scaling Up," Verne Harnish notes complexity grows exponentially with the addition of every new person. Eventually, this complexity generates barriers to scaling.
To win the growth game requires a scalable infrastructure, an effective marketing function, and capable leaders who are savvy in making predictions, delegating, and reinforcing the organization's values and vision through repetition.