Scalability vs. growth.
Remember the days? Your business was just you, an idea, a laptop, and a few other trusted folks. Your organization looks much different today. Its growth is impressive, the burgeoning team is talented, and the reviews are great. So why then do you feel like you are not getting ahead. You are growing, but are you scaling?
Growth, even double or triple-digit, implies a direct progression of current processes. Growth is good, but its linear nature requires significant resources to support and maintain. Scaling, on the other hand, refers to achieving growth and increased revenue without significantly increasing costs.
Scaling, on the other hand, refers to achieving growth and increased revenue without significantly increasing costs.
Is it time to scale?
If you're experiencing diminishing productivity from additional incremental investments, or delaying product releases due to costs, or finding that processes that once took hours are now taking days to complete, the answer may be yes.
A great example of a company that has mastered the art of scaling is Google. While they have an impressive workforce of over 88,000, according to TechCrunch, they have over 2 billion users worldwide on the android platform alone. That's approximately 1 employee for every 23,000 customers they service.
That's an incredible level of efficiency which can't be achieved overnight. Once you're ready to scale, a measured approach will help ensure your success. Startup Genome conducted a report of over 3,200 high growth startups. Their data indicated that the primary cause of failure was premature scaling, impacting over 70% of startups in their study. So, if your operations are at a critical juncture, what steps should you consider to build a scalable business model?
Focus On Your Core
When you put too much effort into running your business, you will not have the time or resources to ensure growth. It is important to focus energy on your products, services, or operations - what you started your business to do. Get back to your core operational strengths and dive into innovation. If e-commerce is your strength, focus there, and use that expertise to create repeatable and predictable systems that will help you expand into new markets.
But what about all of the other work that is needed to run the business on a day-to-day basis?
Review Existing Process
If you are looking to take that next step, it is imperative to review the systems and operations you have in place that may no longer serve you. The workflows and processes that work for a $250,000 annual organization will not be the same when it expands to $5,000,000. By quantifying your existing repetitive workflows, you can determine if steps need to be added or deleted and what outcomes or outputs are desired.
Where to Start?
What is the key to building processes? Start with one process: that one time-consuming, tedious process that has a significant impact on your operations’ quality.
- Choose a process critical to your business, such as billing, that requires the most time/resources
- Record the process
- Outline opportunities for process improvement
- Repeat for the next most arduous process
Right Size Your Scale
Outsource When Possible
As your business grows, you realize that you or your small team can no longer “do-it-all.” However, as your need for support grows, do not jump to hiring more staff, especially for processes that are not core to your business and are not crucial to day-to-day operations.
There are alternatives to adding headcount and overhead. Utilizing contractors and fractional staff for such roles as design, copywriting, accounting, and legal services can provide your organization with top-level expertise and support for vital business tasks with significantly less risk.
Manage Cash Flow
Once an organization starts to grow, it is not unusual for them to significantly ramp up their spending. By keeping the focus on reducing costs and only spending on growth-focused initiatives, you will better position your company to scale and take advantage of opportunities.
Get It Right
Before you look to grow the breadth of your product, get your depth right. Scale-up with your primary offering, before going wide with additional products and services.
Take You Out of The Equation
Small startups are built on the drive and innovation of their founders. How do you grow your staff without diluting the spark? Hiring the right leaders and building the structure to manage a burgeoning team without losing your culture is critical. It is unreasonable to expect that employees will be able to replicate the same passion and energy of a founding team. You can still hire for cultural fit and focus on a building hierarchy that fits your goals and fosters a growth mindset.
Hiring the right leaders and building the structure to manage a burgeoning team without losing your culture is critical.
Identify Opportunities for Automation
Identifying the manual processes that you and your team undertake each day can shed light on organizational growth opportunities. The business operations stack of open-source tools that served you well when you started may be costing you more than you realize in lost productivity. A perfect example is the back-and-forth of accessing multiple information systems or the dreaded "swivel chair".
Another common challenge faced by small startups is the reliance on one-person (often the founder or CEO) to complete a workflow using all of the tools. Productivity can suffer if the tribal knowledge of “how it works” is not shared across the organization.
Neil Patel, Co-founder of Crazy Egg, shared guidelines for automating all of the functions that are not core to the product or service that you provide but are essential to daily operations.
In an Inc. article, Patel outlined the importance of this exercise. “Even though it takes a long time on the front end, this activity will pay for itself in the long term. You'll be able to access data faster, hire faster, market better, pay easier, and streamline operations for a truly scalable model.”
He suggested that certain processes were ripe for automation and can help an organizations scale:
- Cloud storage and organization
- Training processes for new hires
- Marketing automation
- Payroll for rapid processing
- Billpay for automatic withdrawals
Other opportunities for automation exist around the collection of Business Intelligence data (BI) and the development of key metric dashboards for functional areas. Detailed data on sales, customer satisfaction, and revenue can be shared with anyone in the organization. A team that has real-time, actionable data at their fingertips can make more informed decisions.
How to Automate
Once you have identified systems or processes that can be automated, how do you proceed? There are out-of-the-box systems that focus on particular business activities such as accounting, inventory, sales, project management, HR, etc. There are also operating systems solutions to automate individual steps of a process.
How do you eliminate the need for disparate applications that require specific training, maintenance, and significant cost, and that still may not address your particular business needs?
Consider consolidating automation processes organization-wide with a customized, scalable solution that can grow as you do. Customized solutions offer personalization and simplicity for users across the company and reduce staff training and adoption.
They also offer a high level of transparency. Providing data and process visibility gives all employees insight into business operations, thereby increasing enhanced collaboration, communication, and decision making. Custom applications can also address upfront specific challenges that your organization must address, such as enhanced data encryption if you are dealing with sensitive information.
The Right Partner
If you decide that custom software is the best path for direction for your organization, what should you look for in a tech partner? Zendesk shared the following insights regarding working with a tech partner. “Just as a couple isn’t merely the sum of two individuals sharing space and emotional energy, the business partnership also creates a third entity that needs to be considered and cared for in addition to each individual partner’s needs and wants. They’re not a vendor; they’re a partner. The right tech partners will put effort into analyzing and understanding your business, the problems you’re trying to solve, and your specific customer needs.“
It’s All Relative
Regardless of whether scaling to your organization means having 100,000 new customers next quarter or bringing on ten new clients this year, the steps to scaling are the same.
- Scale smart by examining your processes and only work “hands-on” on your core competencies
- Outsource where you can
- Automate the rest
- Identify and eliminate roadblocks to organizational growth
- Dive deep into your product/service
- Plan for innovation
- Build a structure that works for you, not vice-versa
- Focus on continuous improvement and build an opened-ended strategy