Being able to start from scratch and build a profitable business is a major feat. Scaling that same company to a 9-figure-revenue business is another story.
Don’t get me wrong. I’m not saying scaling is more difficult than starting from scratch. It’s just different. It’s as different as flying a plane versus going into space.
It requires drastically different equipment, processes, and training.
The unbearable lightness of startups
There’s a real danger in successfully running a startup with 20-30 employees. It can give us a false sense of having figured it out.
In a startup, your capacity to hustle, react, and move fast definitely pays off. It might be the single reason why you are where you are today.
The problem is that if you do this for 2, 3, 5 years, that habit will stick. And that’s a habit that can destroy your chances of scaling.
Avoid the bureaucratic black hole
Scaling up requires structure and discipline. You can no longer wing it. When you reach 75, 100, 150 employees you need to set up certain processes to communicate effectively, keep the team aligned, and get things done. Many startup leaders fear that this transition period will end up in getting caught in a giant bureaucratic black hole.
To be fair it’s a legitimate concern. But there’s a way to avoid that. It requires work, structure, and perseverance. But it’s definitely worth the effort.
4 key elements that you need to scale
For many CEOs, founders, or executive team members who’ve been there since the early days, scaling up will mean starting over.
Over the years, I have advised, led, or supported many companies in a variety of industries scale and expand internationally. I’ve noticed that those who manage to scale successfully master four key business areas.
The secret here is not so much the business areas, but the new approach that you have to take. Basically scaling up is like starting over.
The Scale up Readiness Checklist
Do you have what it takes to scale?
Sales & Marketing
There’s a reason I start with Sales & Marketing. As Guy Kawasaki said once or twice: “Sales fix everything.” That’s why we believe you need to tackle this area of the business first.
Every startup who has grown over a 2-5-year period needs a serious sales and marketing overhaul. The most frequent mistake we see is not having a shared understanding of the customers. That knowledge is often concentrated in the sales and service teams.
To fix this, you need a systematic customer insight process, a professional customer segmentation, and a simple way to share the knowledge internally across multiple teams (even those who don’t interact directly with customers).
When we talk about customer segmentation, we’re not referring to a simple ABC segmentation based on how much money customers brought in in the past. Although that’s a good start, scaling up calls for a more sophisticated segmentation methodology that also takes into account customer needs, industries, attitude, etc.
Doing this sales and marketing overhaul right means:
- Lower customer acquisition costs
- Higher customer satisfaction
- Increased sales productivity
- Higher revenues and profitability
- Happier relationship with your partner because you stopped crying and shivering every night thinking about your sales numbers. Isn’t just that bullet point worth a try?
Mindset & People
The second and probably most challenging element is Mindset & People. Scaling up is a typical change management project. To make it work, you and your team need to understand that you need to change and evolve.
Remember what I wrote earlier. Scaling up is like starting again.
If you think you’re already doing everything right, please don’t call us. We can’t help you.
As Anonymous, the famous 8th-century thinker once carved on a tree on top of the sacred Emei mount in China : “All meaningful and lasting change starts on the inside and works its way out.”
Seriously. Becoming agile, implementing sustainable practices, changing leadership behaviors, or scaling up can only happen when you got a serious down-to-earth acknowledgement that things have to change.
Once this is done, you can start working on a clear purpose and values and build a team who has the right expertise and skills.
Strategy is a big buzzword that’s been used so often and served with so many flavours that many don’t know what it means anymore.
Personally I like the simple definition from the Oxford Dictionaries:
“A plan of action designed to achieve a long-term or overall aim.”
In other words, it’s how you gonna get there. Obviously you kind of need to know where “there” is. I like calling that “there” your “end game”.
From our experience, companies who successfully scale do two things very well with their strategy:
- It’s not developed in a vacuum.
- It rests on a clear understanding of the customers’ needs, the company’s strengths and assets, and what’s going on in the market.
They follow the principle of “less is more”. CEOs too frequently fall into a never-ending list of initiatives.
The idea is not to build McKinsey-style 400-slide PowerPoint decks. You’re a busy business leader. You don’t have time for that, plus we know too well it won’t help.
To avoid the bureaucratic black hole I talked about earlier, you need a simple one pager that clearly state your strategy. That’s the first step to get everyone aligned.
Most of the time, companies don’t fail because they developed the wrong strategy. They fail because they cannot manage to execute properly.
Successful scale ups implement a series of processes and tools to align everyone around the strategy and the initiatives need to reach the overall goal.
You might say, “Michel, I already communicated my priorities to the team and use various software to keep track of our progress. What else do I need.”
Well, thanks for asking. Let me tackle that question Mr. Congressman. The biggest problem in the world is communication. Communication is everything. It’s the difference between war and peace, love and hate, and to get back to our topic here, it’s the difference between your team’s alignment and its confusion.
Companies who successfully translate their strategy into execution have put in place an effective communication system.
Where do I start?
There are a lot of moving parts when you scale a company. Before trying to fix everything at the same time, the best advice I got is for you to really understand where you stand today.
Knowing what you have and what you lack is a great first step. Only then you can start implementing changes one at the time and get closer to scaling up.
That’s the reason we’ve put together our Scale Up Readiness Checklist. Download it now to get some perspective on where you are on your scale up journey.