To scale your company, focus on these key decisions
There’s no roadmap for scaling a business. But there is a decision-making checklist that can help drive your company in that direction.
Among entrepreneurs and business owners, there’s a natural tendency to equate growing a company with scaling a company. It makes sense—it’s logical to think that these are similar challenges with similar solutions.
In reality, however, scaling a company is its own beast. The strategy that may work for growing a company won’t necessarily work for scaling it. Entrepreneurs and business owners often have to employ a different approach to position their companies for scalability—rethinking customers and markets, people and processes, products and services, partners and branding, and more. This explains, in part, why so many companies struggle with the shift from growth to scale.
So what should leaders do if they want to position their companies for scale?
In the absence of a clear roadmap, I advise business owners to focus on tackling a specific set of decisions. At a recent Salesforce event in Dallas, I discussed these decisions with several small business experts — Pat Niekamp, publisher and co-founder of Texas CEO Magazine; Rex Kurzuis, entrepreneur and founder of Asset Panda; and Dan Vermeire, managing director of Corporate Finance Associates — and, based on those conversations, assembled the following checklist.
If you’re looking to take your company from growth to scale, these are the most important decisions that you should focus on.
Key decision 1: Hire the right people
Talent plays a central role in the scalability of a company. When building your team of superstars, Niekamp recommends focusing on balancing strong generalists with strong specialists. While it’s possible to grow a company with only generalists, you need specialists to scale it, he says. In addition, know where you’re taking the company as its CEO. Make sure you have a clear vision for the future and know what you want to accomplish in the near term and long term.
Key decision 2: Invest in understanding your customer
To take your company to the next level, you must develop a deeper and more nuanced understanding of your most valuable customer. This means spending time and energy to gain better insights about how your top customers think, behave and make decisions. Kurzius recommends getting back to basics: Talk to your customers, listen carefully to what they have to say and gather as much data as possible about them. Based on those insights, review and refine your offerings to ensure that they serve your top customers well. In addition, make sure that you stay tuned into your customers (e.g., through social listening) so you can quickly adapt to changes in their behavior, habits, preferences, and so on.
Key decision 3: Manage your capital wisely
When you’re looking to scale a company, capital is critically important—especially if you’re looking to grow the business through acquisition. As Niekamp has observed, too many companies run out of cash or don’t pay attention to capital shortages before it’s too late. The good news is, the PEVC industry currently has record amounts of dry powder (i.e., capital ready to be deployed), so most companies shouldn’t have a problem securing the funding that they need.
As a company prepares to scale, business owners should also take steps to avoid what Vermiere calls “dead equity.” That is, if you borrowed from family or friends to launch your company, it’s best to pay them back sooner rather than later so you don’t have to think about a payout down the road. Reserve equity for the individuals that are currently working on the business, he notes.
Key decision 4: Upgrade your sales model
Most companies need to change their sales model in order to scale. Kurzius recommends developing a plan based on outbound or inbound strategies, and then making decisions about the teams, platforms and other technology you need to support this new sales model. These investments can be expensive, but they’re necessary in order to create the infrastructure you need to support your sales on a greater scale.
Marketing often plays a more integral role in sales as a company scales. As a result, you may need to increase your marketing investments, especially if you plan to rely more heavily on inbound sales strategies. Content marketing, says Vermiere, can be very effective for casting a wider net and helping customers understand how your offerings can potentially solve their problems.
Key decision 5: Solidify your business strategy
No big surprise: Your business strategy will have to change in order to move your company from growth to scale. Once you’ve decided on your new strategy, communicate it broadly across the company and get everyone on board with it, says Vermiere. Niekamp advocates for making strategy decisions first. Strategy, he says, will always work its way down through a company, shaping its culture, dynamics, innovation and prospects for scale.
Key decision 6: Use culture to your advantage
Culture can give your company the competitive advantage it needs to scale. To create a culture that your competitors can’t replicate, have a constant, open conversation with your employees, says Kurzius. Create a workplace and culture where employees are celebrated, feel comfortable and secure, and have the freedom to make calculated mistakes. Make sure the company’s guiding principles are well-known among your employees, because they will be more productive and motivated if they can connect their work to the purpose and mission of the company.
Scaling a business presents a mighty challenge, but it’s one that can be conquered. Focus on the right decisions, and you’ll lead your company in the right direction.
Read more on this topic: How to approach decisions about the growth of your business