The ability to successfully scale a business is the holy grail of entrepreneurship. Research shows that startups who are willing to redesign the way their core business functions can enjoy massive benefits from scaling even in the early days. Techstart.com tells us that a business scaling quickly and effectively can increase their revenue by 250% and their user growth by 360% if they put their operations on autopilot. To achieve these jaw-dropping outcomes, the ambitious entrepreneur needs to become a master of the three key ingredients of business scaling through three phases of growth:
- Manpower: The people in your team working towards building sustainable business expansion.
- Mechanics: The enabling structures in your business that facilitate all operations across all departments.
- Metrics: The key business numbers which indicate your status in the past and present, and your capacity for future growth.
With great zest and zeal, the start-up business owner mobilises their ambitions to action, taking the very first steps to make their business dreams a reality. To register a business and set up a shop is exciting. Planting seeds of possibility and watering them through to maturity takes boldness, courage and a big dose of faith.
The early days of business survival are marked by the urgent need for sales. All business activities are necessarily focused on generating enough revenue to cover expenses with some leftover to reinvest into building the business. Whether they are working alone or alongside a small team, expenses must be controlled. The aim is to establish a viable business model that works to generate gradually increasing profit by meeting a market need.
- Survival Manpower: The team is small to keep overheads low, and the bulk of work done targets the need for brand awareness and user buy-in.
- Survival Mechanics: Simple systems are focused on the acquisition of steady sales and delivery of products/services. Processes and resources are built and used only if they are essential to address the needs of the here and now. Excess infrastructure can be wasted at this stage while the business works to establish a business model that works.
- Survival Metrics: Keeping a close eye on revenue and profit margin is vital at this stage so that any funds available for growth can be funnelled away and utilised.
Establishing a viable business model is the key to moving out of Survival mode and into business Growth. At this stage, the entrepreneur develops more confidence in the business to be able to generate enough cash flow to stay afloat and finance some growth. They become more willing to delegate activities and manage the responsibilities of others in a bid to grow the business. Seeing their hard work starting to pay off is personally rewarding for the entrepreneur. But professionally, it allows them to stretch out into applying their skills and strengths towards strategic management.
In the Growth phase, the business shifts to focus more on expansion. While the ability to maintain cash flow is still vital for the business in Growth, the need to develop systems to sustain this growth takes on central importance. The priority of the business used to be the acquisition and delivery of sales whilst keeping the books in balance. But now, growing this business to maturity relies on the development of efficient, effective systems and processes.
- Growth Manpower: The team expands to multiply the output of the business. Their training is developed and refined with a focus on excellence. This allows them to serve more customers well, and meet rising business demands across all areas.
- Growth Mechanics: Creating, implementing and refining the infrastructure of the business is paramount. Functions are automated where possible, and policies and procedures are documented to ensure performance is consistently exemplary.
- Growth Metrics: The need to expand the team and improve infrastructure makes the Growth phase a season of investment. With a proven business model in place, black and white measurements around costs, efficiencies and performance need to be optimised.
The shift from Growth to Scaling is a deeply satisfying endeavour for the entrepreneur who has always had their sights on building more than a job for themselves or a business that simply ticks over. In the Scaling phase, the entrepreneur gets to stretch their wings and fly by casting a wide vision for exponential expansion. They must communicate this vision clearly so that the team come to champion the business cause themselves. This dedication and personal sense of ownership is the fuel of the Scaling business.
A business moving through the Scaling phase hits the market hard with strategies to communicate great stories to new segments of the public. They also get busy creating strategic partnerships and alliances. They need to build a thriving customer base that easily refers others due to their experience. This creates a solvent, viable and sustainable business.
- Scaling Manpower: The team expands to multiply the output of the business, serving more customers and meet rising business demands across all areas.
- Scaling Mechanics: Systems and processes need to maintain operational agility so the business can make changes and pivot in response to the demands and opportunities the market presents. Maintenance and evolution are key.
- Scaling Metrics: An operational model that will increase profits and efficiency over time is developed. The business works by growing revenue whilst avoiding cost increases.