Should You Scale Your Business?

The Case Against Scaling

So - Should you scale your business?

Welcome back to another entry in the Scale-Up newsletter. In today’s brief edition, we’re going to talk about whether or not it even makes sense to scale your business.

I have talked to quite a few business owners and entrepreneurs who want to scale and grow, but for the wrong reasons. I fancy myself a wanna-be attorney (disclosure: I am not!), but I’ve been through a very litigious lawsuit situation and have paid top attorneys a TON of money, and you learn a thing or two through that experience.

So, I’ve gone ahead and written (for your entertainment and education) a pseudo case against scaling. I hope you enjoy and think about what you are after to determine if scaling makes sense for you. But don’t worry, in the next edition, I’ll write the Case For Scaling to help balance the scales (pun intended).

And remember, before you can even THINK about scaling your business, you better have at least the following items dialed in:

  • A unique product that people want to buy

  • A proven track record of selling that product

  • The financial numbers showing that you can sell that product and make a profit OR

  • If you can’t make a profit (yet), you have the war chest/reserves to keep selling while you recoup your investment back over time.

  • And it doesn’t hurt if you enjoy what you’re doing and can see yourself doing it for years to come.

So, with that out of the way… let’s make the case, and you get to be judge, jury, and executioner. I’m just the lowly lawyer presenting my arguments.

The Case Against Scaling

Scaling a business is arduous work. You’ve got to keep track of about 100 things all at the same time. Cash flow can become a literal nightmare. You know all those times when a supplier mentioned terms, and you were like, “oh yeah, whatever 30 days is fine.”

You’ll think back fondly on those times you didn’t care or think about terms. You’ll have to find ways to stretch your AP accounts out as long as you can. Are you paying vendors every 30 days? Let’s see if we can get them to 60! No, 90!! That’s why the big companies pay you after like six months. It’s not for fun or to torture you; it’s for cash flow.

Then, the people that owe you? Your clients? Currently, at 30 days? Let’s bring that down to 20. How about 15? Can we get them seven days, maybe if we offer them a percentage off?

And that’s just on the cash flow side. You also better be ready to go out and raise some money if you want to grow fast and not have to be concerned over that dirty word - profit.

There’s always time for profit - later. Right now, it’s about growth and capturing market share, right?

Then there’s the marketing. Oh, the marketing. Your ads will burn out faster than ever. What used to be a 6-month winning campaign might stop converting in only three months because your ad spend has increased, and you’re hitting most of your audiences sooner.

You’ll need a creative team looking for new hooks all the time. You’ll need to find different demographics or audiences to sell your existing product.

Oh, and speaking of the product? You’re going to need new products! A tremendous winning product can get you to $1MM/year, but it won’t take you much further. So, get ready to work with your marketing team, your sales team, your product team, and your customer support team to create new solutions to problems your customers/clients talk about or ask about.

You’ll need to hire more salespeople and streamline their scripts. You’ll need a sales manager to oversee and record all calls. You’ll need daily and weekly team meetings with department heads. It’s best to meet with one department head per day and the whole group per week.

You’ll want to get more customer service people ASAP. You’ll need to hire BEFORE you need them, so they are ready to go once the increase in volume happens. Otherwise, you risk bad reviews that can tank sales and marketing.

And back to marketing and sales. The bigger you get, the more of a target you become for lawsuits (ask me how I know lol). So, you’ve got to invest heavily in compliance and regulatory reviews.

All ads, all scripts, even customer service scripts, need to be reviewed by legal. Make sure you are keeping up with local, state, and federal laws. Are you selling to Europe? Don’t forget about GDPR.

Are you selling in California? There’s a new privacy law that just passed you need to be aware of. Think you’re ok because your ads don’t mention any results or outcomes. One meeting with a decent law firm will scare you right out of that thinking.

There’s so much more risk when you scale. There’s a reason why more prominent companies get sued the most - there’s money to go after.

So, be ready to work on legal and expect a big jump in those fees.

I could go on, but I don’t want to scare you too much. That is just a small look at what can happen when you start scaling. In the next edition, we’ll go over the good side of scaling, and trust me; there’s a lot of good stuff!

In the meantime, I would love it if you checked out my new (updated) theme on my blog. I finished it over the weekend, and I’m proud of it. It’s the same blog I started way back in 2006, and I’ll be updating it more often, so feel free to add it to your bookmarks.

Visit here:

Till Next Time.

Scale Up!

Michael Giannulis