The Case For Scaling Your Business

Why Scaling And Business Growth Are A Good Thing

Let’s dive right in. If you missed my previous edition, it was pretty depressing. It was all about why you shouldn’t scale your business. It made scaling, and business growth sound pretty bad.

If you missed that read, check it out here.

In today’s edition, we’ll look at the other side of the coin. Remember, we are using the attorney/lawyer approach, where I present the facts that best support my case. NOTE: I am not an attorney, so no legal advice is being offered.

Ok with that out of the way, let’s look at why scaling your business is a good thing.

1. You’re Bored (Massive Growth Helps Cure Boredom)

I know this sounds counterintuitive, but if your business has suddenly gotten boring, you have a handful of options available to you. The first option that most Entrepreneurs pursue is to look at selling the business. That can make sense if you are ready to move on to something else entirely.

The other option is to keep things where they are and stay bored. Maybe you can outsource what little work you have left and have what they call a “lifestyle business.” One that runs without our day to day involvement. Under this scenario, you’re a passive investor who happened to create the company.

Then, another option is to scale the business (grow it!). I summarize these three strategies in a simple 3-word formula:

  1. Sell - Get out and move on to something else.

  2. Stay - Keep going and doing what you’re doing, maybe outsource and convert to a passive lifestyle business.

  3. Scale - Push down the gas pedal and guide the business to massive growth and (hopefully) additional profits.

Here’s my argument against the first two options, along with my thoughts on why scaling is better. If your business is doing less than $1MM in revenue (and maybe low six figures profit), then at best, you’re looking at a 2-3x multiple.

Meaning, if your net profit is $200k/year, then you’ll be doing great if you sell it for $600,000. I don’t know about you, but life is long and expensive, and I don’t feel like I can get by the rest of my life on that.

This strategy makes sense if you have another business or opportunity you want to jump right into. You’ve got to be prepared to do a lot of the same work over again as a start-up entrepreneur.

And if you like that kind of work, this could be a good strategy for you to pursue. Now, as far as staying goes. I’m going to assume that if you have the skill and focus to build a six or seven-figure company, odds are you’re not looking to “relax” yet.

The other day someone sent me an unsolicited Facebook Message where he pitched me on a new business opportunity (most likely MLM), and his main benefit was, “If you get this started, you’ll never have to work again!”.

This terrified me. The thought of not being able to produce and work and create in a commercial way is a significant driver for me. I love it. And I believe that you’re similar in that way.

The idea of lying on a beach year-round may sound tantalizing during periods of high stress, but the reality is something else altogether. I believe we are here for a purpose, and part of that purpose is achieving goals and creating a legacy.

It’s hard to do that lying on a beach for 20 or 30 years.

And that brings us to scaling. Imagine your business is right at seven figures. You’re making profits of $200k/year. Life is good. Your business is worth $600k. This is where scaling and the power of multiples comes into play.

If you can scale your net profit (EBITDA) just 5X (easier said than done, I know) to $1MM/year, not only is your company making more net profits (duh), but you’re not playing with the power of multiples.

It’s entirely possible (depending on industry and a myriad of other factors) that your multiple moves from a 3X to a 5X or even 6X.

That means your business could now be worth $5MM - $6MM. So, in short math, you 5X’d your profits and potentially 10X’d your business value. And $6MM is a lot easier to retire to the beach with if that’s your thing. ;)

2. You’re Ready To Serve More People

If your product is incredible and dialed in. If your customer service is weather-tested. If your sales and marketing are on point. What’s next? It’s time to start serving more people. That’s another way you should think about scaling. It’s not purely a financial or “growth” play.

There’s also the aspect of serving others. In a capitalistic society, we pursue ends for financial gain. This is because we are driven (somewhat) by selfish motives. Make more money, etc. However, the great trade-off in this pursuit is that we end up being forced to create value if we’re going to get very far in business.

Value means the customer gets more from you then they paid. Profit is what you earn for creating value. Pretty nice. This means that if you want to help more people and provide more value, then you have no other choice than to scale up.

It’s the moral thing to do, honestly.

By growing revenues, you are interacting and sharing your product or service with more people. You are having a more significant impact on the world, thus doing your part to leave a legacy.


3. You Love A Good Challenge

Scaling a business is one of the most fun things you can do. It’s also a challenge. I love a good challenge. That’s probably why I enjoy helping companies scale and grow.

If you’re the kind of person who loves a challenge, here are just a few of the problems you’ll be able to help solve as you scale:

  • Marketing Problems - Finding new audiences, creating new ads, looking for new hooks

  • Product Problems - You’ll need a steady pipeline of new products, finding new uses for old products, modifying old products to fit a new market segment

  • Sales Problems - Writing new scripts, compliance recording, testing new scripts, learning new consultative selling techniques, more sales training.

That’s just a little bit of what you’ll face. The good news is that solving these problems is super exciting. And it’s something I love to do. In a future edition, we’ll focus more on how to handle these problems.

In the meantime, make sure you check out two of my new sites I’ve recently created.

First, there’s Michael Giannulis dot com, which is my blog about traveling, fun stuff, personal thoughts, etc.

Then there’s Mike Giannulis dot com, which is where I talk about personal productivity and track all the things in my life that I possibly can. Then, I post those things like my workouts, my steps, my word count per week, etc.

I hope you enjoyed today’s shorter edition, and I look forward to getting back in your inbox again soon.

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