The Definition Of Scale
In this issue, we look at what it means to scale your business and make it grow. HINT: The word scale itself is a clue.
Welcome To The First Issue Of Scale-Up.
Who is this for?
This newsletter is for existing business owners who are looking to grow their business or "scale" their growth. It is not for newbies or anyone who isn't operating a real company selling real products to an audience of savvy customers.
So, with that out of the way. Let's dive in, shall we?
Let's Define Scale
Scaling up is a popular term in business. In general, it means to grow or to do more of what you've been doing. When we're smaller, we look at our growth in one of two ways:
Team Size Or Revenue
In my experience, those who tout their revenue first usually aren't making as much profit, but they want to sound big. Those who talk about team size first are more than likely doing better than they want to let on.
For this newsletter, though, we're going to define scale a little bit differently. And it's a rather obvious definition because it's right in your face.
Think about the word "scale" itself. It has quite a few definitions. There's the obvious definition which means to climb (like a mountain), and that's the general definition most business owners are using when they talk about scaling.
Then there's the musical scale, which also hints at movement, i.e., moving up and down the scale. There's also the scale that weighs you, my least favorite kind of scale!
And finally, there's a ratio definition of scale as well. Think of drawing something to scale like on a map.
There are also fish scales, but we'll save that for another time! ;)
So, with all that out of the way, how do I define "scaling" in business? Well, it's a little bit of all the above. But in general, I would say this:
The measured and controlled movement of an organization on an upward trajectory while maintaining similar quality standards and appropriate margins.
This definition seems pretty standard, but we can learn something by breaking down the words used independently.
Measured - this means that you are tracking your results and know what you want to achieve.
Controlled - this means you are taking into account all the different elements of your business at the same time, including what I call MOPS (™) - which is how you clean up in business. MOPS = Marketing, Operations, Product, & Sales.
Movement - Scaling requires change. Things break, but you've got to be prepared to respond and move in real-time as the situation on the ground changes.
Upward Trajectory - Hockey stick growth is rare and unsustainable over the long term. I use this term because I want you to realize that not every quarter will be a win. However, year over year, you want to be consistent upward progress on both revenue and (if you can squeeze it) profit margins.
Maintaining similar quality - Notice I didn't say ensuring the same quality. I don't mean to suggest that quality should suffer. I just want to point out that as you scale, by necessity, not everything scales. For example, one on one sales may have to morph into to recorded presentations if your prospect list goes from 10 a day to 1000. Similarly, your product quality may change slightly to bring costs down to scale to higher volume sales. Think of a sleep mask moving from cotton to a cotton/mix.
Appropriate Margins - This phrase hints at the cost of scaling. You will need to hire more salespeople before salespeople more sales. You will need to hire more customer service people before you start selling more products. You will need to order more inventory in higher quantities if you wish to lower your price. Everything about scaling is the inverse of the "start-up" mode. When scaling, it's not all about profiting today. Indeed, you may need capital available to weather the growth period for years, depending on your strategy. This is why I say "appropriate" margins instead of the myth of getting it all at the same time. Massive growth & record profits. Can it happen? Sure, but we can also win the lottery too.
Where Do We Go From Here?
I'd like you to take a look at your business and look at the different areas you manage. What areas are ready to scale? Well, what areas have underused resources? Then, look at the areas that are not ready to scale, the areas where resources are strained or constrained.
You will need to start preparing these areas as you get ready to scale. We will discuss scaling different areas of business in future newsletter episodes.
One More Word On Scaling
I like to think about the root word of scaling being scale. And like we talked about, a scale weigh things. We've also seen the "scales of justice" and how these scales need to stay balanced.
This is how I like to picture scaling a business. The only difference is instead of keeping two sides balanced, we are many times trying to balance ten or more things at the same time.
This is why we get paid the big bucks, right?
So, I'd like you to think of scaling as "keeping things balanced," especially if you want to scale without breaking everything at once. That means adding new products, new marketing channels, new tech systems, new support teams, new processes, new salespeople, new ideas, etc. at the same rate whenever possible.
The more you can balance scaling, the better your odds of success.
Questions? Ask Away
I know this newsletter is tiny at this point, but I would love some feedback and direction on where you'd like me to take it. I can always get philosophical, but I know you probably want some more down to earth practical advice as well.
Take a second and comment on this article with 2-3 questions you would love for me to answer. I'll try to work them into future issues.
And please take a second to share this with someone you think might appreciate it.