Can the Business Ever Scale, Should It?

Quick Summary: Doing more of the same is usually not an effective method to grow a business.

Abstract:

Many highly successful individuals feel that the next logical step for them is to expand their business.  However, instead of being able to do more of the same, they quickly realize that they will have to be involved in an entirely different set of tasks which they may or may not want to do or may not even be equipped to do.   

Over the years you have developed an incredible set of skills.  Perhaps they are very narrow and very deep or perhaps they are very broad, providing you with a significant level of diversity that is valued by others.  In any event, your talents are highly sought after.   Friends and colleagues have repeatedly told you that you should capitalize on your tremendous skill set and form a company.  You thoroughly enjoy being an individual contributor but are frustrated.  There are simply more opportunities than you can possibly address.  You are actually turning many of them down.  You want to be your own boss and set your own priorities and agenda.  The answer seems clear; form a company, hire more people and expand your operations.  Really?

Many entrepreneurs face this same challenge after starting their business: How can I replicate myself to expand my operations?  This, indeed, is a very tough question and requires some careful considerations before you proceed.  A few of those considerations are:

  1. Are your skill sets really unique or can you hire others with equal experience or train others to replicate what you offer?
  2. Do others really need to have ALL of the same capabilities that you possess or can you parse the work and let others handle certain segments or opportunities?
  3. Can you wean your existing customers off of insisting that you and only you address their needs?  Will others demand your personal attention?
  4. Can you charge enough for the services to cover the costs of additional overhead caused by your expanded business operation?
  5. Are you ready to transition your role as an individual contributor to a business owner and manager of others?
  6. If you begin to hire others, will you no longer be viewed as “the person” and now be compared to larger organizations and, therefore lose some of the mystique that made you successful?
  7. Can you assume that others can fill your role in running the organization if you take time off or are fully consumed by some activity?
  8. Is your projected workload (sales funnel) sufficiently large enough to allow you continue to cover your business and personnel expenses if there is a gap between opportunities while expenses such as payroll continue to be incurred?
  9. Can you develop processes to allow others to train others or will you have to be intimately involved in all aspects of the expansion of the business?
  10. Have you considered the fact that even your best employees will simply be motivated differently than you are and will not be as dedicated to the business as you are?
  11. Are you willing to take on the responsibilities of being the employer for your employees as well as be responsible for their work with your clients?
  12. Can you fund the business expansion yourself until you have demonstrated that your business can, in fact, be scaled?

The last question is probably the first question that a potential investor will ask.  The next question they will ask is how big, how fast, and how will the business scale?  Assuming they receive acceptable answers to these questions, they will then probably ask if you are the right person to scale the company and do you have the right qualifications to manage a much larger organization?  No doubt these will be tough questions that you need to answer well before you even seriously consider adding others to your organization or request outside funding.  As you expand, you must be willing to discard many of the things that you currently do and take on more and different tasks.  Most probably, you will not be experienced in these tasks and may find them frustrating or boring but they must be done.  One very useful and insightful exercise you can do is to write down what you want to do and where you want to be in two years and in five years.  Once you have established those goals, think about what you will have to do and equally important, what you will have to give up or stop doing.  You may decide that scaling your business is not the right path for you.

A sobering fact discussed in the first chapter of this book is that less than one half of the all businesses still exist after five years.  Although there are many causes for these failures, two leading causes are the lack of scalability and, related to that, the owner just getting tired.  Scaling is tough and may not be the best approach.  Think it through carefully before you try to do it.
 

Article Number : 3.010204   

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