The Scaling Readiness Test

Are You Really Ready to Scale?

If there’s only one thing you learn from reading this, it should be that most businesses are not ready to scale. Yours is probably one of them.

Entrepreneurs everywhere are talking about scaling their businesses. Whether they’re in SaaS, ecommerce, services or something in between, they’re all chasing ‘scale’.

The problem is, most people don’t even understand the concept correctly. People use it as a replacement for ‘growth’ which is a gross misunderstanding.

The term ‘scale’ comes from logarithmic scale, like the Richter scale which measures earthquakes. On the Richter scale, each level is 10 times more powerful than the level before it. A level 5 earthquake is 10 times more powerful than a level 4, which is 10 times more powerful than a level 3.

So when we talk about scale, it means doing at least 10 times what your business currently does. It’s the classic ‘hockey stick’ growth pattern investors are always looking for.

It is not growing 10% year over year, or even 25% each year. It’s massive, unstoppable momentum that will take on a life of its own.

And if you’re thinking about scaling because all the cool kids in tech are doing it, stop.

Trying to 10x your company because there’s peer pressure is a terrible idea. It will burn you, it will burn your team, and it will burn your customers.

There are only two real reasons to scale:

  1. You believe you can have a greater impact in your market than any competitor. You believe that exponential growth will allow you to serve your customers better than anyone else.

  2. You want to get extremely rich.

Both of these reasons are perfectly valid. Just be clear about your motivation, because scaling is not for the faint of heart.

Once you’re clear on WHY you’re scaling, you need to understand two things. These are the two things that can stop you from doing it.

1. Every business will break under pressure.

I don’t care how many SOPs you have or how ‘systems driven’ you think you are. When you hit exponential growth, you will have problems you can’t even imagine right now.

One way or another, your business will break.

If it’s a service business, people will feel overwhelmed. You’ll have endless fires to put out, and delivering anything more will be out of the question. Service businesses break quickly: there’s a hard cap on what you can produce.

If it’s a product business, it will break gradually. Parts in the system will wear out or become too inefficient, and one day will come to a complete stop.

Usually something breaks in operations, and fulfillment is often the first thing to go. You can do all the marketing you want, but if you can’t fulfill the demand you’re going to have a bad time.

The problem is that if there is any inefficiency in your operation, it will scale at the same rate as the growth.

If you have problems when producing 100 units a day, it will be 10 times worse when you’re producing 1000 units a day.

Let’s say your business currently has 100 customers and you know your systems will break at 1000. What can you change in your systems now, so that they could theoretically handle 1000? For example…

  • Switching to a customer service platform like Zendesk to manage help tickets instead of having multiple people using a customer support email address (which has a high risk of human error).

  • Switching to Fulfillment By Amazon instead of fulfilling yourself with a small courier service.

  • Find complete solutions for any parts of the business that were hacked together as a work-around or ‘bootstrapping’ solution.

Be prepared to go into battle for this stuff, both with yourself and your team. People unconsciously self-sabotage all the time.

I recently had a client who was mad because they hadn’t signed any new customers from their new marketing campaigns.

When we dug into why this was happening, it turned out their operations literally could not take on another customer. We stopped the marketing campaigns and I threw myself into overhauling their fulfillment systems.

Once the systems were fixed, customers started flowing in again. Like I said: you can do all the marketing you want, but your systems had better be ready.

2. Your people are your biggest strength and your biggest weakness

Humans are conservative creatures. We like it when things stay more or less the same. We don’t like change – especially when it means we have to work harder.

If you tell your employees that you want to increase your business 1000%, there’s a good chance they will freak out or do dumb stuff occasionally.

It usually goes one of two ways:

If the company is well established and has been stable for a while, people will push back on the extra workload. If the company is young and people are inexperienced in the art of scaling, there will be a slew of mistakes that can set you way back.

In both cases, you need two things: crystal clear communication from the leader of the company, and a ‘higher calling’ for the growth.

You see, people are generally more motivated to work hard when they believe they are creating a positive outcome for other people.

Say TOMS decided they wanted to add 10,000 customers this year. Their staff could take comfort in the fact that their work would give shoes to 10,000 children in need. It’s a vision that people can get behind.

This is the same reason that people at Tesla are willing to work 80 or 100 hour weeks for a notoriously difficult boss. They believe in Musk’s vision of moving the world to sustainable transport. They believe in the positive impact they will  have on the world by bringing that to life.

The mindset of your people is the most critical factor in whether you’ll be able to scale your company.

If people dig in their heels and refuse get on board, you’ll never do it. You have to inspire them and show them the bigger picture. Then they’ll create bigger momentum than anything you could have dreamt of.

Some final steps on the road to scale:

Scaling your company takes total commitment. There are no shortcuts here: you have to do the work. It will suck at times. Do it anyway.

  • Don’t accept technical patchwork.

SAAS and tech companies are often guilty of this: they just add more and more servers to handle extra users. Then when something breaks, it takes 10 times as long to fix because the patches have become too complex – the system itself is broken. The same goes for technical debt. Fix it now, before a million users find a flaw.

  • Get regular input from outside.

Have a trusted advisor come into your business and thoroughly assess your systems. Like I said: humans are conservative, often to the point that we remain blind to problems. You need someone who is objective to help you root out all potential breaking points.

  • People are not machines.

An over-used machine that doesn’t get serviced will break much sooner than it should. Humans are the same – we just call breaking ‘burn-out’. You cannot expect people to just 10x their output. You need to hire new people (and make sure the cost of that doesn’t outweigh the extra revenue you would get from scaling). You need to give your people recognition, good pay, vacation time and a healthy environment.

  • Learn to communicate.

Founders are often bad at communicating, and it can break people. You want your people to be loyal and committed, so you need to be able to convey a detailed vision with total clarity. There can be no room for misinterpretation or double meanings. This is the most important thing you can do for your team and your business.

Communication becomes even more important as you scale: most of your team won’t report directly to you, or even talk to you more than a few times a year. Your messages must be clear enough to get through several ‘tellings’ without becoming distorted.

Before you commit to scale, you need to ask yourself the hard questions, and be brutally honest in your answers.

Where are your breaking points?

Are your people on board with your vision?

What is the biggest challenge you’re going to face?

Are you ready for it personally?

Then you need to identify what needs to happen to get from where you are to where you want to be.

Find a mentor or a coach who has done what you want to do. Ask them how they scaled their company, what the big problems were, how they handled them, and what they would do differently. Ask them to keep you accountable and to call you out when you’re doing something dumb.

Make friends with other founders who are scaling their companies. Firstly, because iron sharpens iron and you’ll force each other to do better. Secondly, because you are going to need a support network who get what you’re dealing with. Most people won’t.

Finally, get in touch and tell me what your biggest challenges are going to be. If it’s what you want, then let’s get you ready to scale.

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