Scaling your business can be a daunting task. It is worth it and here is why.
A good friend of mine who I’ve known for many years talked to me about building his finance and accounting staffing agency and why he was so successful. He said, “Steve, I’ve had many opportunities to expand the type of recruiting my business does. Our customers have asked us to add IT, human resources, sales and more. I always thanked them for the opportunity but never took them up on their offer. There’s power in the niche – when the economy goes down, my competition who are stretched too thin suffer, and I get their business. When it’s going great, I do more and more finance and accounting recruiting because all my customers know exactly what I do, nothing more, nothing less.”
He sold his business to a competitor for $8 million, and when the 2008 mortgage meltdown occurred, he bought it back for $2 million (that is not a typo). Since he kept the rights to his company’s name when he sold it, he hung his shingle with a very familiar and trusted brand, and he’s since rebuilt the company to twice what he originally sold it for.
That’s a success story.
So, let’s translate his success to scaling your business.
First, you need to look at your products and services from a profitability standpoint. I know you like selling Widget A, but you make a lot more money selling Widget B. This is an important first step in the process, since you want to scale with the right mix of products and/or services.
Second, there’s power in “less is more.” Simple businesses offer less products and services that they sell to a lot of customers, versus a large number of products and services that are sold to a few customers. Remember my friend’s statement, “There’s power in the niche?” Buyers want to buy businesses that they can easily wrap their heads around, and they know that if you sell to much, you’re stretching your working capital and the experience of your team. It causes problems and is hard to sustain, let alone scale.
Once you’ve got a good idea of profitable product and service you’d like to scale your business with, you’re not done. You need to think about each product and service this way:
- Teachable. Is the design, sale and delivery of the product or service teachable to your employees? Some are very complex and require a lot of knowledge and experience, where others you can teach low level employees how to build, design, sell and deliver easily.
- Repeatable. Is what you’re selling repeatable, meaning that it requires little to no customization to sell? This is really important, because if you customize your solutions to every customer’s need, it will be really hard to scale. And it will require a lot of experts to manage the product and service suite.
- Relevant. And finally, does the product and/or service resonate with your customers? Does it meet their needs and wants? Do they want to repurchase from you and refer what you’re selling to their friends, family and colleagues? This is critical – it doesn’t matter if what you’d like to scale with meets all the other criteria. If your customers don’t care, then you need to rethink things.
When you’ve come up with the products and/or services you’re going to scale your business with, you need to document all of the processes that interact with your products and services. That way, you can teach your employees how to answer customer calls, order materials, design/build the product, sell the product or service, delivery the product or service, ship the product, handle customer calls, do the accounting, etc., etc.
We could spend a whole series on scaling your company profitably and how you can do this in a way that increases the value of your company, allowing you to grow to new markets and capture more from your existing customers. We’ve got blog posts that cover this, but this might resonate with you as a collection of posts, so let us know.
Good luck scaling your business – it’s fun, innovative and exciting. And it of course helps you maximize your downstream profits and the value of your company.