We define scaling as growing sales at over 25% per year and ideally 50% to 100% which can be sustained for many years. Lots of people know only about 15% of new startup companies will survive long-term. And by this I mean innovative new companies and business models and products, not franchises or copies of proven business models like a sandwich shop. However, few people know that only one in 6,300 companies will ever reach $100 million in sales and create lots of wealth for their founders, employees and investors. This kind of growth is what really impacts the world and people on a large scale and also creates new jobs. The standard of living for all people is driven up by strong innovation and entrepreneurship.
And innovation in entrepreneurship is getting more important every year because of AI, robotics, automation and other technology that will continue to replace some jobs. I have already grown two companies from zero to $100M and $156M in sales in their first five years and have a third startup in the works that I expect will easily reach this size and far more. And I have now advised and coached CEOs at about two hundred companies on growth, scaling and innovation. Our CEO Boot Camp also has been teaching these skills since 2004 to thousands of CEOs from over forty countries. So, everything in this article is from deep experience scaling companies for over three decades.
- Build a strong team: As your company grows, you will need a team of talented and dedicated individuals to help you achieve your goals. Many underestimate the experience required and I usually recommend no less than ten years for a manager of a department or area and ideally fifteen years. Few young people can grow their responsibilities as fast as a company can grow and they will need experienced mentors too. It's important to take the time to carefully hire and cultivate a team that is aligned with your company's values and mission. This is #1 for good reason because it is probably half the battle. Quality people will know how to do most of the other things here from decades of experience and no one will build a large, successful company alone. That has literally never happened.
- Have solid differentiation and protect it – To scale a company must have some competitive advantage in the marketplace. You cannot be a “me too” product unless you somehow have geographic monopoly or some kind of lock on distribution. Intellectual property is one obvious way differentiation can protect a company. This includes patents, copyrights, trades secrets and trademarks. We teach a dozen additional ways but that is another article and full course.
- Focus on customer satisfaction: Ensuring that your customers are happy with your products and services is crucial for the growth of your company. This means not only delivering high-quality products, but also going above and beyond in terms of customer service. Testimonials of good products and services are powerful tools in selling more too. Gather them in videos and post them on your web site to enhance your brand.
- Invest in marketing and sales: In order to drive sales and increase revenue, you need to effectively market your products and services. This means finding the right channels to reach your target audience, whether that's through social media, content marketing, or paid advertising. You should have multiple lead sources and feel you have a “throttle” that you can adjust as needed to scale. However, some people think it is all about sales and it is not. You also need to grow the capacity and team carefully to maintain quality in operations, management and many systems, often 30 or more key processes internally.
- Foster partnerships and collaborations: Partnering with other businesses or organizations can help you tap into new markets and reach a wider audience. Look for opportunities to collaborate or co-brand with complementary businesses. Complementary products in the same target markets is a key indicator of good partners and they need care and feeding by a good business development person too. Very few partners will proactively be successful without some training, monitoring and relationship building.
- Develop a solid business plan: A well-thought-out business plan is essential for guiding the growth of your company. It should include clear goals, a marketing strategy, a financial plan, and a roadmap for achieving success. Strategic planning is the foundation of any growth and must create sustainable competitive advantage to reach real scale. Warren Buffet once said, “An idiot with a plan can beat a genius without one”. I agree. Strategic planning is the most complex process in any company because it involves every discipline including marketing, sales, operations, innovation, finance, management, leadership and many more. Hire an expert to facilitate this and you will get a better plan. See here for our services on this.
- Stay up to date on industry trends: It's important to stay informed about the latest developments in your industry so you can adapt your business strategy and stay ahead of the competition. This could mean attending conferences and trade shows, following industry news and blogs, or networking with other professionals. And sending your people to these serves many purposes. I always ask tradeshow attendees to develop a summary of what they learned and present it to the management team. And to do some competitive intelligence while there too. This multiples the value and ensures focus and accountability.
- Prioritize innovation in your culture and budgets: In order to stand out and differentiate your business from competitors, it's important to constantly seek out new and innovative ways to improve your products or services. This could mean investing in research and development, or simply encouraging your team to come up with fresh ideas. This always requires a culture that knows failure is okay and failing small and fast is how big innovations agree created. Incremental innovation is fine, it does not always have to be a "swing for the fences" disruption. Many companies have either strong marketing or strong innovation and do only one well. However, those that do both well are the huge successes that can scale rapidly at 100% per year for a long time and gain market share before competition grows. For disruptive startups you need to gain good distribution before incumbents replicate your innovations. Keep moving and it is tough for them to keep up too.
- Streamline your operations with constant improvement (Kaizen): As your company grows, it's important to keep things running smoothly and efficiently. Look for ways to streamline your operations, whether that's through automation, outsourcing, or simply reorganizing your workflow. Understand your numbers and create dashboards for every department. Be sure to have formal feedback loops for both external and internal customers that surface problems and give numerical visibility to key results (KPIs). And Kaizen applies to every department, not just production or operations.
- Diversify your revenue streams with multiple distribution channels: Relying on a single source of revenue can be risky (product or distribution), so it's important to diversify your income streams to ensure the stability of your business. This could mean offering a range of products and services, or finding new markets to tap into. And always means continuing to innovate new offerings because product life cycles are getting shorter all the time and you will also get leapfrogged eventually if you do not continue to improve.
- Seek out funding and investment: Scaling almost always requires outside capital to fuel your growth. Understand the funding landscape and have at least a three-year funding plan as raising capital takes time and you will want to develop relationships with quality investors. This could include angel investors, venture capital, loans, crowdfunding campaigns and many other sources. Just be sure to do your due diligence and carefully consider the terms of any funding agreements and use an adviser. You can view a webinar I created on the foundational concepts of raising capital here.
You can also get a professional certification in Growth and Scaling for your C-Level executives and managers at our website Entrepreneurship University. See here.
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