What exactly does “scalable” mean?
A scalable company is one where you have the potential to bring in revenues that are disproportionately higher than the staff or resources needed to capture that revenue. So it takes few people and small dollars to get to a big revenue number. And once you get the formula down it can grow very big, very fast.
Business coach, scaling expert and founder of the Entrepreneurs’ Organization, Verne Harnish*, says in his must-read book Scaling Up “the best leaders have the right questions but turn to their employees, customers, advisors and the crowd to mine the answers.” According to Harnish, you need to do three things to make your business more scalable:
- Reduce by 80% the time it takes top team members to manage the biz.
- Refocus the senior team on market-facing activities.
- Realign everyone else to drive execution and results.
Of course, you first need to know if your business model even has the potential to scale. As an example, my own company, Little Pim, is considered “scalable” because after we produced our foreign language video series, we were able to sell the videos to millions of people in the U.S. and abroad without adding many more staff or producing more than ancillary new products. We went from $500,000 in revenues to $1M in revenues with just three full-time staff and a few consultants and interns. Whether we sold in 20 stores or 200 stores we needed very few additional full-time employees or infrastructure.
What if you aren’t selling a product? What if your time is the product? If you’re a consultant or service provider selling your expertise, you may have a harder time making your business scalable because it relies on you and there is just one of you. However, many service providers like social media, public relations and law firms still have a scalable business if they can train select employees in their “secret sauce” and ensure others are doing most of the day-to-day account work. The more you are able to outsource and automate tasks you will be freed up to generate more business and think about how to achieve scalability. Get more tips from my blog How to Scale Your Service Business (and Get Your Life Back).
A great way to start thinking about scale is to study other companies that have successfully scaled in your sector or a parallel sector. How did they do it? Can you implement similar systems or processes? Your product should be unique but how you sell doesn’t have to be. In fact, it’s often better to follow a known blueprint that leads to revenues. And to scale! If you can show your road map to a potential funder, you’ll be much more likely to get funded and have a business that generates over $1M in revenues.
For more tips, read my blog Top 10 Mistakes That Keep Women from Scaling Up.
Until next time,
P.S. To learn about how you can scale up faster, schedule a Free Accelerate Session with me here. I’m offering a limited number of these sessions, to help women get clear about what they need in order to develop a strategic plan, and to see if the next cohort of my Million Dollar Women Masterclass is a fit.
Graduates of Masterclass have a Strategic Plan that has been vetted by our business mentors. As one of our grads writes: “I now feel like I have a road map to follow as I scale my business!”
Click here to book a free 45 minute Accelerate Session. There are limited spots, so don’t delay if you want one!
* Verne Harnish, Scaling Up: How a Few Companies Make It…and Why the Rest Don’t. Gazelles Inc, Ashburn, Virginia, 2014