So, what’s stopping you from scaling? If you ask Rich Mullholland, founder of Missing Link, the reality is that most entrepreneurs don’t need to understand what it takes to scale. “Scaling speaks to exponential growth,” he says, “which for the vast majority of business owners simply shouldn’t be a consideration. Growth by itself is okay, and even then, it should be growth as and when it’s required.”
Rich’s key point is that growth for the sake of growth should never be a business owner’s primary goal. Growth should be strategic, and good for the company. Growth without a solid foundation can actually harm – or even kill – your company.
If your goal is growth though, here are three key points to keep top of mind.
1. Too many business owners don’t understand what it takes to scale a business
“Entrepreneurs are so focused on getting through the month with their cash flow intact that they often fail to lift their heads and look to the horizon,” says Allon Riaz, CEO and founder of Raizcorp. “Scale requires strategic thinking, while most entrepreneurs are in operational thinking mode.”
Howard Mann, president at Brickyard Partners and a US-based business turnaround specialist, advises business owners to stop focusing on revenue growth alone. “Scaling a business is about balance and too many entrepreneurs just focus on the speed of revenue growth. When revenue grows without the infrastructure to support that growth, clients leave as quickly as they come in.
“Instead of focusing on top-line growth, focus on maximum profit margins. This will completely change where you focus your efforts. I would rather have a $10 million business with 50% margins over the false glamour of a $50 million revenue business with razor thin profits.”
2. Without the right systems, process and people, you’ll never be able to scale
Allon believes the biggest mistakes entrepreneurs make are:
- Not arranging sufficient cash reserves for a growth period
- Believing that the people who brought you to point A are the same people who will take you to point B
- Having insufficient systems to scale the business
Rich agrees, adding that you need to focus on the business you want to be, and not the business you currently are. “Businesses often commit legacide,” he says. “They allow the legacy systems, put in place for a business of a smaller stature, to hold them back. Not to get too cheesy here, but to quote the Great One, NHL hockey legend Wayne Gretsky, you need to skate to where the puck is going. The systems you put in your business should be systems appropriate for the business you want, not the business you have. Sure, you’ll possibly be paying more in the short term, but it will be a fraction of what you lose trying to play catch-up later.”
Howard believes that losing track of managing the expenses required to manage growth is one of the biggest stumbling blocks entrepreneurs face. “To intentionally over simplify it, you want to figure out the most efficient and effective way to rapidly attract and close new clients while being able to serve and delight them at the lowest possible cost,” he says.
“Another mistake is taking on too much debt in the name of growth. We are all mesmerized by VC backed start-ups that put out press about their massive growth. You do not see how much cash they are burning through and that most of these companies have net losses that are growing as fast (or faster) than their revenue growth. Again, protect your profit margins. That is your growth fuel and protection against shocks in the economy.”
3. Growth for the sake of growth can actually kill your business
Before you embark on your growth journey, understand that growth, without sufficient structural foundations, can often lead to a business collapsing. “Some scale has the opposite of economies of scale, and actually becomes more expensive as the business becomes more complex,” says Allon. “It’s important to restructure the model as the business grows to ensure the highest possibility of economies of scale.”
Howard warns that a business structured to lose money as it grows is a poorly structured business. “Making the switch back to strong profitability after a growth phase is difficult to pull off,” he says. “Yes, we all know Amazon.com eventually did it. You are not Amazon.com. Growing with a net loss is a straight road to the business graveyard.”
Rich disagrees with the notion that growth in and of itself will lead to death. He believes that growth is, generally speaking, healthy. “I’ve seen businesses grow too quickly and not know how to deal with it, and I’ve seen businesses that out-grow the maturity of their management teams and get strangled by the firm hold the management team try to keep,” he says, but for Rich, this is the product of a business ill-prepared for growth, rather than a product of the growth itself.
“This is why slow is often better, as opposed to scale,” he says. “I remember when my son was young, and I was still his hero. I couldn’t imagine him shouting at me the way I did to my folks as a teenager – I’d be destroyed. So, I asked my dad about it, he smiled and said, don’t worry kiddo, they ease you into it, it all happens over time. By the time they start screaming, you’re ready. That’s true too for business growth. Most entrepreneurs are running their businesses as a real-time business school. You can’t always rush that education.”
Allon: One top tip for business owners on scale is to remain strategic by knowing what you want to create and by ensuring a healthy balance of capital resources, sufficient people skills and the appropriate support systems.
Howard: Famed business owner Ricardo Semler said “Only two things grow for the sake of growth: Businesses and tumors.” Get crystal clear on why you want to grow. Once you do, find your balance between accelerating new business and the cost to manage that business.Scaling, like a scale, needs balance
Rich: Stop thinking about scale, and start thinking about solving an important problem that world has, even (especially) if they don’t know it yet. It the problem is real, and big enough, you will have a scale-able business.
Secrets of Scale Event #1 – Fundamentals Of Scale
Secrets of Scale Event #1 – Breaking Down The Walls To Scale
Secrets of Scale Event #1 – Paths To Scale
Listen to the podcast here:
Set Up Your SME For Success With Fibre
Boost your business potential when you plug into fibre. It offers unprecedented benefits, taking your business to the next level of connectivity.
More South Africans are turning to fibre for fast Internet access. We’re witnessing a boom in fibre expansion and as a result, it’s becoming a more affordable option for SMEs. Once businesses connect to fibre, they can access a reliable, ultra high-speed connection that unlocks the full advantage of cloud-based processing.
Cater to usage demands
A slow Internet connection can derail your business. It’s imperative for business owners to prepare their networks to handle additional usage requirements. Failing to do this might lead to interruptions, slowdowns and a potential impact on your bottom line. An Internet connection should be a tool that supports innovation and uninterrupted productivity.
Shift to the cloud
More businesses are accessing cloud-hosted information via Software-as-a-Service (SaaS) tools and other platforms. In 2018, nine out of 10 companies in South Africa said they had increased spending on cloud computing, according to a report by World Wide Worx and F5 Networks. Running your day-to-day business on the cloud requires you to have a more powerful Internet connection.
Support video and VoIP
Some businesses make use of video capabilities for training and meetings, and VoIP for sales and marketing. On a fibre line, businesses can ensure they meet these demands without putting a strain on the network. With fibre, business owners can run voice and Internet data on the same line but may look at installing a second data connection for redundancy.
Get what you pay for
There’s no denying it, fibre provides exceptional speeds and offers a brilliant price-to-performance ratio. You won’t receive the same contention ratio as other connection mediums – you will get what you pay for. Bandwidth caps are less of an issue with fibre because there’s a choice of affordable uncapped deals on offer.
Make the right choice
- Before you decide on your fibre deal, ask the right questions, understand exactly what you’re paying for and match your business requirements with the right amount of bandwidth.
- Choose a provider that allows you to manage growth for the long term – one that allows you to choose your deal, scale when necessary and not throttle your fibre line.
- You’ll also want an ISP to have your back further down the line. Insist on obtaining a comprehensive list of services along with the monthly fee. Ensure you are provided with a full service including all necessary support and equipment to deliver optimal fibre performance.
Ignite’s drive and purpose is to be the spark that inspires SMEs, which is why the Ignite Fibre service is structured to put you in control. Ignite offers you tailored packages that take into account your daily Internet and business startup needs.
Designing Her Destiny
Oh Yay! owner, Emmerentia van den Hoven does business her way.
In 2011, Emmerentia van den Hoven took a leap of faith when she decided to leave her graphic design job at an agency and pursue her real passion – and it has paid off tenfold. Here’s her story.
“When I started planning my own wedding eight years ago, I fell in love with wedding design and wanted to do that for the rest of my life. Designing for brands had become a set of rules rather than being creative, and I’d always wanted to work for myself. So, in September 2011, I turned my seven-month-old side gig into a fully-fledged business and launched Oh Yay!
I have to hustle every month to get new clients because every client will use my services maximum twice – first for the wedding invitations and then for the stationery on the day – so I don’t normally have returning clients.
Because my main business is seasonal and usually once-off per customer, I have branched out into branding for small businesses in the beauty and lifestyle industry. I also earn a passive income through the Oh Yay! online shop where I sell wedding décor items. Oh Yay Kids – my other online store – is my passion project. I launched it just before my second child was born, adding items to the store that I made for my two boys when I saw a need for it. I then expanded into prints for nurseries and kids’ party stationery.
I work for myself and have no employees, so the fact that QuickBooks lets me load all my services, products and prices in one place makes running my business so much easier. Being an entrepreneur is difficult because you don’t know if you’ll be successful or not. But if you believe in and love what you’re doing, it reflects in your work and the service you give.”
Less admin, more of what you love
When Oh Yay! was launched, along with her dream of being an entrepreneur, came the nightmare of other administrative tasks. But that changed in 2018 when Emmerentia started using QuickBooks.
“When I was using spreadsheets to balance my books, I was spending 80% of my time on admin, which left very little time to tend to customers’ orders. I now spend no more than 25% of my time on admin, which is important, especially when it comes to the speed at which I send quotes. You don’t get any work if you don’t send out quotes and it’s tough to juggle the admin with your actual job of running the business.
Numbers were never really my strong point, so having a professional quote done in record time not only projects professionalism, but the format also changes the way new clients see me. In my industry, the quicker you can send a quote out, the likelier you’ll get the clients’ business. It gives legitimacy to my business. The QuickBooks system operates so seamlessly that clients communicate with me differently, like I have my own accounting department, when in fact, I’m a one-woman-show.
I used to dread doing admin, but now it’s so easy and quick. I’m not just saying this – QuickBooks changed my life.”
The Future Of Fleet Management Is Now
Power up your fleet management and make even smarter business decisions with the new WEBFLEET. WEBFLEET is the award-winning Software-as-a-Service fleet management solution from TomTom Telematics, designed to provide you with the data needed to help your field operations become more efficient, more productive, safer and more profitable.
An improved interface and enhanced features mean WEBFLEET is now more powerful than ever before, and can be accessed anytime, anywhere on any screen. Find everything you need to help save on fuel, maintenance and administration costs, while delivering the quality service your customers demand.
It has already delivered proven results for customers across the globe and is powered by continuous innovation, meaning it is ready to grow with you and your organisation as goals and challenges change. Discover the future of fleet management now and help give your business an edge on the competition. Request a demo and find out more at telematics.tomtom.com/webfleet/landingpages/launching-the-new-webfleet.
Women Entrepreneur Successes2 weeks ago
Watch List: 50 Black African Women Entrepreneurs To Watch
Support for Women Entrepreneurs2 weeks ago
Funding And Financial Assistance For SA Women Entrepreneurs
Accounting & Payroll2 weeks ago
Wilting Away – How To Boost Your Financial Management Team After The Big Financial Year-End
Snapshots6 days ago
How Pepe Marais Went From Bankruptcy To Founding Joe Public And Becoming An Entrepreneurial Success
Snapshots5 days ago
Ian Fuhr Explains Why He Likes To Launch Businesses In Unfamiliar Industries And How He Made Sorbet A Success
Company Posts2 weeks ago
The Future Of Fleet Management Is Now
Support for Women Entrepreneurs2 weeks ago
Too Few South African Women Become Entrepreneurs, But This Can Change
Company Posts2 days ago
Designing Her Destiny