EP32: The Truth About Scaling: Why Bigger Isn't Always Better

To scale or not to scale? Not gonna lie -- too many people confuse scaling with growth and vice versa.

Brace yourselves as we break down the reality that only a minority -- a mere 22% of small businesses launched in the past decade -- have succeeded in doing: scaling.

In this week's episode we take a look at how scaling a business differs from growing a business and what it actually requires planning for as a CEO/Founder.

Then, we flip the script...

As a solopreneur, have you pondered the perks of running a sustainable business as opposed to scaling up? We give solopreneurs a little love by sharing the things that make being a solo entrepreneur the absolute bees knees.

Regardless of what path you decide is for you, this episode gives you a dose of loving reality about the ins and outs of business, both big and small.

Transcript

Speaker 1: 0:00

Hey, this is a really quick ad break because I got to pay the bills. The Business Blast for Me podcast is sponsored by Corporate Rehab Strategic Consulting. Corporate Rehab provides strategy operations and leadership growth support. So if you're ready to clearly identify what you and your business need to move to the next stage of growth, book a call, head to the show notes and click that link. That wasn't so bad, was it? Welcome to the Business Blast for Me podcast, where we question the sacred truths of the online business space and the reverence with which they're held. I'm your host, sarah Kahn speaker, strategic consultant and BS busting badass. Join me each week as we challenge the norms, trends and overall bullshit status quo of entrepreneurship to uncover what it really takes to build the business that you want to build in a way that honors you, your life and your vision for what's possible, and maybe piss off a few gurus along the way. So if you're ready to commit Business Blast for Me, let's do it. Hello, hello, blasphemers. Okay, jump in right in.

Speaker 1: 1:00

Recently, I asked on my Facebook page whether scaling their business was a goal of my followers. Now, most of the answers were yes and the reasons were beautiful more freedom, being able to step away from the business without it, you know, falling apart or without impacting revenue too much, having more consistent income, having more income period and to help as many people as they could. Fantastic. Now, some of the answers were no, they don't want to scale their business. In fact, my favorite no was phrased thusly absa, fucking luteley, not 100% my kind of human being. The reason they valued personal relationships and they wanted, you know, to prioritize deep connection Again, beautiful. Now here's the thing None of those answers were wrong. It was kind of a trick question. There's no right or wrong answer when it comes down to whether or not you want to scale your business, obviously, but there's a segment of the small business, online business space that looks at it a little bit differently. It's not about whether you want to scale your business, it's whether you should scale your business, and there are a lot of people who say that unless you scale your business, you're doing it wrong. But the reality of scaling a business is very different for a lot of different people. Now here's the caveat with all of this. A lot of my friends and followers have been in business long enough to really understand what scaling actually is like, what it truly means, and there are a lot of people who don't. And, weirdly, a lot of people who tell you that scaling is the only way to find success in a business really don't understand what scaling means or they have a very high level, simple understanding of it.

Speaker 1: 2:37

To scale my business means to grow my business, and that's not accurate and that's what I want to talk about today. That's not technically what scaling is. So what is scaling? Scaling a business is actually strategically growing the business to keep up with market demand while improving efficiency and increasing profit margins. So what does that mean in real person talk? It's not just about growth. To just say growth is to really ignore the reality of what scaling sustainably takes, because fun fact you can grow your business and not scale.

Speaker 1: 3:16

Growth means adding resources to your business at the same rate, you're adding revenue. So if you get more clients, that means more revenue. So you hire more people to help serve those clients. You add more tech. You add more capital. It's about acquiring and allocating resources. Now, this tends to be the more typical way that a service driven business model grows. Scaling is about adding revenue to your business quickly without adding resources as quickly. So you're adding your resources more incrementally. You're growing your business, which means increasing your resources and your investments without necessarily increasing your overheads and expenses at the same rate. You're finding ways to grow more efficiently, and the result of that result of scaling is more money without an increase in revenue that matches it, so it's basically doing more with less. Here are the stats, though, on scaling businesses. According to data from McKinsey, only around 22% of small businesses that have been launched in the last 10 years have successfully scaled Scaled, not grown.

Speaker 1: 4:28

I'm not here to be a Debbie Downer. If you want to scale cool beans, let's get you set up for success, because there are clear steps you need to take in order to successfully scale a business sustainably and not just grow it. All right, you with me? Okay, if not, scrub back, listen to that again and then meet me here, all right?

Speaker 1: 4:50

First of all, where do businesses go wrong when they try to scale? It's the usual culprits. They try to do it too fast or they focus on short-term goals instead of looking at the longer-term picture and having it planned out. They get bored. They hire for quantity over quality. They never change their audience and expand to newer environments. They're always trying to sell bigger and better to the same people they were selling to when they were doing more personal and intimate experiences. And then the big two they don't pay attention to the processes and systems that are going to help them stay efficient as they scale, so they ignore operations and they don't remain flexible or open to well, the inevitable evolution that comes with scaling.

Speaker 1: 5:39

So what do you need to look at? If you really do truly honestly desire to scale your business, the biggest advice I can give you have a fucking plan. I'm not joking when I say that I've seen people put more thought into their holiday planning than they do into their business growth planning. If you really do want to scale and you want it to be sustainable, which means lasts a long time, you need a plan. So, yeah, things like doing a SWOT analysis super basic, very important, but very, very basic.

Speaker 1: 6:10

You need to actually have a growth plan in all seven categories of your business. Didn't know there were seven categories of your business. Surprise, there are seven categories of your business and because I know you're curious, here's what they are. There's the financial and legal side of your business. There's the visibility and marketing side of your business. There's customer experience. What does that look like? There's your innovation or your offers. What are they going to look like as you scale? There's team growth. There's personal development, because you have to improve as a leader as you grow your business and scale your business. And then, finally, operations the one piece that is always an afterthought for a lot of people because it's not sexy and, as an aside, this is what I support businesses with in my growth navigator intensive. If you're curious, head to my website, getcorporaterehabcom, for more information.

Speaker 1: 7:03

You need to understand the strategy required to grow all seven areas of your business, including, like I said, your growth, right, like what you are going to need to learn and embody from a leadership perspective as you grow and all seven areas of the business cannot grow at the same time. You have to have a plan for each of them. You have to time it out, you have to have a timeline. It's really, really important to understand that. So that's really the first thing have a fucking plan. The plan doesn't stop there, though. It includes having a clear understanding of your cash flow and what sort of financial investments you're going to need to make over the next however long you plan to execute the scale. And then this speaks to timeframes. You don't want to scale too fast. So having a realistic idea and understanding of how long it's going to take you, based on your business model, your resources, your capacity and the maturity of your business as it stands right now.

Speaker 1: 7:56

Sometimes I work with people and I'm like you know what. You didn't do XYZ before you got to this point, so we got to go in backfill. So you've really got to be very clear on what the timeframe looks like. You've got to have a plan for your team. You've got to know who to bring on and when. It's not just about I'm just going to hire a VA or an OBM and they'll fix everything. No, they're not. And please don't look for a fucking unicorn. The number of people who are like I'm going to grow my business, I'm going to hire a fucking unicorn. Stop looking for and hiring fucking unicorns. They don't exist. You also have to be very clear and very intentional about what role these people are going to play and at what points in the growth of the business, in the scaling of the business, their role becomes crucial, and what experience or expertise they're going to need to have. And yes, I realize I've been interchangeably using the term growth and scaling and that's why it tends to be something that people get wrong, because they are used interchangeably, but I'm talking about growth that leads to scaling, just to make sure we're on the same page here.

Speaker 1: 8:55

Then there's the whole thing about not paying attention to the operations right, the systems and the processes that are essentially holding up your business. This is, I think, where a lot of entrepreneurs get caught, because the bigger the business gets, the more processes it requires and the less innovation. So if you're a visionary entrepreneur, this may be something that you resist. This may be something that is really uncomfortable for you or you don't like the idea of because you get bored easily, but the reality is having a plan that you follow ruthlessly is critical. That doesn't mean that you can't be innovative. It just means that you can't continue to prioritize innovation like constant innovation if you want to scale in an effective way and a sustainable way. You can't. I'm sorry to be the bearer of bad news Hashtag sorry, not sorry. Do people still say that? I still say that it's fine. This includes communication channels. If you sucked at communicating with your clients and team members before scaling without addressing that problem or that bottleneck is just going to make it worse. By you I mean the business, not just you you, although sometimes it is a founder thing.

Speaker 1: 10:09

There are some telltale signs of businesses that are growing but not scaling. They want to scale, but they're actually just growing. Just in a nutshell, it includes things like your profit margin starts to shrink or the quality of your output starts to take a hit. You find that your customers are less and less satisfied. Your team is overworked, feeling overwhelmed, generally unhappy. Communication starts to suffer. This means that you've grown quickly, but you haven't scaled. Still not sure what I'm talking about? Hit, rewind, wait, it's not called rewinding. Scrub this episode back to the start or book a call and talk to me. That's also a way that you can do this. Hopefully, that gives you a really quick and dirty primer on what it actually means to scale a business. Here's what I really wanted to touch on today before I went off on that tangent Scaling a business does not have to be the only goal in order to grow a successful business.

Speaker 1: 11:10

There is absolutely nothing wrong with staying small. There's nothing wrong with staying a solopreneur or running a lean business. There is a lot of shit in the online business space that makes you think, if you aren't in it to scale, you're somehow doing it wrong. If you're not in it to grow exponentially and have a big team, you're somehow not cut out to be an entrepreneur. You know that's not how we roll here. You get to decide what a successful business looks like for you, and I'm here to help you understand your options and to see what it takes realistically.

Speaker 1: 11:50

Now, being a solopreneur allows for sustainability way more easily than a scaling business, for obvious reasons. The business model for a start is a hell of a lot simpler. Take me as an example. I'm a solopreneur. I've been a solopreneur from the very start. I do not have a team. I do sometimes hire contractors on a project basis when I need support in certain areas, or I find the simplest way to do something, including this podcast. I have figured out ways to streamline my activity so that everything gets done. I'm not overworked and overwhelmed and, as a result, I take home a lot more of my income than some of my counterparts who have larger businesses with bigger expenses and overheads, and I'm not working nearly as hard or as long as people think. So lower overhead, higher profit margins that's one really great reason to stay a solopreneur.

Speaker 1: 12:43

Some people will tell you that, as a solopreneur, your income is capped because you, as a business owner, only have so many hours in the day. That's 100% true and it's no different than if you have a team. Your income is still capped because your team only has so many hours in a day. And if you think you're going to be making more money because you have more people on the team, yes and no Again. Because you still have to pay the team you got to pay overheads. Your expenses increase, so you're still not taking home as much as a solopreneur. And the truth is, as a solopreneur, you have way more options for flexibility, pricing what you sell. You can pivot, you can change your target audience and your ideal client much more quickly than if you were a bigger-scaled business. They're just less moving parts as a solopreneur.

Speaker 1: 13:30

I've heard people use the excuse that if you don't have a team, you're going to end up overwhelmed, and that's the reason a lot of people hire team members. I've done two episodes on why this is a dumb reason to hire. Go back and listen to them if you don't believe me. If you're a solopreneur, the way you avoid this is understanding exactly what you should be working on every single day and then stay focused, and if you can't do that on your own, you get to hire a coach or you get to bring on accountability partners or a biz bestie to help you not be overwhelmed, to stick to that plan.

Speaker 1: 14:00

My experience has been that a lot of entrepreneurs who feel overwhelmed are honestly just doing too much, and a lot of it doesn't even need to be done. They're doing it because they've been told they need to Right. So they're doing a whole bunch of busy work and keeping themselves caught up in a hustle and in the belief that productivity and Busyness are the same thing. They're not so getting really clear on what are the actual activities I need to do as an entrepreneur solo entrepreneur every single day, every single week, every single month. You can streamline those down so that you're still moving your business forward, but you are not overwhelmed and you can have much simpler processes. You get to have a higher-touch business model if that's what you want, which, if done right, means you can charge a little bit more. By the way, you know things get done more quickly. There are fewer roadblocks and red tape and hierarchy and bullshit. All right, let's be honest, and work overall just feels less complicated and mistakes can be fixed more quickly.

Speaker 1: 15:05

Decision making is quicker and easier. Now, this one's a bit more of a selfish reason, but as a solopreneur, you get to make decisions for yourself and not with a lot of other input or in what I call in committee. When you scale your business, you likely start to have, you know, a leadership team of some kind. So maybe you have a COO or a DOO, a marketing manager, an OBM, and I know you're sitting there thinking, yeah, but I'm still the boss. I get to make the decisions in the business, yes and no. You can run a dictatorship absolutely but you're not going to have a loyal and happy team for long if you're always going rogue and making decisions about their input. The bigger you get. This is just one of the realities of how the business is going to evolve and that's just how these things work. Another benefit to being a solopreneur you get to decide which contracts you continue.

Speaker 1: 15:54

I have a bunch of friends who run agencies and bigger-scaled businesses and sometimes they got to keep working with certain clients because they need the income to pay their teams. They're offering services that no longer light them up. For the same reason, they're out there marketing all the time. I mean, we all should be marketing all the time, but they're like doing double and triple time because they've got to pay for their teams. As a solopreneur, this is less of a problem. I'm not going to say it's never a problem, but it's less of a problem. You get to decide who you continue working with and it doesn't impact a whole bunch of people who rely on you making money. Look, at the end of the day, bigger isn't always better and smaller isn't for everyone.

Speaker 1: 16:35

I understand that some people do want to build an empire and I'm here for it. I'm here for all of it. The bottom line is this Know what the fuck you're getting into. Know what it takes and what you have to give up or gain in order to make it work. Do the research and make it your business to know what kind of business will make you happy and if you are happy right now or forever being a solopreneur and want to make sure you've got processes and systems that support you in maintaining that status, or if you do want to grow your business or eventually scale your business.

Speaker 1: 17:11

On August 22nd 2023, which is the year we're in right now Next Tuesday, if you're listening to this. On the day this episode drops, I'm running a two and a half hour workshop all about making sure you have a solid foundation for all of it. Smooth operations is a done with you hands on experience, where we're going to look at five operational pillars the foundational pillars of your business, and what you need to prioritize, depending on what your plan is for the future. If you're interested, head to the show notes to register. There is a cost to attend it's $247 US and there is a replay available if you can't attend live. That is all for this week. You get to decide whether you want to grow, scale or stay a solo act. It's entirely up to you and you get to have success without the BS. You just got to know what success means to you. All right, I'll talk to you soon.