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The Secrets Of Great Scaling

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To a lot of start-up owners, growth is a universally good thing. You’re a small business now, and you want all the financial stability and branding strength of a large one. Naturally, this means that once you stimulate enough growth, everything else will fall into place, right? Well, not quite. If your start-up has experienced a lot of rapid growth recently, you’ll know that it’s something of a double-edged sword. On the one hand, you’ll have better profit margins and a stronger platform for making a name for yourself. On the other, you’ll have to take care of a lot of scaling, which will mean managerial and organizational changes. Regardless of what your period of growth has done to your business, you need to be able to sustain these challenges. Here’s a guide to managing a rapidly expanding business…

Have a Medium-Term Goal, and Stick to It

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Photo courtesy of Dafne Cholet via flickr

When you drew up your business plan, it’s pretty much a given that you set a range of short and long-term goals, but what about medium-term ones? When business owners totally overlook any medium-term milestones, it can cause all kinds of scaling problems which will come back to bite them in the future. Every good business plan should have a long-term vision and mission, which you’ll ultimately want your business to reach. You’ll need a wider range of medium-term objectives, which will support that end-goal vision, and are usually milestones set five to three years down the line. Then, there are short-term plateaus you should keep in mind – skills, accomplishments and experiences which you can achieve realistically in the next year. A lot of people at the heads of growing businesses become too wrapped up in the long-term, and change the direction of their venture far too frequently. Set yourself some medium-term goals, and stick to them!

Keep Your Customers Happy

You should be placing a strong emphasis on customer satisfaction no matter what stage your business is in, but it’s especially important to make sure you’re not getting distracted by scalability. Your customers are the people who will come up with the most relevant ideas, the most immediate feedback, and in today’s social media-oriented world, they’re increasingly happy to help. No matter how rapidly or drastically your business is changing, don’t sacrifice a formal process for constantly listening to customers, and acting on their input. Aside from holding an ear to the ground, you also need to make sure that you can keep a handle on delivery, back-end support systems, and order fulfillment in the midst of all this chaos. If your customers become dissatisfied with your performance, you’re going to have a very hard time retaining them, and continuing to grow at a healthy rate.

Think About Finances

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As your business expands at a fast rate, there are a range of financial implications which all need to be taken into consideration. As your business becomes larger and larger, your cash flow is going to become strained before it gets any better, so it’s a good idea to look for ways to save as much as possible. Recover any outstanding debts promptly, decrease prices wherever it’s practical, consider refinancing and borrowing money, offer up some rewards for prompt or upfront payments, and eliminate as much unnecessary overhead as possible. You may also be able to draw some savings from incorporating your business or registering it as a certain type of company. This can be done through services like yourcompanyformations.co.uk – registered formation agent . As more and more factors are added to your cash flow, you need to make it a priority to understand and manage those factors, and eventually manage all your income and outgoings with a “big picture” mindset. Financial growing pains have ended countless promising businesses over the years – don’t let yours become one of them!

Find a Good Mentor

Finding a good mentor, with a wealth of experience as an entrepreneur or executive in your field, can take a huge amount of the weight off your shoulders. You’ll be able to reap the benefit of their years in the business, and the advice of someone who’s been in the same position as you in the past. When you imagine a great entrepreneur, you probably don’t see someone who’s constantly asking for advice. However, you shouldn’t let your pride get in the way of the potential success of your business! Some of the most successful businessmen in recent history have developed on the advice of a mentor. Bill Gates had Buffet, and Mark Zuckerberg had Steve Jobs. I don’t care how smart you are, or how disruptive your business idea is, find a mentor if it’s possible!

Surround Yourself with a Great Team

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Photo courtesy of Link Humans via flickr

Continuing on this theme of not thinking of yourself as a one-man-band, surrounding yourself with team members who are significantly smarter than you is essential for anyone who’s at the head of a fast-growing company. No matter how good your product, service or strategy is, if you don’t have a good team behind you, the rapid growth of your business can quickly become overwhelming. If the departments at your company are growing faster than you can handle, then choose the best minds you have available and give them positions as the heads of their departments. By doing this, you’ll be able to free up your time and invest it in your overall strategy. As these people become more familiar with their departments and senior roles, you should keep them in the loop about more executive decisions. Make them a part of the hiring process, and anything else that could impact their role.

Take Away While You Add

A lot of business owners think that once their company grows enough, they’ll have a lot more freedom and flexibility. As a matter of fact, scaling can actually be very restrictive. There’ll be all kinds of things that used to work, but won’t anymore, meaning that you’ll have to rub these out of your usual strategy. It’s only when your operation gets a little larger, you’ll realize that there are a range of things that have always been slowing you down, without you realizing it. Whether you axe paperback to revive the company or do away with things like performance reviews altogether, you need to be aware that certain things will need to go, and holding onto them will only drag your company down. Getting rid of performance reviews, for example, will mean that you’ll free your employees from a lot of tedious work, and redirect those people-hours to more pressing issues. Don’t be afraid to make drastic changes when they’re a gamble, provided that you’re certain you can make them pay off. If your grocery is on the verge of bankruptcy, but hiring greeters will reduce theft and improve sales, then go ahead and do it. If team meetings are too long and ineffective, don’t be afraid of being seen as a horrible boss by banning the use of phones! Whatever’s on the horizon, you need to stop resisting change, and choose the sacrifices you’ll have to make very carefully.

Wrapping Up…

Rapid growth, if you know how to handle it, can promise all kinds of great things for your business. However, if you approach it in the wrong way, it could be the thing that brings your promising idea to ruin. Going from managing a bootstrapped, fledgling start-up to a feverishly expanding business will require a lot of changes in your tactics, but through applying the strategies above and learning as you go, you’ll be able to assure a bright, successful future for your company!

It Doesn’t Have To Be Taxing: Simplifying Your Business Tasks

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Think of everything you have to do in your day as a business owner. Think of the mass of tasks and work you have to perform. Think of the systems you rely on.

When you stump it all together like that, running a business seems like hard work! And it is. There is no doubt about that whatsoever.

Now, technology moves at such a fast pace in the modern age. If you want your business to succeed, you’re going to have to build a good relationship with tech and understand exactly how it all works. You’re going to have to appreciate that your gadgets and computers are going to be outdated. You’re going to have to adapt to thrive and the future is now.

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Photo courtesy of Pricenfees

Now, let’s return to the beginning. If you are adapting so your business can thrive, you’ve still got heaps of tasks to complete. It is now time to knit everything together and see how we can simplify your business tasks.

Let’s talk money first. Accounting software like Sage accounting online is going to save you a lot of headaches. Not only can you keep yourself in the know with your finances with some simple data entry, but it’s also going to be automated and can save you the hassle of replicating invoices and calculating your tax. What does this mean? Well, it means you can spend more time on your actual job than counting coins!

What more is there to know about money? Well, payment is crucial! Sites like Paypal can offer you a cloud-based payment solution that automatically exchanges payments into a currency of your choice – meaning you’re not the one heading to the exchange! This is an amazing solution whether or not you have a lot of overseas customers.

With accounting and currency exchange out of the way, there are already two heavy tasks dealt with. Now, it’s time to talk communication.

Basecamp is an amazing software package that can do it all for you. Basecamp’s Campfire organizes your internal communication and projects in a single dedicated place. The advantages of this are too often underestimated and having a single platform for multiple, yet linked, subject matter (like work) is a brilliant way to increase the productivity of your staff. The campfire app within Basecamp allows you to communicate instantly, like an old school instant messenger app, and in-real time and you can even link to work. This cuts a number of steps out the process and allows your workflow to be centralized with a single piece of software. There are no more messy and long email chains between staff members. Instead, Basecamp offers topic based message boards, instant chat tools, to-do-lists, staff check-ins and instant work reports. Not only can you simplify your staff’s communication process, but you can get everything moving forward in the same direction.

Communication, work flow, accounting and payment – four huge tasks have been broken down and simplified with technology – find out what else you can simplify and launch your business forwards.

This Is How You Can Grow Your E-commerce Store

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If you have an E-commerce store, chances are, you’d like to expand and grow. Everybody wants to make more money and get more conversions, right? Here are a few ideas that can help you to achieve the success you want:

Make It As Easy To Check Out As Possible

Make it as easy as you possibly can during the check out process. Just because somebody is checking out, doesn’t mean they won’t change their mind if it’s taking too long. Go through it yourself and make it as simplified as possible to stop people from abandoning their cart and going elsewhere. This could mean offering a guest check out rather than forcing people to sign up with you, for example. However, there are a few things you might need to change.

Show Complementary Products

Make sure you find a way to show complementary products on the page as a way of up-selling. Show the customer what others have bought, or what goes well with what they’ve bought. This can help you to achieve more sales. If you’re a clothing company, you could show complementary shoes with a particular dress, for example.

Offer Coupons And Discounts

Offer coupons and discounts for certain things. For example, signing up to your newsletter, or even birthday discounts to loyal customers. You could even offer discounts when somebody recommends a friend. Many stores are also offering point systems, so customers can earn themselves a free product after so many purchases. The following infographic can give you even more useful information!


Infographic Created By Red Stag Fulfillment

4 Failure Points that Can Undermine Your Business – Failure Point 4: Don’t Close Your Ears to Experts

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When I launched my second business, a publishing company called Sigma Communications, I was filled with passion but knew next to nothing about publishing a magazine. Without proven competence, I desperately needed guidance. Sure enough, I came to learn that the Chairman Emeritus of Time Warner, Dick Munro, was in the neighboring office. I could not imagine a better advisor for our startup publication and decided to introduce myself.

As I walked down the hall for our initial meeting, I wondered if someone of his stature would take the time to speak to an entrepreneur new to publishing. It turned out that Dick was more than willing to open up to me. He listened carefully as I told him about my idea for my magazine. But I was surprised when he cautioned me that publications usually take a long time to become profitable.

“You’ve got very lofty goals,” Dick said. “When we started Sports Illustrated, we didn’t make a profit for six years. Are you prepared to wait that long? Do you have enough funding to last six years, if necessary?”

I assured Dick that we would do whatever was needed to make our journal successful. In the back of my mind, I had a different thought: We had launched USI and turned a profit in four months. Why couldn’t we accomplish the same with Sigma? I was determined to beat the normal ramp-up to profitability in the publishing industry.

By the close of our discussion, Dick agreed to be our advisor. He immediately started reaching out to his network and introduced us to the publisher of Garden Design magazine. Garden Design‘s publisher was amazingly friendly and generous with his time and knowledge.

As he took us through the mechanics of starting a publication, he, too, explained that magazines take a long time to make money. First, we would need to build an audience. Then, we’d have to sell advertising space. He warned us that revenue from advertising would not start flowing immediately, and even then, it could be just a trickle for several years as we built our subscriber base.

Garden Design‘s publisher was straightforward and very honest. He shared that publishing a magazine was an ongoing challenge. Achieving profitability was a constant struggle with progress measured in years, not months. Because I was used to moving at breakneck speed and expecting immediate returns, I felt we could outperform the publishing industry norm. Rather than listening to my advisors, I allowed my passion for our magazine to distort my views about timing, funding, and reaching breakeven – a fatal mistake.

My unbridled enthusiasm for becoming a publisher, combined with my lack of distinctive competence, put blinders on me. I did not heed the advice of industry experts with superlative track records. Allowing my passion to overrun the common sense of listening to my advisors was Failure Point #4.

4 Failure Points that Can Undermine Your Business

In this series we have shared four failure points that can undermine the efforts of even the most seasoned entrepreneurs. Why not learn from my mistakes?

  • Failure Point #1: Starting a business based on your passion, rather than building a business based on your distinctive competence.
  • Failure Point #2: Convincing yourself that “the world will beat a path to your doorstep” without securing preorders to prove your business model.
  • Failure Point #3: Taking the risk to launch a business without sufficient funding to reach breakeven.
  • Failure Point #4: Allowing your passion to overrun the common sense of listening to your advisors

About the Authors

Ed “Skip” McLaughlinEd “Skip” McLaughlin is the founder of four businesses and is currently running Blue Sunsets LLC, a real estate and angel investment firm. He bootstrapped his first business, United Systems Integrators (USI) Corporation, a corporate real estate outsourcing firm, and grew it into an Inc. 500 company. In 2001, Ed earned Entrepreneur of the Year honors from Ernst & Young. In 2005, he sold USI to Johnson Controls, a Fortune 100 company, and at that point, became CEO of JCI’s Global Workplace Business for the Americas. A member of the Board of Governors for Tufts Medical Center, Ed founded its David E. Wazer Breast Cancer Research Fund. He graduated from the College of the Holy Cross, where he is a member of the Board of Trustees. Active in philanthropy, Ed lives with his wife in Connecticut and has three adult children. Contact Ed at [email protected] or connect with him on Twitter @purposeisprofit.

Wyn LydeckerWyn Lydecker is the founder of Upstart Business Planning, where she works with entrepreneurs to develop plans that answer the questions investors ask most often. Previously, she was Managing Director of Business Plans International in New York and Co-Director of the Small Business Resource Center at Norwalk Community College. Wyn has an MBA in finance and marketing from the Wharton School of the University of Pennsylvania and a BA in economics from the University of California at Santa Barbara. She serves on the board of a local nonprofit she helped found, At Home In Darien. She lives in Connecticut with her husband and has two adult children. Contact Wyn at [email protected] or connect with her on Twitter @upstartwyn.

4 Failure Points that Can Undermine Your Business – Failure Point 3: The Dark Side of Bootstrapping

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When we launched my publishing business, Sigma Communications, I was so passionate about the magazine, and so confident that it would be a runaway success, that I decided to self-fund. After all, I had successfully bootstrapped my first business, USI. Why couldn’t we bootstrap Sigma, too? Unfortunately, I had to learn the hard way that bootstrapping is not always best.

I came to realize that I did not properly factor the size and scale against the funding needs of Sigma. And I completely miscalculated the time it would take to reach breakeven. Sigma’s quarterly magazine, The National Register of Commercial Real Estate, consumed capital at a rate far greater than USI could generate it. Since I had never manufactured and shipped my own product before, I underestimated the continuous cash drain from ongoing production and distribution.

After almost three years of losing money, things started to become stressful. Our business model was not working as planned. Advertising revenues were slow to trickle in. While some major holders of real estate agreed to place listings, many did not. The deep recession in commercial real estate had forced corporations to freeze all marketing budgets. Many of the big real estate holders were not allowed to spend a dime on advertising, even though corporations were spending millions just to maintain their surplus real estate.

Selling display advertising to non-real estate advertisers also proved to be extremely challenging. As a new publication, we did not have an audited distribution to prove our circulation. While we planned to sell a full-page, four-color ad for $10,000, no advertisers would pay that rate. We were lucky to get $5,000 for a four-color ad and $2,500 for a black-and-white ad. When we approached big advertisers like Absolut Vodka, they said they would love to put an ad in our magazine, but they would not pay us anything for the placement because they felt their brand name gave our magazine credibility. We were forced to accept their terms.

With little advertising revenue flowing in, we had to rely on USI’s profits to fund most of Sigma’s cash needs. To make matters worse, we found ourselves spending 80 percent of our time on Sigma and only 20 percent on our cash cow, USI.

By its third year, Sigma was still burning cash. Quarterly advertising revenue was averaging $100,000 per issue, while expenses were running at $200,000 per issue (20,000 copies × $10 per copy = $200,000 in expenses). We were losing $100,000 per issue and could not forecast when we would break even. We started to hit a wall.

Generating a profit from a publication was a slow process. Sigma had begun to run an annual deficit of $400,000. We could not continue to bleed cash and rely on USI to fund the shortfall. USI needed money to fund its own growth. If we had planned properly, we would have raised enough financing to see us through the gestation period of a national publication.

Bootstrapping was not enough. We needed outside capital to reach breakeven – but my desire to maintain control and my ego stood in the way. Having insufficient funding was Failure Point #3.

About the Author

Ed “Skip” McLaughlinEd “Skip” McLaughlin is the founder of four businesses and is currently running Blue Sunsets LLC, a real estate and angel investment firm. He bootstrapped his first business, United Systems Integrators (USI) Corporation, a corporate real estate outsourcing firm, and grew it into an Inc. 500 company. In 2001, Ed earned Entrepreneur of the Year honors from Ernst & Young. In 2005, he sold USI to Johnson Controls, a Fortune 100 company, and at that point, became CEO of JCI’s Global Workplace Business for the Americas. A member of the Board of Governors for Tufts Medical Center, Ed founded its David E. Wazer Breast Cancer Research Fund. He graduated from the College of the Holy Cross, where he is a member of the Board of Trustees. Active in philanthropy, Ed lives with his wife in Connecticut and has three adult children. Contact Ed at [email protected] or connect with him on Twitter @purposeisprofit.

Wyn LydeckerWyn Lydecker is the founder of Upstart Business Planning, where she works with entrepreneurs to develop plans that answer the questions investors ask most often. Previously, she was Managing Director of Business Plans International in New York and Co-Director of the Small Business Resource Center at Norwalk Community College. Wyn has an MBA in finance and marketing from the Wharton School of the University of Pennsylvania and a BA in economics from the University of California at Santa Barbara. She serves on the board of a local nonprofit she helped found, At Home In Darien. She lives in Connecticut with her husband and has two adult children. Contact Wyn at [email protected] or connect with her on Twitter @upstartwyn.