3 Key Points in this Episode:
- You must complete the prototype of your business before you can scale.
- Scaling a business is not about going big, it’s about starting small and doing it right at the beginning.
- The result of scaling a business often leads to selling the business.
Welcome to episode 71.
We have come along way in the Blueprint of a Great Business Series. We’ve talked about overarching life and business goals, we have talked about establishing your leadership foundation, your management framework, and the curb appeal of your business which really is your brand. We’ve talked about the interior design of your business which includes your financial, operations, and marketing systems.
What is the point of all of this?
Remember that my definition of a great business is that the business operates predictably, operates independently of the owner, can scale and finally can be sold.
Everything we have talked about so far is all in preparation for first scaling the business, and then selling the business when the time is right. That is what the last two episodes of the Blueprint of a Great Business Series will focus on.
This week we will talk about scaling your business and next week we will talk about selling your business.
Are you ready to learn how to scale your business? Let’s get started.
When we build a home, we start with a blueprint and then we build the home starting with the foundation and ending with the interior design. At some point, we may decide that it is time to add on to the original home.
This is what scaling a business is like, there are two distinct phases.
The first phase is what many call “prototyping” which is the process of building a systems-centric business that can be scaled. This involves creating systems, testing them, and then implementing them in your business. Once every aspect of your business has been systemized and you have hired people to fill each role your prototype is complete.
The second phase is scaling the business. This involves replicating the prototype. For some businesses, it involves opening new locations in new cities, but in other businesses, it involves replicating groups of employees performing specific work.
For example, in most contracting businesses you have a truck or van with a crew of employees working out of that vehicle. The business starts with the owner driving the vehicle and doing all the work. Then the owner hires a couple of helpers. That is where the whole thing usually stops.
When done properly, the business owner hires an operator to replace themselves and that operator and the helpers start doing the work. The owner then buys another vehicle and hires another operator and a couple of helpers, trains them with the systems they have designed, tested, and implemented and now the business has scaled to two. This process is then repeated many times over and the business scales.
The process of scaling continues until you build a business that either is large enough to allow you to completely step out and remotely operate the business or you get the opportunity to sell the business.
A word of caution: Your personality profile may limit your ability to scale. Many business owners who have built very nice small businesses have tried to scale too quickly or too large and the whole thing has come crashing down ending in a total nightmare. For more information on personality profiles click here.
Many people think that scaling a business involves going big when it is the total opposite. The reason everyone assumes scaling is all about going big is because they only look at large multi-national businesses and fail to appreciate what happened prior to the business reaching its current size.
If you try to build the next McDonald’s, Walmart, Google, Facebook, or Amazon you are going to probably fail, or at the very least be totally overwhelmed. The secret to scaling is not looking at large corporations who have successfully done it as they look today. The secret to scaling is starting small and looking at how those massive businesses started out.
What was their prototype?
Why did customers love their prototype?
How did they replicate their prototype?
Only when we look at what was done at this phase of the business can we gain insight into what it takes to scale a business.
The second word of caution: You can do this, you can create a prototype of a great business and you can probably even scale it to multiple locations or crews. For most of us that is all we want and need and that is where the story will end. But, if you have dreams of going global like McDonald’s, Walmart, Google, Facebook, or Amazon you are going to need capital and lots of it.
Scaling a business is all about doing the right things at the beginning and replicating that repeatedly. Scaling a business that is self-funded is limited by the available capital so if you want to go global you are going to need investors.
I’ll tell you this with absolute certainty, if you have built a prototype that works, and when I say “works” I mean a prototype that produces predictable results, operates independently of you the owner and has scaled (even if only to a small degree), you will be exponentially more likely to find someone who will buy your business for a great profit or, if you so, desire you will be able to find investors who will take you global.
I can also tell you with absolute certainty, if you fail to build a prototype that “works”, you will struggle to find a buyer or investors, and, in the end, you will only own a business that has very little value the minute you stop working in the business.
In the concluding episode of this series, I will talk about how to prepare for the final sale. This is for the business owner that has built a prototype that can scale.
Remember you can get the entire Blueprint of a Great Business by going to jamieirvine.ca/book.
On Tuesday, I am going to introduce you to Danielle Grant, a fellow Canadian and a great woman, who specializes in mindset. It was a great interview that I think will help you to ask some difficult questions of yourself which will lead you to make significant changes to improve your life and help you build a better business.
This podcast can be found on jamieirvine.ca, Apple Podcasts, Google Podcasts, Spotify, and Stitcher. If you’re new to the podcast, why not subscribe today and after you have listened to a few episodes give us a 5-star rating and review. To our longtime listeners, I want to say “thank you” for your support, it means the world to me.
I would like to say a special thank you to Martin who lives in Sarasota, Florida. If you need exterior cleaning done, they are the professionals you can trust.
Check them out at gorillakleen.com.
This episode sponsored by:
Every business needs a website and I have used Gerrit and Trackstar Web Design since 2012 and so should you.
I use Process Street to create systems in my business and I highly recommend that you use Process Street as well.
Thank you for listening and I look forward to working with you soon.