Achieving business scalability. Practical tips
October 3 2022
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How do you get your business scaled and keep it scaled in practice on an ongoing basis? The most important thing is to develop the processes that will bring customers to your business. The next step is to fine-tune these processes by eliminating their weak points. However, you can’t do without screening the company first to find out its unique market offering. This particular aspect involves multiple steps and I will walk you through them as I tell you how to get rid of whatever it is that is holding back your business from becoming fully scalable.
What is business scaling?
It’s all about the definition. Business scaling and growth are two different things. Some businesspeople confuse the two concepts, while the differences are large and important.
Growth, or business development, is simply a company ‘gaining mass’, swelling its revenue, hiring more staff for production, customer service, process support, etc. The problem is that as your company grows it consumes a large amount of resources over a prolonged period of time. It is usually stable and increases as you go along, but it is unlikely to decrease.
Scaling, on the other hand, is when a company earns more revenue with the same consumption of resources. It does not increase employment or incur additional large expenses.
How do you scale a business? The difference between one definition and the other becomes obvious when a company is no longer a start-up (it has had a stable market presence for some time), but is not a large and established player either. It is then a scale-up, i.e. a company that accelerates (speeds up) growth. In practice and without going into too much detail, a company that is scaling up increases its revenues faster than its expenses. Very often, such a company will use a growth hacker or an external consultant to support the processes and improve business scalability.
Who is a growth hacker?
A growth hacker is a business-scaling specialist who commands a combination of various skills, one of them being preferably a T-shaped personality, i.e. one that can synergize in-depth knowledge of one or several fields with a high degree of versatility and information from interrelated areas.
This is important because growth hacking is a methodology of marketing, sales and product development, all at the same time. While traditional marketing focuses on building awareness and customer acquisition, a growth hacker takes care of the entire sales funnel (link to my article “How do you design a sales funnel in B2B?”).
This is important because a growth hacker is a person who supports the scaling of a company in a non-standard way, often focusing his/her efforts on product development (link to my article “Stand out or die – what is a product development strategy?”). So, a hacker must not only have a solid grounding in the marketing and sales area, but also a thorough understanding of the company and its offering. Only then will he/she be able to create an effective marketing strategy.
How do I achieve business scalability?
First, a few important pointers:
- focus primarily on your company and its offering, not your competitors
- focus on increasing product and service value rather than on the price or marketing itself which are also important but will be discussed in the next steps
- introduce and manage innovation
Managers often make the mistake of comparing themselves to competitors in the initial phase of change in the company. Why? This is, after all, not what scaling a business is about. The key components of the process relate to your business. By trying to see what others are doing, you are not focusing on what you are doing yourself. Indeed, the scaling process is about your organisation. It’s also about the uniqueness of your offering, but we’ll get into that shortly.
The next step is managing price and price growth dynamics. But we first need to do scaling, then marketing, and only then price adjustment if necessary. Scaling a company involves, among other things, branding, which is a basis to build on. Derived from this are marketing processes, including growth hacking. You need to start out by delivering value to the market, building up that value internally within the company, and only then, you can think about its transfer. An important concept here is the ‘unique selling point’ (USP).
Another important point is that scaling doesn’t have to but can and probably should be based on innovation in terms of product, offer, customer service or – more broadly – in terms of the big picture of settling the business into a particular niche. It’s your call. We’re talking about brand purpose here. This is the starting point for all innovation and downstream thinking.
Conditions for upscaling – your capabilities and the market
You need to consider three important things:
- the market in which your company operates must be large enough for you to grow
- the lifetime value (LTV) of the customer must be sufficiently high
- the customer acquisition cost (CAC) must be relatively low, up to a maximum of 20-30% of LTV
You can never forget about these three parameters. The market can initially be large but then shrink. The question is, can your company survive in it? The answer is yes, but here again, we come to the unique value offering. This decides success (and makes you stand out among competitors) in a crowded market, while also allowing you to survive in a market that can only sustain a handful of product or service providers. If you are wondering how to achieve business scalability, this step is always the one to start out with.
Lifetime value is a parameter relating to your company’s estimated revenue generated from a customer relationship. This suggests a returning customer who sees value in and is loyal to the company.
Customer acquisition cost is in turn the sum of the marketing expenditure divided by the number of customers acquired. Naturally, the lower the unit cost, the higher the profit.
But this is only the beginning. The following are the three basic pillars of scaling.
How do you scale a business? Here’s what you need:
- a unique value offering
- focus on the company’s core strengths
- scalable processes
- employee autonomy and confidence, elimination of micro-management
- established and stabilised customer relationships for consumer loyalty
- business networking for easy access to specialists – both in-house and freelance
- process automation for a sharper focus on the creative side of doing business
- a company culture that allows everything to fall together and goals to be achieved effectively
I’d like to emphasize this last point in particular. Company culture is not just about onboarding, going out to lunch or team-building trips. It is above all a sense of belonging to an organisation based on mutual respect and trust. When employees feel comfortable and at ease in a company, they perform well. As simple as that. They don’t get stressed when presenting ideas. They come up with ideas off their own bat. They don’t feel afraid to speak up about a difficult situation in the company, they give feedback. Quite often, they also teach and help others thrive in what is known as reverse mentoring.
All of this is part of the Management 3.0 trend. In fact, everything you see on my website – be it services or blog posts – is interconnected and synergized on many levels. This is why my approach to business development is effective: it addresses all the key business areas, bundling them into a consistent and functioning whole.
How do I achieve business scalability? Facts and myths
I worked as a full-time employee for many years; formally as a content specialist but I actually supported marketing processes, sales processes, website changes… I helped salespeople prepare emails, and optimized human resources and employer branding (HR/EB) processes. Later, when I started my own business, I realized that many entrepreneurs didn’t quite know how to achieve business scalability. They didn’t always understand what that means. Many managers say that scaling is selling or providing services abroad. But just because your company website is in English, it doesn’t automatically mean that you can sell abroad. Unfortunately, it doesn’t.
Firstly, in order to sell abroad, you need to understand your customer. Learn the business, test the business model, create and stabilise internal processes. Only then can you ‘go abroad’ with such a model (properly scaled and customized to local realities).
Secondly, having a website in a foreign language is not business scaling. The key elements here are understanding the local customer and creating a local branch with people who know and easily navigate the local environment. This involves creating repeatable processes that originate from the head office but may need to be tweaked to the new market. None of this is easy and takes time. All these are hurdles to business scaling which affect the journey to business scalability. Sometimes, the company itself is its own hurdle.
Another important myth to bust is that once you have scaled your company (i.e. the business is growing, earns a steady revenue, costs are kept in check and processes are working) then the job is done and you can just kick back and cut off coupons. Unfortunately, no. And this goes back to the uniqueness of my approach. There is a big difference between branding and marketing. The latter should always be a component of the former.
If you have your branding properly sorted out by establishing the company’s mission, vision, values and principles, the chances are good that you will be able to rely on it for years to come. Forever, in fact. However, marketing activities need to be adapted on an ongoing basis, depending on current customer needs, changing market situations, trends, production technology, etc. Branding is permanent, though. What does this mean? Business scaling and processes change – they are never set in stone. Once created, the framework of the scaling process, including branding, is designed to last for years, but what wraps around that skeleton changes. The work of adapting a company to the current market situation is never finished. However, it is much easier if a solid foundation is laid first.
Another misconception is that many managers think of the product as final. “I can’t scale unless I have a finished, perfect product ready.” No, your product will never be finished. There will always be something wrong, there will always be something to improve. But that’s what successive models and semi-products are for. You don’t need a perfect product to scale your business.
Let me use an example from the world of technology. The term minimum viable product (MVP) describes an application that is not yet on the market in its final form. It has been released with all the key functionalities, but not all of them. In addition, it is not yet fully developed. But it works, serves its purpose and delivers value to users. The same goes for your products. Launch something that is good, good enough. The rest is just more models.
I think this is where the evolution of the MVP concept can help you. It is called a minimum loveable product (MLP). It‘s a concept from the world of user design and user experience (UX/UI). The idea behind it is that in the age of the app economy, i.e. an economy largely based on the Internet and apps, companies have become accustomed to putting weaker and underdeveloped products on the market. Customers tolerate this to some extent. Meanwhile, MLPs are what I call MVPs created with love. They are unfinished, so they can’t be called a complete product, but they’re polished enough to prevent users from getting frustrated with the product’s flaw or blandness.
How do you achieve business scalability? Remember that you have a good product. Believe in it and don’t try to be a perfectionist. Customers don’t expect perfection, they expect you to address their need or solve their problems.
Think globally, act locally
Another point is so important that I am writing a whole section about it. Business owners often want to go international with their offering. Sometimes too early (operational and budgetary constraints), sometimes they are not prepared enough or do not understand the market. This is precisely the problem. If you are also including overseas expansion in your scaling up (a much later stage), keep local conditions in mind.
For example there are a number of foreign companies that have been successful in France or Germany, but these are difficult markets. Buyers in these countries ‘buy their own’. They rely on local solutions. Therefore, one of the basic things you should do in such cases is to create a local branch so that you have a company registered in one of these countries. This will show customers that you are committed. You can also create a completely new brand with an associated name in the local language. Few people in Western Europe know that the Italian-sounding footwear brand Gino Rossi is in fact the brainchild of a Polish company.
Beware of cultural differences – they are full of pitfalls. A company I used to work for, Landingi, is an interesting case study. They once had a rather interesting slip-up. They wanted to expand into the French market, but were unaware of the local conditions and the fact that the French prefer their own companies. So, they looked for another French-speaking market and that’s how they ended up in Algeria. Customer acquisition cost? Very low. The needs are there. The problem? Algerians don’t do business with women, so not having a non-female French-speaking Customer Success Specialist was quite an obstacle there.
Such things unfortunately do happen, so apply the principle of ‘think globally, act locally’. First, build sales and marketing processes in your home market. Then, if that’s your strategy, expand your company into global markets, but don’t attack them all at once. Focus on the most promising ones and adapt your operations to local needs.
Business scaling blockers
There are several major obstacles that can prevent you from continuing to grow your business. Blockers to scaling your business appear in different areas of your business; you need to address them all.
What if we don’t have a sufficiently creative marketing strategy? Creativity is always important, but its role is perfectly highlighted in a recession. As I write this article, it is mid-2022. The war rages in Ukraine and the global economy has not yet recovered from COVID-19. There is also growing social unrest in various parts of the globe, all of which is causing a decline in purchasing power around the world.
A study by LinkedIn B2B Institute study looked at 1,600 companies with B2B offerings and discovered declining effectiveness of marketing and advertising. No less than 75 per cent of the companies surveyed had one-star ratings, i.e. zero effectiveness.
The key problem here is the age-old dilemma of signal vs. noise. Today, every company has a marketing department that does something. Many companies opt for content marketing activities. Except what do we do if the materials fail to deliver the results? What’s necessary is SEO optimisation, collaboration with the sales department, but above all thought leadership. The company must have something to say. And here again we return to the issue of branding, which I have raised several times. Don’t think about how to achieve business scalability – start with the basics first.
What if we don’t have AIO mapping? AIO mapping is an acronym for audience, intent and offer.
- Audience. Consider who the target audience is for your sales offer and marketing message. Create buyers.
- Intent. Think about your sales funnel – where in the funnel are these audiences? What their needs and challenges are you able to address with your product and message?
- Offer. Analyse whether the offer you have for customers is sufficiently clear and compelling. Is it engaging?
What if our data analysis/capture resources are non-existent or inadequate? Information, or data, is one of the most valuable currencies of the modern age. Some companies do not collect data at all. Some do not structure it well enough, which causes problems when analysing it. Some companies are not competent enough to learn the right lessons from the data they collect. There is no growth hacking.
There may obviously be more problems. The most common ones are the challenges of raising funds or access to qualified professionals. Over time, all these problems can be solved. However, my experience shows that most of the challenges are rooted in a lack of foundations (as mentioned earlier) or in the improper arrangement of these foundations. Unstructured operations are the first and most serious threat.
Business scaling – let’s get our priorities straight
How do you achieve business scalability? Approach this in a similar way to how you approach the digitization of a business – focus on the organization, define goals, appoint change leaders who will support your approach and spread change within the organization. Internal advocates are a very important part of being successful.
Here is a short and necessarily a somewhat simplistic guide on how to scale a business:
- Know your brand purpose.
- Communicate within the company the need for change and prepare change leaders for it.
- Refine the product and services.
- Assemble a team to manage the change (sales, marketing specialists, project and product managers, etc.).
- Create a company culture based on respect, trust, knowledge sharing and honest feedback
- Forget micromanagement – delegate tasks
- Create repeatable and scalable processes or optimize existing ones
- Establish a genuine relationship with your customers based on an understanding of what they care about rather than what you need
- Periodically evaluate your processes and change your strategy at least every two years (marketing and sales strategy, not branding)
- Adapt to change and remember to innovate
It is, of course, difficult to create a one-size-fits-all guide for every industry and every individual company. It doesn’t work that way. What works in one industry will not work in another. What works perfectly in one company will not necessarily suit another even in the same industry. This is largely (but not exclusively) because of different customer groups and different expectations. Therefore, one of the keys is to customize the commercial offering and marketing message.
How do you achieve business scalability? Calmly and with a clearly outlined plan. Tools such as mind maps or co-working products like Miro are good for this. However, these are no substitute for a well-considered idea of what you want to achieve and over what time horizon. Therefore, take care of the basics. If you need external help, I offer my business consultancy.