Learn how to build a scalable business

Learning How To Build A Scalable Business

Learn how to build a business that is independent of you and has value – even when you’re not involved. If you are launching or growing your business, do any of these statements apply to you?

You are putting more and more energy and time into your business but not seeing the proportional increase in output from your efforts. You have not done any planning, training or systems development in your business in the past three months. The thought of bringing in new employees or part-time workers to help deal with an increased workload seems like more effort than it’s worth. Your business is almost totally dependent on the effort, ability and tacit knowledge of one, two or three people. If any or all of these people were to leave you would be in serious trouble. If you won a two week holiday to your dream destination that you had to take in the next month, you would seriously consider not going for fear that your business would not survive without you being there.

Are you feeling like it’s all just too much? That you’re being pulled in too many directions?

The challenge of serving customers, paying accounts, managing employees, sending out invoices, answering emails and budgeting is totally overwhelming. A very high proportion of business owners feel this sense of being overwhelmed at a point in the business development process. So let’s try to understand why.

When launching a new business or growing your business, small business owners initially do a great deal of the work themselves. If you start a software company, you write code; if you start a retail business, you serve customers; if you start a bookkeeping business, you balance accounts; if you start a training business, you deliver workshops.

As a new business owner you also need to take care of a multitude of other things such as accounting, marketing, sales, hiring, training and customer service. Initially this works out fine. With only a few customers, most early entrepreneurs find time to deal with all these responsibilities and they typically enjoy the diversity of tasks. They enjoy the feeling of being master of their own destiny and are willing to work hard to see their dream come to fruition.

In this phase of the business development process there is typically a strong relationship between effort and output. The harder one works, the better the results. But because the entrepreneurs are enjoying what they are doing and because they are motivated by a sense of ownership, they keep acquiring new customers.

Initially new customers are a blessing but slowly the entrepreneurs begin to feel worn down and vulnerable. The challenge of serving customers and taking care of everything else in the business becomes taxing. They start missing deadlines, fail to send out invoices, the books fall behind, they don’t have time or energy to hire new employees and the employees that are in the business are complaining that they need more guidance.

The natural response in this situation is to work harder. In the initial phase of business growth, hard work paid big dividends but now hard work is just not enough. Even though the entrepreneur puts in more and more effort, the effort does not necessarily result in output and the output to effort ratio starts declining.

The entrepreneurs just do not have the capacity to keep operating the business in this manner yet they do not know how to get out of this rut. The mindset for avoiding this age old problem – or for getting out of it – is very different from the mindset for solving problems in the process of growing the business.

Up to this point, the natural and fruitful way to solve problems was to work hard, to put in more hours, and to do more in the business. The mindset for avoiding or getting out of this situation is to spend more time working on the business and to spend less time working in the business.

Working in your business means operating like an employee, doing the day-to-day tasks that are required to keep the business running. Working on your business means creating your business as something that is separate from you, something that is self sustaining without your input.

When working on the business you establish the direction for the company and develop the systems and processes so that the business runs smoothly even if you are not there. You train and empower others to do the work in the business. Pretend that the business you own is the first of 10,000 more just like it. In other words pretend that you are going to build a scalable business.

The Scalable Mindset

Adopting a scalable mindset is one of the best things you can do for your business. A scalable business is a format that is replicated over and over again. You create a system that delivers a product within very particular parameters at multiple locations across the

globe. To do that, you need to:

Understand exactly what value the business should deliver to the customer Create a set of processes that can be operated by people with the lowest possible level of skill Capture all processes and practices pertaining to the operation in an operations manual Provide training and development to new employees so that they are able to effectively learn the system Be deliberate about the culture they wish to create within the organisation Specify how the brand is to remain consistent across locations

Although, on the surface, it may seem simple to adopt this mindset, it is difficult to implement effectively. But if done properly it can have a massive impact on a small or medium size business.

Five Focus Areas for Adopting a Franchise Mindset

If you were going to start growing your business in the next few months, there would be five aspects of the operation that you would need to focus on intensely to get it to the point where it could be replicated multiple times over. By focusing on these elements of

operation, you will be creating a business which is independent of you and one which has value even if you are not involved.

1. Planning Goals

If you were going to replicate your business many times over, you would need to be clear on what you expect each operation to achieve in both the short-term and the long-term.

As a business owner it is easy to become so busy just trying to get through the day that you lose sight of where the business should be heading in the future. Goals and plans drive behaviour but as the leader of an organisation becomes more and more busy it is easy for them to stop doing what is important (setting and monitoring goals) and to only focus on what’s urgent (getting orders out, dealing with complaints etc.). When this happens, everyone in the company loses direction and focus. They become less and less efficient in what they do on a day-to-day basis and the organisation gets caught in a downward spiral of expending wasteful energy.

Take action: To assess your focus on planning and goal setting, consider these questions:

Do you have goals for the next 90 days, one year, three years and five years? Do your partners and employees know what those goals are? Do you have a plan in place to achieve each of those goals? Do you have measures and tools to regularly assess your process in relation to your plan and your goals?

2. Systems & Processes

In the very early phases of growing your business, when only one person is responsible for a task, they can over time learn the best way of performing that task. They learn through experimentation and slowly become an expert at what they are doing.

A problem arises when that person leaves or wants to go on holiday, or when they are the business owner and they have more pressing issues to deal with, or when more and more people get hired to do that same job but need to go through the same drawn out learning process to acquire the knowledge and skills.

There comes a point in a business’s life where the processes that have been developed over time need to be captured and documented. This entails creating an operations manual for the business. Developing such a manual, forces one to carefully consider whether all elements of a process add value and to identify the best person to carry out such a process.

Take action: In adopting a scalable mindset in your business, consider these questions:

Do you have an operations manual describing the major systems and processes in your business? Have you reviewed those processes with the people carrying them out to look for inefficiencies and redundancies? Have you considered whether a person with the appropriate level of skill is carrying out each of the processes in the business? In most cases you should aim to have the person with the lowest level of skill necessary carry out a task. If people are too skilled for the tasks they are carrying out you are likely to incur excess cost and over-skilled people will get bored and frustrated.

3. Training & Development

One of the fundamental mechanisms used to empower others is training and development. A clear sign that a business is stalling is when none (or very few) of the people in the business have been on any kind of training or development activity in the past six months. People in a business are either growing or they are becoming stagnant and unproductive. Training and development programmes are one way to keep them engaged and on an upward growth path.

This is one of the critical tasks for a business owner of a growing business. Whether you are conducting the training or overseeing the process through which others are trained and developed, to adopt a scalable mindset, you need to take ultimate responsibility and ownership of the training and development process.

Take action: To assess the effectiveness of your business, consider the following questions:

Have all your employees been on some kind of training activity in the past year?

Who has not been exposed to any training and development? Why?

Do you have informal activities within the organisation that encourage people to develop and grow e.g. lunch discussions, book clubs or mentoring arrangements Have you been on any kind of training activity in the past year? Have you spent any time passing on knowledge and training others in the organisation in the past 12 months? Could you do more?

4. Culture & Morale

One of the biggest challenges to creating a scalable business is replicating and distributing an organisation’s culture. To ensure the right culture and employee morale across multiple locations, one needs to be very clear on the norms, values and assumptions that are relevant within the organisation.

Organisational culture can develop a life of its own. Therefore, if as the leader of a company, you pay no attention to culture, you are likely to wake up one day and discover that the norms, values and assumptions that are driving behaviour in your organisation are out of alignment with what you want them to be. A leader should own the culture of his or her organisation and as the organisation expands, so the leader should pay more and more attention to the culture that is emerging among employees.

Take action: To critically assess the culture in your business, consider the following questions:

What are the values of your company? Would all your employees agree? What sort of culture are you trying to create in the organisation? How is this culture demonstrated in your behaviour and in the behaviour of the other employees in the organisation? What are the things that carry and retain the culture of the organisation – language, rituals, stories, traditions, people or activities? Is the culture and morale of the organisation getting stronger or weaker? Why?

5. Brand & Reputation

For anyone running a business, one of the biggest risks is the potential destruction of the brand and/or reputation of the business. You should be absolutely clear about what your brand means and how it should be represented in every aspect of the business arrangement – signage, greeting and customer service.

If you wish to build a business that is independent of you and has the ability to expand and grow in an effective way, you need to be explicit about what’s important for its brand. You need to consider both tangible elements (logo, colours, signage, design and communications) and intangible elements of the brand (brand values, behaviours, routines, service delivery).

Take action: The following questions will help focus your attention on brand and reputation related issues:

What does the brand of my business stand for? Would employees agree? Would customers or the public agree? What are the strongest elements of my brand? What are the weakest elements and risks of my brand? What elements of my brand do I expect to evolve and change over the next three years? What elements of the brand should remain steadfast? What kind of employees are best for my brand? What kind of customer does the brand of my organisation appeal to? Is this my target customer?

The Challenge: Adopting the scalable mindset is difficult when you first start out.

After months or years of being manically busy with day-to-day issues it is challenging to take a step back and focus on the bigger picture. It takes immense discipline to work on your business and not be tempted to fall back into the trap of working in your business.