by Safaraz Ali, CEO – Pathway Group
As you are reading this article you may be wondering, how and when to scale your business.
The important question to consider first is a slightly different one which is: Why? Why would you scale your business?
When you have a growing, profitable business, there are inherent risks. Typically, the underlying issue is that the management’s capacity falls behind the needs of the day-to-day operations, which leads to growth pains such as high organisational stress and negative disruption. These types of growth problems can quickly spiral out of control and it is then difficult to recover.
Long-term business survival rates are low; and we hear this so much that we can get slightly immune to the reality and think it will be different for us! If you are seeking to scale your business, then before you begin, it is crucial to understand the risks you may need to take and the sacrifices you may have to make.
To maximise your growth potential and to scale, at times you will need to consider stopping first, reconciling, evaluating – in fact just taking the time to look within. You must be willing to be completely open-minded, which is often easier said than done, be willing to unlearn, relearn as well as learn. This may include listening to things that it may not thrill you to hear. The worst thing to do here is to allow fear or worst your ego to prevent you from assessing the steps you need to take.
For example, it is a mistake to assume that as the founder, you are fully capable of taking your business to the next level. The best recent example of this is Ben Francis, the founder, and current majority owner of Gym Shark.
Ben Francis established the now billion-pound-plus business with the help of school friends but stepped down as CEO and moved to the position of Chief Brand Officer in 2017.
Ben Francis publicly stated that one needs to build the team in a way that is truly best for the business.
You may in fact be the best person for the role, and have the hunger and skills to develop, grow and scale the business however it is critical to understand that scaling requires a different skillset and strategy to those of creating a start-up. Unless you understand the new requirements and the implications–both for the company and for you as the leader–the odds of failing will be high.
It is obvious that a company made up of ten people will be different to one of fifty, one hundred, one thousand, and so on. The challenges and complexities are different, such as the requirements for the structure, management team skills, board structure, and cash-flow. Growing pains caused by a misunderstanding of the best way to scale the business may stop growth or even result in negative or at worst a critical situation, which is why it is vital to focus on how to retain competitive advantage.
The Biggest Challenge of Scaling
To successfully scale a business, a founder must typically retrain their instincts.
I would even say that a founder’s usually infallible gut instincts can be a liability with scaling. There is no getting over it; scaling often is a complex and rigorous process which requires careful planning and a powerful team.
When a business is in its infancy, its leader will typically make decisions based on their instincts. The leader will draw on their knowledge and experience to generate and execute solutions. Instinctive type management often work well for a small, agile company, but if decisions are made with an instinctive leadership style during the complex process of scaling, in my view the business frequently suffers.
The leader or founder needs to stop making all the decisions themselves because they will not have time, and often may not be the right person to make every decision. This can be particularly challenging for an entrepreneur who is used to being involved in every move. But to scale successfully, giving up some level of control is vital. The leader who does not release some of his authority, risks becoming a bottleneck and ultimately leads to poor decisions.
Scaling demands that leaders put aside their visionary qualities, which often is not easy. Most entrepreneurs are not natural scalers; they enjoy autonomy and flexibility which are typically entrepreneurial qualities and the reason many enjoy the start-up phase. Scaling is primarily operational and administrative, and it takes time to put the systems in place, which is something you must accept if you commit to scaling.
I will conclude by saying I do not actually evangelise scaling your business as it is not necessarily the best route for everyone. It all starts with you, so it is essential to first achieve clarity on your “why”.