What does scaling the business mean? For a business to be ready to scale, there are three stages involved:
1) Search for product market fit
2) Search for repeatable and scalable infrastructure (preparing to scale)
3) Scaling the business.
Stage 1 and 2 require the business to conserve cash while stage 3 involves investing aggressively.
In stage one of finding product market fit, we look at the slow grind of day-to-day business that most organizations never leave because they never find product market fit. Then when you find it, and there is the trauma that your organization goes through as you try to manage it.
In stage two, we look at preparing to scale and what you need to do to prepare to scale an organization. We could do that in stage one while you’re trying to find product market fit, and then be ready for, for product market fit experience when it happens.
Now we want to deal with scaling an organization in stage three, it’s a very different reality than anything we’ve experienced before. This is where you put the pedal to the metal to scale the organization, and you get to understand what scaling the business means. Here are thoughts on scaling;
Don’t scale until ready!
Number one thought, don’t scale until you’re ready. First to market is not an advantage. Contrary to popular belief, you hear people say all the time that first to the market is an advantage. No, it’s not. First to market is first to get killed.
First to market is a big Bulls eye on your back. If you’re going to go to market, the mainstream market, you better be ready to race. In the early adopter innovator market, getting out there early has an advantage, but not scaling to the mainstream. It is different.
Prerequisites are met
Have you met the prerequisites to scale going back to our people, processes, platforms, production and sales model? Before you scale, if you try to scale without standardized processes, you could have a significant problem. When you try to scale without people, your quality goes down the tubes, and you overwork the ones you have.
There are challenges, and you want to get these prerequisites met before you try to scale the organization, and that includes the finances.
Pivot & Race as fast as you can!
Now, once you go to scale, you are going to pivot as a team and an organization and you are going to race as fast as you can. Everything shifts here. The shift in the culture is massive. I remember an organization that went from 70 employees to 500, in two years, everything changed.
In the early days, it was very relational and very easy-going and laid back. By the time they sold the company with over 500 people and many multiples of revenue, everybody was walking around in suits. It was very professional, very different than an early stage company. The culture and environment were very different.
When you pivot and turn around to race as fast as you can, it’s going to be very different for your organization and culture.
Manage increased burn rate with infrastructure scaling
You are going to have a great challenge of managing increased burn rate because you’re going to start spending money like crazy because now you are scaling. You are hiring people, scaling production and going after other markets with your sales model. All of these things are happening at the same time, and your burn rate is going through the roof as you scale. This is a big culture shift.
Managing Culture Transformation
Managing the culture itself will be one of your greatest challenges. Over 90% of all work force employees today are already traumatized. They’re traumatized because of the pace of accelerating change, not only in business, but also in their personal life.
If you get an organization in trauma, it’s very difficult to achieve any kind of top performance. Managing culture at this point is absolutely crucial. Your focus at this point in stage three is to manage resources and culture for an invasion of the mainstream market while under heavy enemy fire. I wish you the best, it’s not for the faint of heart.
That is why getting people that are professional at doing this is a very valuable thought, in that organizations start to hire people that are skilled at this invasion of the Main Street.
Deadly Sins of Scaling
It is important to learn some of the mistakes and misconceptions when seeking to understand what does scaling the business mean. These are some of the top deadly sins that have been seen in people trying to scale.
o Target customer mix up
Many people trying to scale think they’re selling to the same customer, the same end user as the sales ramp up to the moon. They don’t realize they’re actually Crossing the Chasm at that time. They actually run into a different end user in the mainstream.
Sales can actually start to flat line, and they have no idea why. They don’t realize they are in the mainstream, it’s a different customer. There is a mix up as they begin to grow like crazy in that scaling mode.
o Compelling reason confusion
Another problem is the compelling reason confusion. If you are selling to a different customer, a different end user who has a different mindset, your reason that they would value your product is different. Your quantified value proposition, high level product specification, chart of your competitive position may be very different because you’ve got a different end user.
You have to go back to identify and understand the end user in the mainstream market because they are different than the early adopter market, even though you are trying to sell the same product.
o Whole product perfection
If you are not embarrassed by your first launch, your launch waited too long. The same thing is true in the mainstream, you’re not going to perfect your product, going from a piece to a whole product solution. Get out there and keep moving forward just like you did in the early adopter market where you launched with a piece of minimum viable product business product.
Now launch a whole product solution into the mainstream, it doesn’t have to be perfect, but you got to get it out there. Keep moving; remember you are in a race.
o Overdoing sales training
Overdoing sales training is an interesting concept because when you are Crossing the Chasm to the mainstream, you don’t need to take your whole sales force and move them on to the mainstream market. Focus with a new end user. As a matter of fact, you don’t want to leave the early adopter market that’s paying your bills.
They’ve created that income, that cash flow to sustain your operations and get you where you are now. Instead, create a SWAT team, take a couple of your sales people to invade the mainstream market and teach them about the new customer and the new way to approach the mainstream. Remember this too, just like when you very first started, startup sales people are different than normal salespeople.
They’re a different kind of person that operates a lot better in ambiguity and chaos, where once you establish the process, then other kinds of sales people come in and just run through the process and the cookbook of sales. Startup sales people are different. You need those when you first launch your business to get launched and traction, and sales.
What does scaling the business mean? You also need those kinds of people when you enter the mainstream market because it’s a new beachhead, a new launch, and you require a different kind of salesperson. Don’t take your whole sales team and take a SWAT team to focus on the mainstream market.
o Pricing misstep
When you move into the mainstream, you don’t need to touch your pricing at all. As a matter of fact, it won’t make much difference. You’ve got the momentum going.
You’ve been doing your sales and are in a different market with a different end user in the mainstream, but you don’t need to change your pricing. That’s a mistake that a lot of people make when they go to the mainstream.
o Weak messaging
Lastly, weak messaging; because it’s a different market, your whole messaging strategy is different than it was in the early market. You have to rework your messaging through your marketing funnel, and all of those documents that we use to move people through the stages of the funnel, the documents that came out of the customer journey map; the quantified value proposition, the high level product specification, the competitive positioning, and all the other documents. You are going to have to rework the customer journey map and marketing funnel.
What does scaling the business mean? It means that you first find the product market fit and put in place a repeatable and scalable infrastructure before you can embark on the process of moving to the mainstream market.
As a business, you should be ready to pivot and race as fast as you can against the big and more established competitors that are waiting for you in the mainstream market.