Are you at the stage where you’re ready to scale your business? Whether you’re newly self-employed or you’ve been running your business for years but can’t quite seem to reach your goals, you can benefit from this lesson.
My definition of a true business is a commercial, profitable enterprise that works without you.
When you set out to scale a business, you need to put the proper systems in place so that it can expand and earn a return on your investment without you working at it day in and day out. That’s the ultimate goal of the “owner”—that’s you.
A good gut check on the scalability of your business if to ask yourself, “If you walked away from business for two weeks, what would happen to it?”
Remember this: The Systems Run The Business. The People Run The Systems.
When you have the right systems and people in place, your business can function and make you money while you sleep.
This step-by-step guide will show you exactly how to scale a business by putting the proper systems in place and choosing the right people to run those systems so you can reach the point where the business can run without you.
Growing vs. Scaling
Before we jump into the systems that will help you scale your business, I want to address a key misconception: growing is not the same as scaling.
While you will experience growth when you scale, you won’t necessarily be scaling when you experience growth.
Growing a Business
When a business grows, it can mean its operations expand, its sales increase, it adds more locations, or all of the above. As one part of the business grows, another part grows at the same rate. For example, a business hires more salespeople and so it generates more sales.
Business growth is often referred to in terms of a percentage increase; i.e., the business grew by 30%. But I want you to think bigger…
You don’t have to settle for 30% growth when you can scale your business to 30 times its size.
That’s the premise of my 30X Business program, where I teach the formula for a successful business so you can take it from a small operation to a scalable business to a sellable enterprise.
Scaling a Business
So, what does it mean to truly scale a business? Scalability, by definition, means the next sale gets easier and costs less. When we talk about business scaling, we are talking about increasing sales while reducing costs and efforts.
The key differentiator between growing and scaling a business is the ease with which you expand. If you can grow sales at an increasingly easier rate, that’s scaling. The business is not necessarily scaling if, as it grows, it gets more challenging to run.
Another word for this is leverage. I define leverage as doing the work once and getting paid forever. It’s what happens when you can get more results with less output.
Let me give you a few examples of leverage. If you write a book, you write it once but can get paid every time someone purchases it. If you create a song, you make it once but can get paid every time someone listens to it or uses it in a commercial. If you develop a software, you do so once, but you can keep selling it over and over again. With every additional sale, your profit only increases.
It should get easier as it gets bigger. That’s what I want you to think when you think about scaling your business.
When you can master this, you can develop a business that will run regardless of whether or not you show up to work that day.
How To Scale a Business
If you want to cook a meal to perfection, you will follow a trusted recipe. Similarly, if you want to scale a business, you’ll follow a proven “system”. System stands for Save Yourself Time Energy and Money. That’s what I’m here to teach you how to do today.
This is the business scaling strategy I have used to scale hundreds of thousands of businesses to 30X their size. Follow these nine steps, and you can multiply your business by 30 as well. Do you think you’re ready for that? By the end of this lesson, you will be.
This strategy will help you implement systems for these four key areas of leverage:
- People & Education: How to put systems in place to hire and educate your people and, ultimately, how to get them performing better.
- Delivery & Distribution of Products: How to ensure the delivery of your product or service is strong and consistent.
- Testing & Measuring: How to systematize the numbers i.e. financials, levels of production, sales, etc. to measure your success.
- Systems & Tools: How to put systems in place that make it simpler and easier for someone to complete a task.
If you want to learn how to scale your business quickly, this is the best model to follow. Don’t try to take shortcuts or skip steps.
Whether you want to scale an online business or a business with physical locations or services, this business scaling strategy can work for you.
Step 1: Determine the Vision for Your Company
I always start by saying how important it is to know the answer to these two questions: Where are you now? And where do you want to go?
The answer to these will help you determine the vision for your business. This is step one. This is step one because, for the system to function, it needs direction.
I know it may seem a bit distant, but ask yourself, “Where do I want my business to be in 100 years?”
We’re talking about scaling now, so think big. Don’t try and calculate the numbers or consider what’s possible.
Instead, let yourself dream about what this company could look like in 100 years, how it will function, where it will serve customers, what will be its chief products. Be clear on what you want to achieve.
Casting this vision is so important because it will become your guiding light.
Our vision statement at ActionCoach is “World Abundance through Business Re-education”. It shapes everything we do.
Step 2: Craft Your Mission Statement
Now that you have your vision, it’s time to put pen to paper and craft your mission statement. Your mission statement will describe the “why” behind your business and become the road map that points toward your grander vision.
Your mission statement should describe:
- The type of business you have
- The type of people, the team, who will help make your vision a reality
- The type of customers you want to do business with and aim to serve
- What makes your business unique from other businesses out there.
In his best-seller, The 7 Habits of Highly-Effective People, Stephen Covey said to achieve success, you must begin with the end in mind.
“To begin with the end in mind means to start with a clear understanding of your destination. It means to know where you’re going so that you better understand where you are now and so that the steps you take are always in the right direction.”
I say not only do you have to know the end you’re aiming for, but you also need to know why you’re going there. Only then can you truly create a meaningful roadmap that will lead to your destination.
Take step 2 seriously. It will ignite your goals with purpose and ensure you are always in pursuit of your 100-year vision.
Step 3: Establish Your Culture Statement
The vision and the mission statement should influence your company culture. To ensure this happens, you’ll want to craft a culture statement next.
The culture statement is meant to define the core values of your organization. It will set the tone for the expected method of business and behavior you expect your employees to exemplify.
Your culture statement should include:
- The values you as the owner want your company to stand for
- The values that will serve the company and its long-term success
- The values your people will have that align with the company’s vision
- The values your customers have that make them want to work with you
This culture statement is what you will strive to achieve as an organization. It is a key part of scaling a business because it begins to set the direction for the systems you will put in place.
Step 4: Set Specific Business Goals
As I spoke to above, the key to success is knowing where you’re going. Then, you can create the roadmap to get there. Your vision may be broad, but your goals should be specific. The more specific you are, the better you will be able to measure your success.
At this step of the process, you’ll want to think of your vision for your business with the near future in mind. Instead of crafting a 100-year vision, craft a 5-year vision. Then, work backward to set goals or road markers that will help you reach your destination.
So in short, set big macro-goals and then set coordinating micro-goals within the bigger goals that will help you achieve them.
It’s important that you have a future-oriented mindset here. If you base your goals on where your business is today, you won’t think big enough.
Once again, it’s critical to have a direction to experience success and scale your business, and goal setting is a key step to staying on course.
You already know where you’re going and why you’re going there, now goals are how you’re going to get there.
Step 5: Build a Future Organization Chart
Now it’s time to focus on your people. Picking great people is an important step to scale a business effectively. Remember:
The Systems Run the Business. The People Run The Systems.
So, take a look at your 5-year goals. Now ask yourself, “what kind of talent do I need to achieve these goals?” You can’t scale a business on your own, and you shouldn’t want to! Go back to the goal of the owner: you want a business that functions whether you show up to work that day or not. People make it possible for the business to work without you.
As you think about the kind of talent you will need to achieve your goals and scale your business, write it down. Create an organization chart that depicts the roles and responsibilities that your business needs to move toward your guiding light, including every level of position from the C Suite to the department heads down to every last salesperson, marketer, and customer service person.
Consider how every role is connected and who will support who. Don’t think about how your organization chart looks NOW; think about how it should look in the FUTURE. This future organization chart should be a picture of what the business will look like at that 5-year goal.
Having this ideal structure in place will help you prioritize what systems you need to create and what positions you will need to hire for down the road.
Step 6: Create Clear Descriptions for EVERY Position
Once you have your organization chart that displays your future business’s structure, dive deep into each and every role.
You know what employees will support the managers and what managers will support the VPs, but how will they do so? And, ultimately, how does each employee support the business goals you created and help you reach your vision.
Just as you did with goal setting, be specific. Break down every sector of your business into not only positions but also the responsibilities of each position. When you have specific and clear responsibilities in place, you will be able to actually measure success, both of current employees and of job candidates.
How do you hire a new employee today? How would you know if they would be an excellent addition or not if you don’t have an outline of the ideal candidate? A clear job description makes the hiring process easier and reduces employee turnover.
It doesn’t just benefit you, though, it benefits your people too. Clear and specific descriptions of responsibilities help your people know what they need to do and how they can excel.
As an exercise, have an employee write down the 10 things they think their role includes, then you do the same for what your 10 expectations of their role are. I’d be willing to bet that nine times out of 10, your employee’s perception of their role and your expectations of their role won’t match. That’s a problem.
If you want your people to support your goals and help scale your business, you must create clear descriptions for each and every role.
Step 7: Set Measurable KPIs
When it comes to important business scalability factors, KPIs are essential. When I talk about KPIs, I’m talking about Key Performance Indicators and Key Predictive Indicators.
Key Performance Indicators are measurements of the results i.e. the profit, the number of new customers, the total sales, etc. Key Predictive Indicators are measurements of what you expect to happen in the future. Both of these KPIs will help you determine whether you are on the road to reaching your goals.
For any given position in the company, you should have one to six Key Performance Indicators and one to six Key Predictive Indicators. What is measurable at the end of each day is the Key Performance Indicator and what you expect at the end of this month based on that day is the Key Predictive Indicator.
For example, If you know that a salesperson generally makes 2 sales out of every 10 leads, your Key Performance Indicator may be 3-4 leads a day, and your Key Predictive Indicators would be 100 leads and 20 sales for the month.
There are also Key Activity Indicators, which measure how much you produce in a certain amount of time. For example, a customer service representative answers 30 emails per hour.
As I mentioned above, it’s important to have KPIs and KAIs for each position in the company, but it’s just as important to have them for the company overall as well as each division. The goals of the job, the goals of the division, and the goals of the company should drive the measurements you set.
Between Key Performance Indicators, Key Predictive Indicators, and Key Activity Indicators, every position, every division, and the company as a whole should have no more than six weekly or daily measures in total.
These are the six most important things for the person in that role, that division, and the company to achieve on a daily or weekly basis.
Step 8: Develop How-To Manuals … for Everything
You have now reached the most time-consuming part of the process of scaling a business—developing How-To Manuals. This is absolutely crucial work, so don’t stop now.
Remember why you are building systems. Every system you develop reduces your workload by five or ten minutes every day. Eventually, your systems will make it so you don’t have to show up to work. Gradually, you can build a business that works so you don’t have to.
80% of business tasks are routine tasks; they are done on a regular basis, which means you can systemize them. Start by making a list of every routine task that you or your employees do. Note how often each task is done; i.e., hourly, weekly, monthly, or quarterly, and set out to create a how-to manual for the things that are done most often first.
A “How-To Manual” is a step-by-step instruction manual for a certain task or job. It should easily guide someone through the job without being too complex.
Every how-to manual should include at least one of the following (the more, the better):
- Checklists to ensure successful completion of each step
- Photographs to show how the job should look when it’s done and/or after each step
- Videos to visually train people and easily include links to pertinent documents and files
- Infographics such as spreadsheets and flow charts to display how things fit together
To create a how-to manual, you can use documents, videos, or invest in software that will help you more easily control your systems in the long term.
Software, albeit expensive, can be incredibly helpful in scaling your business even more when it has reached a substantial size. By creating the systems on paper now, you will be ready when that day comes.
Step 9: Create the “Loop”
The final step to scale a business is creating the “The Loop”. The loop means that once the system is in place, you check that it is actually working for you and your people and making your business run more efficiently. A system that isn’t doing a better job than the team did before the system isn’t a good system at all.
When you create a system, there are four possible outcomes:
- It improves productivity. For example, your people are generating more sales or achieving more in less time.
- It creates more work. In some cases, this reduces productivity, but if the additional time or effort creates fewer problems that eventually mean less work, or improving quality, then the system is working.
- It produces more problems. Sometimes, the system can cause more issues than you experience before. In this case, you need to scrap the system and go back to the drawing board. Involve your team in this process to create a system that works for them.
- It creates frustration. If a system causes frustration amongst the people that use it, or they aren’t using it at all, it could mean a few different things: the team wasn’t properly trained in the new system or given advance notice of the change, or that it’s ineffective. If this issue arises, discuss it with the team and/or managers to pinpoint the issue and make changes to the system or training as necessary.
It’s always good practice to try any system out yourself first, so you know if the system you’re putting in place actually works.
Not all of the systems you create will work, but if you’re open to innovating and altering these processes, you will be able to find the ones that do work for you.
You will know a system is working for you if it gets a better result than before the system was in place, but you have to check it—closing the loop—to make sure that’s happening.
What’s Next For Your Business
Every business is at a unique phase in the process and facing unique challenges, but this strategy can work for you regardless of where you are. You may have solidified your vision, mission, and culture statement a long time ago—that’s great!
While it’s always a good idea to revisit these steps, you can start the process from the step you’re at. If you follow this recipe, you will be able to scale a business to the point where it works without you.
As you continue to grow, I want you to know your business can’t grow if you don’t. Think of it this way: the more you learn, the more you can earn. This is why I have developed a step-by-step program to meet you where you’re at in your entrepreneurial journey, address your challenges, highlight your strengths and ultimately pave the path to wealth.
Unlock your unique roadmap and take the next step towards success.