Like every other aspect of life, business is full of myths and legends.
Business owners are taught to admire founders who gave it their all. They
didn’t have a personal life, and they worked night and day to build their
business. They slept at the office. And sometimes, that is a legitimate part of
building a business.
But creating a large business doesn’t require the owner to work 100 hours a
week, week after week, forever. Very few businesses fail because the
founder didn’t work hard enough. When companies get to a certain size and
stop growing, it isn’t because an entrepreneur isn’t giving it their all.
The fact is that the blood, sweat, and tears of one person can only take a
business so far. And the secret to growing isn’t working longer or harder: the
secret is scaling.
Yes, hard work and dedication are definitely helpful, but that’s not the whole
story. Launching a business requires a considerable time commitment and
lots of personal sacrifices along the way. The owner of a typical startup
begins doing everything partly because they are good at what they do and
partially because it saves money. While the “give it all you got” approach
can be exciting (and necessary) for a while, it can quickly become
unprofitable. The founder gets tired. They focus on the wrong things. They
make mistakes. They spend all their time executing tasks instead of
orchestrating strategies.
Avoiding the Overwork Trap
Sometimes the more you do, the harder it is to stop. That’s how business
owners get trapped in a cycle of 100-hour weeks. But once your business is
launched, it’s time to delegate, orchestrate, and find people who are better
than you. Because no matter how good you are at any one task, there are
many people for hire who are better. Find a better accountant. Find a better
sales director. Find a better facilities manager.
Instead of handling all functions, as the owner of a growing business, you
must create structure, assign tasks, and build a solid team. As an enterprise
grows, it’s time to train other employees to lead the way, and that can be
scary. But by allowing hired experts to own the success of parts of the
business, you create a well-rounded team with more experience, bandwidth,
and focus.
And once the team is in place, you can concentrate on vision, quality control,
and business strategy. Throughout history, every successful business owner
had to make this transition, and you can too.
Lean on Systems and Processes
Asking others to help run your business is a big step. There’s a lot at stake,
so you want to provide as much structure and guidance as possible. That’s
why systems and processes are an essential part of scaling a business.
Creating predictable, reliable processes makes it easier for any business to
satisfy customers, expand trade, and maintain margins. That means that
each job, department, and specialty will need its own set of systems, checks
and balances, and processes. And as the owner, you will need to lead the
creation of formalized systems and processes and enforce adherence.
How does that work? Let’s start with a smaller example. Many business
owners issue checks to vendors. Maybe an assistant opens your mail and
lays a pile of bills on your desk to pay. Most are pretty straightforward, and
they take just a moment to settle. Occasionally, sorting out vendor issues
can suck up an hour or more. But on average, the task takes an hour or so of
time each week. So it’s not worth hiring an accountant for that, right?
But when start analyzing your process, you may realize that you spend
another hour or so each month tracking down invoices or trying to keep your
invoicing system in order. And maybe you spend another two or three hours
each month trying to track expenses and income and figure out profits.
Perhaps you want to learn more about pricing and determine if you’re
charging enough or too much. And you wonder if you should expand the
offices and if you could get a tax break doing it.
In this case, you are spending your time doing an accountant’s job, and
you’re also avoiding related tasks that take more time. A good financial
officer not only pays bills but also handles vendor relations. They ensure
clients and customers are paying on time. They may create new payment
systems like credit card payments, Venmo, or PayPal. They should be well-
versed in tax law and be able to advise you on ways to get the best tax
credits from your expenditures. And they can review competitive pricing and
make recommendations. The accountant can also create monthly P&L
statements, explore lines of credit, and recommend more cost-effective
suppliers.
In other words, letting go of a small but vital task (paying bills) empowers
you to add a team member who adds exponential value. In this example, it’s
easy to see how devoting more time and attention to the books can quickly
reap significant improvements and how adding this key hire creates the bandwidth needed to scale.
But of course, delegation is not just limited to
accounting. What about the sales tasks? Which marketing responsibilities are
you heading up? Do you have HR experts taking care of hiring? Who is
managing your facilities? Who is in charge of IT? A long list of tasks, initially
managed by the founder in the start-up phase, need to be delegated if a
company wants to scale into a seven-, eight-, or nine-figure business.
How Scaling Works: The Dentist Example
When explaining how scaling works, I often use the example of a dentist
opening a practice. At first, the dentist invests in property and equipment
and sees as many patients as possible to pay the bills. Unfortunately, he’s
overextended and scared to hire a lot of people, so he hires just one
receptionist. In this example, the dentist is doing as much as possible to
make money, trying to pay off debt, and working very long and hard to do it.
But with just one dentist and a receptionist, there’s a clear manpower limit,
which slows the practice’s growth.
Now dentists often hire hygienists to help increase their bandwidth. After all,
if two or three hygienists do most of the patient work, the dentist spends
much less time with each patient, so they could theoretically triple the
patient load. The practice may need another chair or two, so it’s not a
complex addition. But if the dentist in our example does this, he is still
working more than 80 hours a week and has to be there for every
appointment.
To really scale, that dentist is going to have to think of a bigger end game. Is
the goal to work with patients all day, or is the goal to serve patients AND
have a more profitable dental practice? Could the dentist employ other
dentists? What tasks could he delegate? Yes, he may be able to reduce his
hours by hiring an office manager, an accountant, or a tech consultant, but
these hires also give him the ability to expand. Could he have offices all over
the city? Throughout the state? Across the country?
In this example, if the business owner stopped focusing on “doing” and
concentrated on vision, he could create a practice with multiple locations.
Thousands of appointments could take place, and the dentist would not have
to be present at any of them. With systems, checks, and balances in place,
it’s possible to scale the practice, which means the owner could increase
profits 10x or even 100x while working fewer hours.
By creating new roles and delegating responsibilities, the dentist spreads out
work. He allows his staff to specialize. This dentist will assign different tasks
to people who have the time and expertise to handle them quickly and
efficiently. And with staff and systems in place, he doesn’t depend on any
single person to be present every day–including the himself.
Start Scaling Up
To scale up quickly, owners must focus on building systems, automating
duties, creating processes, and building an organization that runs well with
or without them. While you may have been chief cook and bottle washer in
the early days, if you’re ready to scale your organization, it’s time to
orchestrate, refine, and build. And that’s when exponential growth can begin.
If you want help finding ways to scale or strengthen your structure, systems,
margins, or succession plan, email me at [email protected]
