Best Practice Business Test

It’s Time to Scale Your Business With These 7 Surefire Strategies

What do start-up companies Webvan, Pets.com, WebTV, and IndexMedical all have in common? They were companies that had great concepts and experienced initial success but couldn’t scale.

Listed below are seven surefire strategies for scaling any business:

Develop and execute a strategic plan. Sustained growth starts with having a formalized strategic plan. That means one that’s not in your head. This plan must be based on the company’s core competencies and focused on the appropriate internal growth engines, such as promotions, and external growth engines, such as joint ventures, alliances and partnerships. Three key data points are essential: 1) a vision that serves as the starting point, 2) execution of an annual strategic plan, and 3) a strategy that details the end game — an exit.

Develop and cascade a scorecard. Focusing the efforts of employees and resource consumption/burn rate are extremely important inputs for growth. The creation of a balanced scorecard of metrics is a critical step to focus employees and hold them accountable for targeted results. It is essential to cascade the scorecard throughout the organization to ensure employees are focusing on the right things and help identify and fix variances between actual vs. target performance.

Secure access to capital for growth. A common theorem in business is you have to spend money to make money. The challenge is securing the needed capital on favorable terms to fund equipment, facilities and the new product introductions essential for growth. Your potential for success is increased by cultivating relationships with lenders and investment bankers and demonstrating a track record of consistent growth by following the strategies outlined in this article.

Establish robust marketing and sales capability. Growth is dependent on having a strong go-to-market strategy. This typically requires activities in image building, such as blogs, articles, website and search engine optimization; and lead generation, such as advertising, social media, pricing, promotion, packaging and positioning. Many businesses require investment in the sales and marketing functions that range from technology, including CRM systems, and market research to sales forecasting and prospect management.

Develop formalized and stable core and support processes. As a company begins to experience rapid growth, there is a need for standardized and formalized processes to ensure efficient and reliable results. Processes also need to be pressure-tested to ensure they deliver acceptable outcomes in cost, quality and throughput at different volumes. Too much structure ends in costly bureaucracy, and too little structure prevents the company from realizing economies of scale. Two processes that are mission critical are cost management — you have to manage your spending — and budgeting. These are absolutely essential for achieving targeted growth.

Periodically evaluate and evolve the business model. An organization’s business model should be periodically evaluated to ensure alignment with the business strategy. The leadership team should engage in ongoing discussions around such issues as 1) insource vs. outsource, 2) centralize or decentralize and 3) how to cultivate distribution channels, including the possible use of channel partners. Making these tough decisions will have a profound impact on your growth and profitability curves.

Build a strong leadership team with supporting bench strength. Critical leadership attributes vary by stage of business. The skills needed to start a business are different from the leadership skills needed to scale a business. Many founders lack the requisite skills and must augment their gaps by bringing in “professional leaders” who have a track record in transitioning a start-up to an emerging growth company and beyond. Remember that a prospective acquirer will be looking at not only your senior leadership team but also the quantity and quality of your midlevel managers who serve as bench strength.

During my career I have personally worked with more than 140 companies, and scaling is by far the most significant challenge facing entrepreneurs, business owners and executives once the company is founded because of an innovative technology or science, a catchy product or service, or a new market space. The seven best practices highlighted in this article are a blueprint to successfully take a business to the next level.

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About the author

Ronald J. Recardo

Ronald J. Recardo is the managing partner of The Catalyst Consulting Group LLC. He can be reached at rrecardo@catalystconsultinggroup.org.

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