The 5 Traps of Scaling Up Your Business

The 5 Traps of Scaling Up Your Business

Business Culture Leadership Profitability

As a business owner, you know that change is inevitable… especially when you’re scaling up a business.  You built your business with passion, blood, sweat and tears, and while your start-up challenges may be behind you, there’s a whole set of new issues to face on the horizon.

These are the growing pains of the SME entrepreneur.  Is my initial objective to build to sell still what has meaning for me? Do I have the right people on the bus for growth rather than launch activities? How do our financial targets need to change to reach a profitability that is sustainable?

Over 95% of new businesses never grow beyond $1 million in revenue.

Here’s why…

Too Little Attention to Bottom Line Targets

During the start-up phase, it’s all about making sure there’s enough cash coming in to cover the expenses and payroll going out. And all too often, there isn’t, which is why start-ups often rely on personal, private or public financing. Once the demand and the supply are established, however, it’s time for the business to start focusing on gross margins and profit.  Entrepreneurs assume that in order to increase profit, they need to increase sales, but that’s not necessarily the best, or easiest, way to do it.  All expenses (fixed, variable, and payroll) need to be re-assessed in order to create and sustain a profitable business early in the growth phase. The inability to become profitable is the number one reason businesses fail.

Questions to Action: What is the monthly $$ we would have needed last month to make a profit AFTER paying expenses, payroll, owner’s pay and pay down debt?  What would it take to reduce our cash outflows by that much next month?

Culture is Neglected

Without deliberately cultivating the culture of your company as you grow, it will run amok like a class full of teenagers when the teacher doesn’t show up. Your business culture includes the values and beliefs of all the staff, and the way they behave at work.  As the entrepreneur, if your company values are not communicated and expected behaviours are not made clear, then you’ll lose the unique strength that made your business successful at launch and you’ll see declines in cohesion, trust and productivity.

Question to Action: What do we stand for and how does that show up in our day to day actions?

In part 2 of this blog, we explore the next 3 traps of scaling business, and what you can do about them.

As the CEO, what are your business growing pains?  Leave a comment below to join the discussion.

Until next time, be free… and wild.

Sue