Do you really want to scale?

do you really want to scale?

 All founders want to scale. It’s one of the reasons that they start in the first place. You’ve got something that’s working, people are buying it, your revenue is growing crazily, surely you just want to see how big it can get and how far it can go? My answer would always be yes but only up to a point. Just to be clear about what I’m saying here. I’m not talking about when you get to a few million in revenue but more realistically when you get to around $15-20 million in revenue – that when you need to decide.

This is a great size and a fantastic achievement but the next phase of growth from $20-50M is usually regarded as the hardest. The reason is that you have to fundamentally change the DNA of the business. Verne Harnish the author of Scaling Up refers to these type of businesses as gazelles ( hence the pic) and his book is a great guide to how you can make the transition but before you do, you need to ask yourself if you really want to.

Every founder goes through a number of transformational stages in their journey both as a person and with their business. The first stage is the weird combination of excitement and terror as you first launch, then manically scrabbling around trying to get it all off the ground and up and running. Then you start to build your team and proposition and as the business grows establish more communication and delivery protocols. In this phase you’re often moving from national to  international and possibly opening a second office. As the business continues to grow it becomes more structured and as a founder you are now probably working on the business as opposed to being at the coal face daily working in the business. You have a management team in place and a senior exec team/exco making lots of the day to day decisions and executing on the strategy. You might even have completed and successfully integrated your first or even second acquisition. Cashflow is hopefully no longer a day to day issue. It’s at this point you’re probably around the $15-20 million mark I mentioned.

What you haven’t realised though is that although some parts of the business have fundamentally changed others have not and most importantly you haven’t. Most founders are by definition creative, disruptive and in some ways if not actually anti-establishment then they at least relish in breaking with orthodoxy. That what makes them successful.

At this stage of the business’s growth and size you can still exist in a permanent state of unorthodox comfortable chaos. The culture is driven by you, as is the strategy, and if you have a board its more likely to be an advisory one as opposed to one that seriously holds you to account. You’re still likely to be the majority shareholder so even with all these structures and governance in place, being frank, what you decide when you look in the mirror at the start of the day is what goes.

This is great and this place is a lot of fun and frankly a great reward after the hard work it’s taken you to get here. It’s at this point that you might be thinking about truly scaling- about the next phase of growth.

What most founders don’t understand is that all the exact behaviours that have got them to the place where they are now, unfortunately, are the same exact behaviours that they need to fundamentally change if not stop altogether. In the same way as when you are rapidly growing you realise that certain processes or even people are no longer fit for purpose and are blocking your growth, you now need to understand that the biggest blocker to your growth may be you.

Piers Bearne, founder of Collingwood, who focuses on helping founders scale, articulates it very clearly, that a truly successful founder builds a business to a point where he/ she is no longer necessary or relevant- in fact they need to step away.

This appears to make the journey of all startup founders totally counter intuitive. You are starting a journey where the definition of success is likely that you will no longer be CEO of your own business- your goal is to make yourself unemployed.

The orthodoxy, the step by step procedures and adherence to board strategy, the carefully agreed and mapped out plans and numbers that you have not had to deal with and have possibly totally ignored in order to get here, is now what you need to deal with. The non stop mania and creativity, constantly pivoting and trying new things on the spur of the moment, the decision making on the fly, going with your gut, experimental risk taking, all of that needs to stop. The culture and DNA of your business needs to change and mature.

This is a good thing for the growth of your business but the question you need to ask yourself is firstly whether you want to also change and become more orthodox or if you think you do and think you can, even then, are you truly the person best placed to lead the next crucial phase of growth.

Yes it’s your baby, you built it from scratch, it's your life passion, but if you really want it to grow and genuinely scale should you step aside? If you think you can change and are willing and happy to do so then fantastic. If you decide you don’t want any of this and you want to carry on as normal and not make the leap then also that’s great. But if you do want to try and help your business make the leap then have a hard  and honest think about what it means for you as an individual . For more thoughts on this check out tomorrow’s podcast where I discuss all of this, the pros and cons, how to approach it and and much more with Piers Bearne