Many people refer to scaling a business as growth, but that is oversimplifying the concept. Understanding what it means to scale a business and how one goes about it means seeing the nuance between growth and scale.
Stan Bril of Feasterville, Pennsylvania, is the CEO of MCG. When he is engaging a client on growth, he wants to know if the business has what it takes to grow while also increasing growth potential.
What is Scale?
It’s important first to define what scale is not. If a business grows and hits its max capacity, that’s not scaled, just growth in the short-term. Unless that business owner thinks in terms of business scale, no more growth is possible. It’s growth into a dead end.
In contrast, the scale is growth that makes continued growth easier. It is making business operations more elastic. As such, scaling a business is about increasing capacity simultaneously with growing sales.
Stan Answers the Question: How Does One Scale a Business?
One of the key reasons that Stan works in business lending is because scaling a business usually requires more resources. When an entrepreneur is ready to upgrade his/her tools and mindset, there is generally some overhaul and investing in better solutions.
Think Retention Over Acquisition
It is significantly more expensive and inefficient to acquire a new customer than it is to retain an existing customer, says Stan. That is not to say that a business shouldn’t seek out new customers – on the contrary! However, if the business has difficulty retaining clients, chasing down new ones to replace them will cost more time and manpower.
Therefore, if a business owner’s retention rate is poor, then it’s time to troubleshoot. Why won’t customers stay? It could be mediocre staff, inappropriate sales techniques causing customers to regret their purchasing decision, or it could simply be that the products/services offered are poor.
Use the Right Technology
There are many tasks that business owners and staff do manually that can be done in minutes (or seconds) with the right industry and productivity software. To scale a business, there needs to be a healthy inclusion of relevant technology.
Train the Staff
A critical piece of scaling a business means doing more with less. Five lazy or poorly trained employees do the work of one great employee. Business owners that spend the extra hour, day, or week training their employees get better results at a much lower cost.
Understand Financial Statements
Few people enjoy pouring over financial statements. But without them, a business owner has no idea where their money comes from or where it’s going. The three critical financial statements are the balance sheet, income statement, and cash flow statement.
- The balance sheet takes account of all assets, cash, and liabilities (debts).
- The income statement is an annual overview comparing revenues against costs. The bottom line of an income statement either reports a profit or loss.
- The cash flow statement breaks down the income statement into quarters or months. It accounts for all product sales, as well as fixed and variable costs.
With over 15 years of leadership experience in the lending industry, Stan Bril is CEO of MCG based in Feasterville-Trevose, PA. In his role at MCG, he works with small business owners seeking to scale their businesses. As such, Stan guides his clients in creating business plans, financial statements, budgets, and more.