Scale a Business
Scaling a business is often used synonymously with growing a business. The premise is that to grow or scale, you add more people, resources, capacity and expenses to support increased revenue and customer growth.
However, there are important differences between growing a business and scaling a business.
Scale vs. Grow
The idea of scaling versus growing is that you create revenue growth while adding resources — or general and administrative expenses — at a considerably lower rate. G&A expenses are typically rent, salaries, benefits, offices supplies, etc.
Scaling a business is not focused on adding people with aggressive recruiting efforts or securing new office space, but on building processes, systems, culture, infrastructure and processes to support growth without adding costs.
Software, SaaS, PaaS and other technology-based and less capital-intensive businesses are often good candidates for scaling up.
How to Scale a Business
Within Human Capital, the foundation for scaling a business can be set through the following:
Founders may have a very specific vision and set of skills they used to found their business. They may surround themselves with similarly skilled people in order to get an organization off the ground. It is up to the Human Capital function to help build a team with broader, complementary skills to those of the founder and early employees.
The right finance, operations, marketing and sales, product marketing, customer success skills are typically a combination of good general management skills and those abilities that are specific to a certain business, product or industry. This dynamic of adding quality managerial skills enables mentoring, coaching, strategic thinking and diverse skills that can help build scale.
We have argued that organizational cultures can be built. Culture, that is a shared pattern of values, beliefs and expectations, are used to create desired behavior. Culture and culture building is more about standards that get communicated, modeled and reinforced by leaders and influencers in the organization, rather than policies or perks. Articulating desired behaviors, celebrating and reinforcing them through programs hasten the building of cultures that help scale an organization.
High-energy, fast-paced, creative enterprises are not typically associated with adherence to processes. However, creating repeatable and measurable processes set expectations in an organization. They assist in developing performance standards and objective KPIs by which people will be measured. Processes that are painstakingly examined provide a baseline for improvement.
Human Capital can encourage newer and fast-growing organizations to start adopting policies around expenses, travel, reviews, internal communication, employee hiring and onboarding. These guides will assist faster scaling.
Infrastructure certainly means finance, operations, compliance and all those things associated with classic G&A expenses. However, Human Capital can also support those things that are part of product management, services delivery, sales and value-added services. These revenue growth functions can be greatly enhanced with the smart addition of customer-centric product development people who may be much more cost-effective than higher end executives who are strategic but may be less focused on implementation and delivery.
There are several models used to access skills and knowledge that can be alternatives to hiring full-time people. These include:
- Advisory Services – Where a company enters into a consulting agreement for high-level strategy work.
- Interim positions – Where a company hires an acting CEO, CFO, CTO, etc. while replacements are sought
- Part-Time or Fractional support – An executive may contract with the company and assists for a set number of hours per month or days per week.
- Outsourced Functions – Many functions, including Finance & Accounting, Product & Technology, Sales & Marketing and HR can be outsourced for half to a quarter of fully-loaded, full-time salaried employees.