We often hear about “scaling” a business, but what does that mean? Sometimes that means growing the top line (revenue). Sometimes it means increasing the number of employees. It could also mean increasing the capabilities of what you offer. Sometimes the word “scale” is just thrown about sound cool. In our work with professional service firms, primarily marketing agencies, we’ve heard all of the above.
So what does it really mean to “scale” a business?
The definition of “scaling a business”
Our definition of scaling a business is as follows: Increasing both revenue and net income without a corresponding long-term increase in the capacity utilization of the team. In particular, this applies to the capacity utilization of the owner.
What Does Scaling Look Like?
During the startup phase, the business is starting to generate revenue and the owner is making increasingly more money. However, that usually comes with a price – the time, energy, effort and stress of the owner. The owner is the person in the business that “can do everything,” and often they do. During this phase the owner is often shouldering much of the incremental burden of a growing business. It looks like this…
At some point, though, your business needs to grow past the startup phase and enter the scaling phase. You start to hire employees. You start to put processes in place. That phase looks like the below diagram, which stands in stark contrast to the above.
What are the keys to scaling a professional services business?
Documented Processes
Begin documenting everything that you do in your business. Everything. Account management, how to surface problems, the creative process, etc. Everything. Everything should have a standard operating procedure (SOP). Think of an SOP as step-by-step instructions on how to accomplish a task.
Delegation
Once a task has an SOP it’s ready to be delegated. Delegation should come with the appropriate resources to accomplish the task, and should go to a trained employee. Clear expectations around the expected outcome (i.e. what does good look like?) should also be part of the delegation process. Not sure how to do this? Feel free to snag the template that we use internally as a starting point.
Automation
It’s no secret that I love automation, but there’s a time and a place for it. Automation allows you to accomplish more without needing to allocate additional resources. Good automations just…work. But, where do you start?
Start with items that are both repeated on a consistent basis and annoying to deal with. That will free up both your time and your mental capacity, as you’ll no longer have to deal with the task you don’t like. Examples are parts of the proposal process, parts of the invoicing process, or even something as silly as sharing 2FA codes with your team.
Conclusion
Scaling a service business is all about putting the people, processes and culture in place to allow the team to accomplish increasingly better results with less stress. Scaling a business is hard, but hopefully this post has helped to frame what scaling is, and isn’t, and has provided some insight to get your started down the path. There are a ton of resources out there to help you along the way. As a final thought, here are some of my favorite books on the topic. Hopefully you find them as helpful as I have.
- Traction by Gino Wickman
- The E-Myth Revisited by Michael Gerber
- Systemology: Create Time, Reduce Errors and Scale Your Profits with Proven Business Systems by David Jenyns
- Scaling Up: How a Few Companies Make It…and Why the Rest Don’t by Verne Harnish
- The Checklist Manifesto: How to Get Things Right by Atul Gawande