The idea of telling your horrible boss to shove it, set fire to your conservative corporate pantsuit to quit the 9-5 and start your own business is quickly becoming the new Australian dream.
Everywhere we look on social media there’s an incredible success story of some start-up, born from little more than a great idea and a laptop in a bedroom somewhere in suburbia that’s now valued at hundreds of millions of dollars.
But like most things in life, the reality of building your own business from scratch is very different to the heavily filtered images strategically strewn across Facebook and Instagram.
Owning your own business is Damn. Hard. Work. It’s a world where there’s no such thing as COB (close of business), a monthly pay packet and the term “work/life” balance doesn’t exist.
Now thanks to the likes of behemoth start-up success stories like Uber, Air B + B and Canva, scaling is the new black in entrepreneur land. And everyone’s doing it.
But what exactly is “scaling,” what are the different ways to scale and is scaling necessarily a good thing for every business?
My dear friend, fellow entrepreneur and finance expert, Mel Browne, explains that it’s not always a one size fits all approach when it comes to world domination.
So Mel, what does “Scaling” mean?
“Scaling your business means taking it beyond you. Leveraging something to make it bigger than it is.
It could be expanding your employee base, purchasing a new facility or developing a new product, but one of the key elements in taking a company to the next level is knowing the kind of capital you need to support that growth.”
What are some of the main ways to “scale” a business?
“There are a ton of different ways to scale. You can borrow money from friends and family; you could take on outside investment from someone like a venture capitalist, go to the bank, sell assets, franchise it, license it or try and leverage technology.”
But before you go out and start crowdfunding, be warned.
“Scaling is not for everyone, and it’s also not going to happen for everyone,” Mel warns. “So just because you have a great jewellery stall down at the markets, just because you go and find an investor and decide you want to take your business global doesn’t mean it’s going to be successful, we’re not all going to be Samantha Wills.”
Nor is scaling a way to force your business to succeed.
“In the tech space you see figures on what a business is worth thrown around like Monopoly money, yet it might not be making a single cent of profit. So just because you’re scaling, just because you have a high revenue doesn’t mean you have a successful business.”
There are so many scary stories about great start-ups that have crashed and burned when they’ve tried to scale too quickly.
Fortunately, Australian company, The Nourished Life, isn’t one of them.
Irene Falcone from Sydney’s Northern Beaches sold her “little” online organic skincare business for $20 million dollars just last week.
The 2016 Telstra Business Woman of the Year Award winner, sold her house to scale her business with no outside investment five years ago.
She backed herself because she didn’t want to give her business away. And the risk paid off in spades.
Irene did an incredible job in scaling her business, but ironically, it was never her intention to sell.
“If you go looking for outside investment, you have to give a piece of your business away,” Mel cautions. “You’ve got to ask yourself, ‘Am I prepared to risk it all and have a crack myself and scale?’ Or if not, ‘can I get investment and potentially be OK to lose a bit of control?'”
So, how do you know if your business is even fit to scale?
“Simple. Go back to basics. It’s called the Jim Collins ‘Hedgehog’ concept,” Mel says.
You need to ask yourself:
1. What am I deeply passionate about?
2. What can I be the best in the world at?
3. What will drive my economic engine?
“If you can answer those three things, then you can look at starting to scale your business.”
On the other hand, your business is unscalable if you feel like your fingerprints need to be all over everything, all of the time.
“Your business needs to be at a point where it’s like a franchise,” Mel says. “Great systems and processes need to be in place, and it’s turnkey, so anyone could walk in tomorrow and know how things work.”
“If your DNA is solid, you’re in a good place to scale.”
So you’ve decided to go big, or at least bigger, now what?
There are a few key things to consider:
1. What is your end goal? Are you scaling to sell? Or to increase profits? This will also help you identify where the best place is for you to go to seek additional capital.
2. Know your numbers. If you don’t know your numbers when you’re small, you will completely lose control of your business as you grow. If you only ask for a $100k investment but in reality, you need $200k – your business is bound to fail when you scale.
3. Know your unique point of difference and have a strong company culture.
4. Utilise technology: You’ve got to have the database gut, says Mel. Be able to see the business from a birds-eye view and make decisions based on insights from numbers and graphs.
5. Hire before you’re ready. Having key people in the right seat is paramount to the success of any growing business.
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Liz Nable is a Premium member and PowerPlayer. Liz was the first franchisee to bring the Xtend Barre brand to Australia, after trying her first barre class in New York seven years ago. Find out more about classes here, and if you’re keen to give it a go, sign up for their $49 New Client Special Offer (that’s 14 Days of Unlimited Classes for $49). Just click on the studio closest to you to go to the offer.