When is it time to scale a business?

In the world of entrepreneurship, there can be an overemphasis on scaling your business. But I believe bigger isn’t always better. More isn’t always more. In fact, there are many instances when scaling can actually be detrimental to your business.

Like most entrepreneurs, I started my business as the sole employee, working from my dining room table. I took on clients that I was passionate about and that I could confidently serve on my own. Once I reached a point where I couldn’t take on more clients without working around the clock, I made my first hire: a part-time assistant. From there, I added a few interns and by-project contractors. It wasn’t until my business was three years old that I hired my first full-time employee.

Now, I have to two full time employees (three if I include myself) and two part-time contractors. And that’s where I plan to stay for a while.

You may have a different vision for your business. Maybe you want to scale the level of services you offer, but not necessarily build out a team. Or you may have a vision of overseeing hundreds of employees and creating a company that you could sell or pass on, one that doesn’t necessarily rely on you to be a part of it.

There is no one way to scale a business, and you don’t necessarily need to scale a business in order for it to be successful. But, no matter what route you choose, the key is to do it methodically and with intention.

I’ve always wanted to grow a team and build out my company, but I never wanted to do it too fast. As I shared on my friend Tara McMullin’s podcast, my intention was always on slow growth.

Think slow-cooking, but for business.

Turn the heat up too fast, throw in too many ingredients, or don’t read the recipe ahead and you’re sure to ruin the dish. Cook things slowly and methodically, and it’s a lot easier to identify and remedy any mistakes. Right now, you may have set your sights on building out a team. But what if you hire 15 people only to realize that you really don’t like being a manager? Or that you’ve made the wrong types of hires? How will that misstep affect your business and the lives of your employees?

On the other hand, if you start by hiring a contractor or part-time employee, you would still discover that your strength is not in leadership or management. However, you would have been be able to quickly decide, with much less at stake: do I want to go it alone instead or do I want to improve my management skills and continue to build out a team?

The same slow-growth idea applies to your clients and customers as well. For example, if you took on several big clients in the interest of expansion, only to discover that these weren’t the types of clients you really wanted to work with or that you didn’t charge enough. Or what would happen if you’re a maker and you focused on rapidly growing your customer base, only to have such runaway success that you didn’t have the bandwidth or materials to fulfill orders? How would the shipping delays or lower quality products impact your business?

Whether you’re wanting to scale your business from the client side, the employee side, or both, it’s crucial to do it slowly. Here are a few places to start:

Make some lists.

I’m a big fan of putting pen to paper. Start with listing out all the things you love doing in your job. Whether it’s talking to clients, creating your products, or simply the fact that you have flexibility, write it down. Next, make a list of things you don’t love about your job. Maybe it’s the bookkeeping, discovery calls, or client deliverables. Write it all down.

These lists will shed light on two things:

What you should do more of and do less of
What you could potentially outsource

For example, if you really hate discovery calls, ask yourself: Do I really need to do them for my business to succeed? Maybe potential customers could fill out an online intake form instead? Or they could book a consultation first, and then you both could determine whether or not you want to work together in a bigger capacity.

Alternatively, if discovery calls are essential for your business to succeed, then you should consider outsourcing them. Hire a part-time or contracted accounts person to field all potential clients and on-board new ones.

By listing out what you love and hate about your business, you’ll have a clear sense of where it makes sense to scale.

Review your financials.

Numbers don’t lie, and neither do your books. If you’re unsure of where to focus your energy, your financials are the best place to start. You may think you want to take on more one-on-one clients because they’re responsible for the most revenue, but when you look at the time and expenses associated with them, you may find that individual client work isn’t as profitable as you thought, and that group coaching or consulting work has a much better profit margin. Or if you’re a maker or online retailer, you may think one product is the most popular because it’s sells the most and has the highest reviews, but if the profit margin associated with that product is low, it will be difficult to scale.

I don’t believe in determining where and how to scale solely based on money. I believe in playing to your strengths and passions first. But all things being equal, if you’re unsure of where to start, look at the books and go with the numbers.

Make a prototype.

The testing and iteration process is so important when you’re developing new products and services, but it’s also important when you’re ready to scale. Before you go all in and make those dozens of hires, begin with one part-time contractor. Also, before you go full in on a big roll out of new products and services, run a small launch or beta group for one concept.

You wouldn’t launch a product without creating a prototype and testing it out, and the same should be done when you’re ready to grow.

Not everyone needs to scale their business, and for those who do, not everyone needs to approach it in the same way. By focusing on slow growth and taking the time to reflect on your strengths and passions, you will avoid costly missteps and determine the best path for you.

In order to help you get started with creating these long term goals, I’ve put together a package of goal-setting worksheets. Combined with journaling and list-making, these worksheets will determine the best methods for scaling your business, and how to actually put your plans in action!