So if you’re following my Building a Sellable Business blog series, you’ve learned that having a business plan is essential for success in business’s end. I’ve shown you how to create and implement that fundamental plan within your business. But beginning with Mastering Competitive Advantage, we’ve transitioned into the heart and main body of my series dealing with how do we build a business successful enough that someone is willing to buy it from us? Not only its end value but how do we multiply the value of our business so that we can make as much money as possible up to the day when we do sell it? Business scalability… your business MUST be scalable to be sellable.
If you’re like me and most entrepreneurs around the country, you work incredibly long hours. We small business owners spend much of our personal time working in our business, and we rarely take vacations. It’s not something we have “time” to do. But why are we killing ourselves by working so much? Didn’t we go into business to have more free time? Then, why can’t we take breaks without feeling guilty? It’s like the harder we work, the better off we’ll be.
Unfortunately, hard work isn’t the key to success. Without a doubt, we have to work hard to be successful. You’re definitely not going to reach success without some sweat equity, but there’s something more important. To make your business successful enough to sell it, your hard work must go into making your business scalable in nature.
What does scalable mean? Simply put, scalability is the ability to grow your business. Growing your business doesn’t necessarily mean making it into a franchise and opening store fronts all over the nation or the world. How many companies actually do that? That’s not necessarily our goal.
The business growth we’re talking about in scalability revolves around revenue. How can we increase revenue and decrease costs involved to produce that revenue?Click to tweet
Let me make it easier to understand. The business growth we’re talking about in scalability revolves around revenue. In other words, how can we increase revenue and decrease costs involved to produce that revenue? Essentially, how do we make profits high and costs low; how do we increase our margins? Remember, people buy businesses that make money, and scalable businesses typically bring larger price tags.
Maybe your business is already making money. Perhaps your business is booming with good employees and exponential sales’ growth. Sure, but I’m assuming that you’re not content with where you are; you want to make even more money and experience more growth. There’s no better time than now to invest your time, energy and passion into developing foundational systems that will help your business reach long-term success.
Recently, I read a parable in the Bible. You might know the one. In Matthew 7:24-27, Jesus talks about a man who built a house on sand and a man who built a house on rock. When the waves came, the floods washed the sand out from under the first man’s house, decimating everything he had underneath the water. But when the rain and floods beat upon the rock, the other guy’s foundation withstood the waves.
Whenever my wife and I built our home, I was particularly fascinated by the laying of the house’s foundation. I watched men dig down to reach solid earth before they placed the footer and the piers. At times, they dug almost twelve feet into the ground before finding solid ground. After laying the base, the workers poured concrete and laid rebar and did everything that had to be done to give my house a firm foundation.
Just like a house, our business has to have a sound foundation. As I’ve mentioned, that foundation is our business plan. But the building blocks of the foundation – the footer, the piers, the concrete, the rebar – are what make our business scalable. The following three things make a business scalable: Strong Management Systems, Scalable Product Solutions, and Strategic Thinking.
Deep-rooted systems help us maximize our business growth so that we can make as much money as possible while minimizing growing pains. So when the storms of employee issues rush in or the gales of family issues flood our business world, we’ll have systems built down deep enough to withstand the storms. These systems usually come in the form of computer software programs specific to market industries. But management teams in your own company or teams you hire from another company can also function systematically. I’ve identified seven management systems I’ve used in my own companies that have dramatically increased their scalability.
In the early days of business, money is often tight, and it seems like we business owners constantly have less than we need. In addition, our time and expertise are in constant demand. Implementing systems will take you time and money, but this second building block will increase your business’s scalability without a lot of time or money. What I’m talking about is just taking a moment and identifying the things in your business that can be easily increased or reduced to maximize your business’s profitability and revenue.
So here are seven questions you can ask yourself:
Your answers to the questions will show you how to take a product or service your offer and begin to scale it up. In other words, what you learn about your products will help you increase revenue and decrease costs. You now have scalable business solutions.
The third thing you have to do to make a scalable business is change your way of thinking. You’ve got to learn to think strategically. If you don’t know where you’re going, you won’t know what road to take to get there. If you’ve gotten this far in my Building a Sellable Business Series, you should have identified your business goals and written them down in a business plan. You should now be looking at ways to make your business more valuable than your competition’s.
In order to build a plan for scalability, you must take the focus off of yourself in your business. For your company to attract buyers, it can’t be wholly dependent on you. You wouldn’t even be where you are in business if it weren’t for people around you. Take a step back to understand that you are building a business that can operate without you. Therefore, you AND your team must be successful together.
So how do you change your thinking?
Remember, the goal we’re dealing with first and foremost in this particular series is building a business to sell it. If we’re then going to sell our company for top dollar, then the business has to be scalable. We have to increase revenue and decrease the costs it takes to produce that revenue to attract buyers and to get the most money possible from the buyers. Are you building a scalable business? If not, why not?
Next article in our series, we’ll tackle your building your business’s team I referred to above in changing your mindset.
I say this often. Life’s hard. Life’s complicated. Business can be stressful. Finances don’t have to be. Join me as I continue to make your life, at least, financially simple.