Why Don’t Most Companies Scale
Do you know the keys to double the revenue and 10X your business value in 3 years or less?
- Why do 99.6% of businesses fail to reach $10m?
- What are the other 0.4% doing to generate such success?
- Why don’t most companies scale?
“Scaling up is every entrepreneur’s dream – and nightmare. Hypergrowth is terrifying, and it’s most often success that kills great companies.” – Verne Harnish, Scaling Up: How a Few Companies Make It … and Why the Rest Don’t
Let’s define business growth…
When your business is growing, you are increasing:
- revenue
- market share
- people
Meanwhile, your expenses tend to grow at the same rate (if not more) because growth sucks cash!
That’s the external reality.
The internal reality is that as the business grows, you find yourself working more hours.
Stress levels and the drama of the daily operations with your team are both through the roof.
What you’re experiencing is a growth paradox: the belief that as you scale the company – and increase your dream team, prospects, and resources – things should get easier. But they don’t.
Things actually get more difficult and more complex.
Scaling is a whole other story
“When you scale, you are growing at 2x the industry average but your expenses year over year remain stable.” – Daniel Marcos, CEO Growth Institute
When you’re scaling, your revenue is growing at a much faster rate than your expenses, giving you the cash and resources to help you fund and support the increased business.
You have the opportunity to hire the right team, invest in tools and resources you couldn’t afford before – reducing operating drama.
When you’re scaling, you can have your life back!
Beware the “Valleys of Death”
What is the difference that enables some companies to scale, while others cave under the weight of their own growth?
Let’s take the United States, as an example – there are currently around 28 million companies and 96% of these businesses are stuck!
Out of the 28 million, only 4% are making over $1 million in revenue per year, less than 1% are making over $10 million and only 17,000 are making over $50 million.
Scott Tannas is the founder and former president/CEO of Western Financial Group. He successfully led this company for 20 years before it was acquired by the Desjardins Financial Group for $440 million. Scott developed an outline that demonstrates the typical pattern of roadblocks companies hit when trying to move to the next level:
Australian numbers are almost identical (source ATO 2015-2016 stats):
- 96.2% of Australian companies have a turnover of less than $2m
- Only 3% of Australian companies have revenues between $2 – $10m
- Only 0.45% of Australian companies have revenues between $10m – $25m
- Only .3% of Australian companies have revenues over $25m
A business and its leaders must break through each “Valley of Death” to a new way to scale, while making money and maintaining culture at the same time.
- When a company reaches 10 employees it arrives at the first “Valley of Death”: Processes that got you here are not enough to take you to the next level of competition in the market. Your processes need to change to overcome this. Time to hire an assistant manager to help you oversee the business.
- When reaching 25 employees the company arrives at the second “Valley of Death”: You need to hire someone to control money. Middle management becomes more important. Intentionality in building culture becomes critical.
- When passing through 100 employees, the company reaches yet another “Valley of Death”: A whole new internal communication plan is vital. Company politics and egos come into play. Continued focus on strategy and culture are vital as you attract more competitors.
When you’re trying to grow and you find yourself in a ‘Valley of Death’, you’ll need to master new competencies.
What got you here will not get you to the next level!
I have written a short 20-page eBook on the “7 Keys to Double the Revenue & 10X Your Business Value in 3 Years or Less.” Reach out to us at: admin@scaleupgrowth.co if you would like a complimentary copy.
In the meantime, if you’re really serious about 10X your business value, get started by scheduling a free strategy session.
In 30 short minutes, we’ll give you the exact blueprint we’ve used with dozens of businesses to double their revenue fast and we’ll even share a few secrets you can use to 10X your business value.
This is a completely free, no-obligation strategy session.
Book a session here. Or, feel free to email us at jonathan@scaleupgrowth.co or call +61 (0) 408 748 980.
I hope you have enjoyed these insights. Have a great week and stay growth-focused!
Best wishes,
Jonathan