Scaling a Business Has More to do with Trust Than Anything Else

In all the years I’ve been running my own business, I don’t think I’ve heard the word “scale” more at any time than in the last few years.?It’s thrown around an awful lot and I think there are too many people out there profiting off this word but for the wrong reasons.?What you typically see online are advertisements on how to “scale” a business but are they really talking about scaling a business or are they talking about growing one just for the sake of growing one??I think it’s more of the latter.?And in a day and age where companies are simply trying to show “size” for market valuations, it’s very easy to get caught up in the lingo.?Scale sounds sexy doesn’t it??It sounds more sophisticated than “growth.”?Even the word itself seems surgical.?It’s like you need to learn this amazing secret to double the size of your business.?The truth is, there aren’t any huge secrets to scaling a business the right way.?Anyone can grow a business and just put a ton of money into it and increase the size.?Does that mean it’s going to be profitable??No.?It just means it’ll be bigger.?But can anyone scale a business??Not necessarily. So then how should we define scaling?

The difference between scaling and growing a business

Here are a couple of definitions that I found to be most accurate when discussing scaling vs growth (via?Lightercapital)

What is Growth in Business??– When companies grow, they are increasing their revenue equally as fast as they are adding resources to enable that increase. The company may gain $50,000 in new revenue, but in order to do so they had to hire a new sales rep with a $50,000 salary. The company’s gains and losses are evened out, so even though the company is growing — by one new employee and a corresponding uptick in revenue — it really hasn’t gained much value.

• What is Scaling in Business??– When companies scale, on the other hand, they add revenue at a faster rate than they take on new costs. A company that is scaling may gain $50,000 in new revenue for which they spent only $5,000 on marketing automation tools to allow more efficient marketing to a wider audience. The company’s gains outpaced its losses, allowing it not only to grow but also to scale.

The main difference between the two is that when a business starts to scale, it’s not at the expense of the business itself.?What I mean is, you’re not hampering the financial stability of the company.?You’ve gotten to the point where growth is outpacing costs and some of the things you had to manually do at the beginning are now becoming more automatic because of processes and resources you’ve implemented.

So then how do you scale effectively?

The best example of scaling, in my opinion, is McDonald’s or any successful franchise for that matter.?McDonald’s is a shining example of how to scale a business properly.?Let’s ignore the fact that the bulk of the wealth of McDonald’s is in real estate and instead focus on their fast food business instead.?Once upon a time there was only one McDonald’s.?Hard to believe, right??But it’s true.?And before I go any further, I don’t want to botch the story, but I’ll do the best I can.?If you really want to read up on McDonald’s then dig up information on Ray Kroc.?The man was an insane visionary.?You should also check out the movie “The Founder.”?Anyway, Ray Kroc discovered a McDonald’s restaurant and saw how amazing the place was being run.?But instead of just one, Kroc envisioned way more than that.?In fact he wanted McDonald’s restaurants to be located all over the country, and perhaps all over the world.?But how do you get there??You get there by taking every facet of the success of one store, and replicate it in multiple stores.

That process begins with growth and eventually turns into scaling.?In the case of McDonald’s, the secret sauce was the efficiency the original owners had with regards to making hamburgers, fries, milkshakes, etc etc while not sacrificing the quality of the food.?They had a very distinct process, or assembly line of processes that took a customer from order to food on the table in a matter of minutes.?Kroc saw the value in this and also saw the efficiency in pricing.?Once that model could be replicated and taught to other restaurants, McDonald’s was able to grow.?Once one store was profiting, you could open another store, and another, and another.?Obviously I’m leaving out a ton of details but you get my drift here.?And all along the way you’re constantly trying to innovate and improve each process.?Examples would be the introduction of drive through, getting cheaper milkshake mix, altering the seating in stores so you can fit more people, etc etc.

You go from one store to let’s say 10.?Then once you’re at 10 you hire someone to manage all 10.?Then you start over somewhere else doing the same thing.?Then lets say you have 50 stores all in New York.?Maybe you then hire a manager to manage all the New York stores.?You’re replicating the exact same process only doing it more and more.?When you’re profitable, you rinse and repeat.?What starts out as growth eventually turns into scaling.??And if you’re lucky you have a relatively similar success model in each store.?Of course not all stores will be equal but the goal is to have them be as identical to one another as possible.?And obviously we’re not just talking McDonald’s here.?There are plenty of scalable franchises out there.

How I scaled my own business

Back in 2007, when I began this site, I was the only person writing for it.?I wrote upwards of 10 articles per day.?I was responsible for every single facet of the business.?From the design of the website to growing traffic, to?coming up with content ideas, to monetizing the site, you name it.?It was hardly something that could be scaled.?But it was definitely something that could grow.?And grow it did.?It grew to the point where I quit my full-time job less than a year into the site’s existence.?And after about a year and a half of owning the site I decided to start a new site.?Only this time I wasn’t the only writer.?I took on a new writer.?A writer with whom I’d share some of the profits.?This was the first time I learned about scaling despite not truly understanding it.?As time went on I developed more sites, and hired more writers.?But it wasn’t just that.?It became more than that.

Instead of focusing on site monetization I hooked up with a company that would do all my ad deals and take care of all the ad optimization on the site.?Instead of site design, I now have developers working for me.?Instead of writing content, I now have a stable of writers I can turn to.?Instead of editing content, someone else does that for me.?All the things I used to have to do myself are now someone else’s job.?And when it’s time for me to grow a new site, I’m ready because I have the resources to do so.?Perhaps someday I’ll have 100 sites, and managers to oversee each vertical.?Who knows??For now I’m sticking with 10, doing as much as I can myself, but also knowing I cannot possibly do it all if I want to grow.

Why trust matters more than anything else in scaling

While scaling sounds great, and it can be, it’s nearly impossible to do without one thing: trust.?The best CEOs in the history of business relied on others to grow and scale businesses for them.?The CEOs either taught these people the ropes, or they brought in outside help who were smarter than they were.?You can manage 10 franchise locations of a McDonald’s but can you manage 100??It’s a lot harder.?For every single spoke in the wheel you have to have a reliable person managing the process.?If you have one broken part, the entire system shuts down.?It’s why so few companies are in the fortune 500.?There are 500 companies in there for a reason.?How many companies do you think there are in the world??Exactly.?From trust, everything else can happen.?You can grow and scale as quickly as your team’s ability to do so.?But without reliable people, you’re toast.?It’s kind of a double edged sword.?People want to grow fast but to find the right people to help, there are no shortcuts.?I’ve gone through well over 1000 writers to get to the 50 or so I have now.?And if I want another 50??I’ll have to go through another 1000.