Grow or Die? No, Scale or Die

scale or die

The old saying “grow or die” is now “scale or die.”

I love the Grateful Dead song, “Uncle John’s Band.” There are so many great lyrics …

When life looks like easy street, there’s danger at your door …

but the lyric that hits me is

Woah, oh, what I want to know, where does the time go?

And like that it’s November. And November means “planning season.”

It’s time for us to push to finish the year strong and set our plans for next year. For business owners, it’s a crazy time of the year with getting budgets together, starting CPA audits, holding forecast planning sessions, scheduling the annual offsite, and conducting year-end board meetings to finish the year strong.

As you set your targets for next year and plan for growth, here’s a tip.

Don’t let overhead get ahead of you.

For many companies, overhead equals death! We have all seen businesses that grow the company’s headcount and overhead costs based on planned revenue. They add a marketing department instead of outsourcing specific expertise or making sure they have strong operational processes in place. They add staff based on expected volume without thinking about outcomes. This is a big mistake.

The idea is to scale. Do more with the same or less. Not do the same with more. Expected revenue does not equal actual revenue. When we decide to add people, we need to ask, “Are we making things bigger or are we making them better?”

I love using modeling projections tools – it’s a very powerful exercise. But we need to be careful to use the correct assumptions. By definition, projections will be wrong, but with a focused plan, accuracy dramatically improves. Businesses need to look at their people and processes and think about expected outcomes. What are the rhythms of daily, weekly, monthly, quarterly, and annual tasks? Specifically – what are the metrics and measures that indicate staff has achieved the outcomes expected of them? Work on scaling by using efficiencies, training, technologies, and tools.

Effective scaling increases your revenue at a faster rate than your costs. Today’s technology and tools combined with improved processes and training can help your company grow using the same or less overhead (obviously dependent on your business.) Be intentional in setting specific goals, milestones, and measurements for the upcoming year, and involve your team in the process. (The last thing you want to do is overwhelm them, but you can incentivize them to be more efficient and intentional in scaling their own processes for the good of everyone.)

And while doing this, don’t forget to focus on your current priorities to complete the goals you set earlier this year. Even if you only get 80% of the way there, you can still finish strong rather than taking an unfocused approach and accepting whatever happens. Use what you learn to prepare for next year’s proper scaling so that your growth can be a result of actual earned revenue to set you up for the future.