Taylor Welch Shares 3 Essential Elements To Scale Your Business
I don’t love business jargon. Sometimes buzzwords get so big they create their own gravitational pull. The word “scale” is one of the worst offenders.
Why? Because scaling is a result – not a strategy. Successful companies focus on the elements that create the result. They don’t just stare at the pot of gold at the end of the proverbial rainbow and hope they’ll stumble across it one day.
Three simple elements determine your ability to scale: SPEED, LEVERAGE, and MARGIN. Each one feeds into the others to create a predictable life cycle. And it’s the sustainable life cycle we want to achieve.
The Need for Speed
Looks like Tom Cruise was on to something when he made that phrase famous in the first Top Gun movie. But there’s more to speed than meets the speedometer. Focus on these three fundamentals which will determine your rate of growth:
- Do you have the right market? Your market must have two things – a NEED and RESOURCES (so customers can afford you). If you can checkmark those two boxes, you’re ready to quickly take over the market. That’s why, when I am building new companies, I start first with the person I want to help (and how I can best help them).
- What kind of impression are you making? You wouldn’t walk into a big meeting with spinach in your teeth, right? So don’t let mediocre advertising make you look or sound less than the best. Ads introduce your company to new people. Use them to make a strong first impression – so you won’t have to overcome a misinformed one. (Speaking of impressions, do you know how much of your company's growth comes from advertising? American companies are projected to spend $350 BILLION in advertising in 2023. The key to advertising, is making it a productive, profitable use of funds)
- Are your sales episodic or an ongoing series? I love the scent of conversions in the morning – smells like victory! Sales is the process of converting attention into revenue via clientele acquisition. But that process shouldn’t stop after that first sale. Every month you keep a client, a sale is happening. If you’re advertising and selling properly (and if your products are built with great people and systems!) you’ll be able to reinvest that revenue back into advertising. And voila! With the right market, an effective advertising model, and ongoing sales, you’re ready to reach the next rung on the ladder: leverage.
Level Up With Leverage
Leverage is all about using something in a way that maximizes its advantage. Here are the three must-haves to create leverage that feeds into your ability to scale:
- How skilled are the PEOPLE on your team? Around here, it’s all about the team. I’d pit my staff against any high-profile team (even The Avengers!). We talk about this a lot in our resource group on Facebook, and we do multiple training sessions about this all-important topic.
Bottom line? Your people ARE your business. It’s the most symbiotic relationship you’ll ever find. Here’s how to build a world class team.
- Is your PRODUCT *really* good? No, really! Let’s be honest. Your product carries with it your reputation. That means your reputation walks into the meeting room before you do. And it creates the leverage you need to accomplish the next goal. A great product or service carves out a special place in the customer's memory and keeps them coming back for more.
"Long story short, brand awareness isn’t enough. You want customers to believe in your brand, and that belief begins with product quality."
- Can your SYSTEMS save the day? Best-selling author James Clear says goals are fine but “having a well-designed system will always win.” Why? A great system allows things to be done without your involvement. So ask yourself questions like:
- Can I do this again and have it work as well as the first time?
- Can someone else do it for me with the same quality of outcome?
- Can it be repeated perfectly by technology withOUT losing what makes it great?
If you can answer these questions with a convincing “yes,” you’ve got a powerful system in place. But remember, systems are only as good as the profit margins they produce.
It’s All About Margin
At the end of the day, we’re all looking for margin. Without it, you’re not growing – just getting by. To focus on this final element of scaling a business, consider the following:
- Are you focused not just on price but how you *approach* PRICING? There is an important difference. It’s not just what you charge, but how you charge.
- Do you have enough VOLUME to exceed fixed expenses? If not, it’s time to increase. You need enough volume to create margins that can be reinvested into improving your product. (Remember that life cycle I mentioned earlier? It just showed up again.)
- What does your Cost of Goods Sold (COGS) say about you? COGS is a measure of how efficient your company is. It also says a lot about how executives are managing labor, supplies, and the production process.
As your company grows, greater profit margins will allow you to cut costs with economies of scale. The goal is to put yourself into a “moat” position, which makes it harder for new competitors to challenge you. After all, you’re able to do the same thing they do – only cheaper.
Closing
In a new book I’m writing, I talk about the 3 “P’s” of growing a business quickly (without sacrificing quality). You have People, Product, and Positioning. One of the biggest risks you have in business will be sacrificing one of these 3 things for “more speed.”
Anytime you make sacrifices, you have to pay them back later.
The key in 2023, and beyond, is to prioritize healthy growth above everything else. If you pay attention to the lessons in this article, you are well on your way to a healthy, balanced, and (hopefully) FUN business experience.
Let’s grow!