How to Know When Your Business is Ready to Scale

Before Facebook evolved into the ubiquitous brand it is today, it was called “Thefacebook” and its founder Mark Zuckerberg was fervently running around Harvard’s campus signing up users for his nascent social network.

scaling your business

That was in 2004 when the company was Mr. Zuckerberg and a few of his close friends. In 2017, some 13 years later, the company has grown to over 20,000 employees, 2 billion users and an astonishing market cap of $497 billion.

That period between startup and “success beyond imagination” is a jungle-obscured, precarious route that every CEO or entrepreneur must navigate as they guide their companies on a path of growth, otherwise known as scaling the business.

Is Your Business Ready?

How to know when your business is ready to scale is not a simple decision. And you might be surprised that the obvious answer isn’t growing as fast as you can through sales.

Stanford professor of management science and engineering, Robert Sutton, in his article “Eight Essentials for Scaling Up Without Screwing Up,” says “Understand that you are spreading a mindset, not a footprint. Scaling requires instilling the right beliefs and behaviors in people, not just running up the numbers as fast as you can.”

Indeed, most CEOs agree it’s essential to have the “right people in the right seats” before undertaking aggressive growth plans. But according to Brian Hamilton, chairman of Sageworks, there are a total of “5 signs You’re ready to Scale."

Signs You're Ready to Scale

  1. You have confidence in your revenue model.
  2. You are profitable and have a path to positive flow.
  3. You have a healthy accounting system and a cash flow forecast.
  4. You’ve developed a strong, core team of long-term employees.
  5. You have a company ethos you’re comfortable with.

Author Jason Albanese says that “Scalable growth is all about pairing exponential revenue growth with incrementally increasing costs.”

Find the Right People

Other CEOs and leaders insist you must carefully sculpt the organization’s culture before hiring people to fit within it. That’s the approach Facebook took in its early days, Prof. Sutton explains. Given the speed that Facebook was growing, the company made a conscious decision to slow down the hiring process.

“It was essential to slow way down and find the right people, and to make sure that they learned to live the right mindset, to set the stage for speedy and effective scaling down the road,” says Prof. Sutton.

Some Silicon Valley companies—Facebook and Google—hire their employees for culture fit first, technical skills second. To be sure, “Facebook takes extreme measures to assure that newcomers live, understand, and commit to its distinct and shared beliefs about what is sacred and taboo. The people it hires, after rounds of grueling interviews, go through a six-week boot camp, which is led almost entirely by engineers (not HR), summarizes Prof. Sutton.

Slow the Process Down

Most firms run into trouble while attempting to scale too quickly. When Starbucks grew too fast by opening thousands of stores, it lost control of the unique Starbucks' customer experience through massive hiring.

Once more, during a firm's early years, when a decision must be made to scale or not to scale, people should be at the center of a CEO’s thinking. Mr. Hamilton says you not only have to be confident in your staff’s ability, but also in their commitment to the company. “You need at least three to five people who you feel will be with you over the long run.”

Interested in a peer advisory board of growing companies that could help you grapple with common concerns like knowing when your business is ready to scale? Join us for a meeting!

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About the author

Gary Teagarden
Vistage Minnesota

Gary is an accomplished copywriter and B2B content marketing strategist. He’s written numerous articles and member stories for Vistage Minnesota since 2012.

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