Entrepreneurship seems straightforward from the outset: you have an idea, build a business around it, implement some marketing tactics, and hope to make it big. But most entrepreneurs get stuck at a certain point of growth with their business and struggle to build past it.
This sticking point provides a natural pause in your daily operations to ask yourself: how can I continue to grow? What is and isn’t working for my business? Do I need more human resources, technology or processes? Really, what entrepreneurs need is an effective strategy to scale their business.
Building a business isn’t easy, but according to investor and entrepreneur Mark E. Watson III, scaling a company involves one potentially surprising factor: simplicity.
Many entrepreneurs struggle when their companies start to grow. They get off to a good start, solidify their product or service, and generate some customer recognition. But they struggle to move forward.
The resources, skillsets and amount of employees needed to sustain growth will change during the lifetime of a company. Watson likes to remind entrepreneurs that how you deliver a product or service will likely have to change as you move from a handful of customers to hundreds of customers, and from hundreds of customers to thousands of customers.
Watson likes to say, “don’t pave over a cow path”. Even if you’ve been doing certain processes the same way since the start of your company, don’t assume it will work as your company grows. Don’t pave over inefficient processes and, in turn, make them permanent. This will create inefficiencies at foundational levels and make further growth even more challenging.
The key to making processes efficient? Simplicity. Make sure every aspect of the company is governed by straightforward, easy-to-understand processes and guidelines. If you don’t have processes set in place yet, make sure you take the time to create them.
Sit down and evaluate how you do business. Write it down, test it, and see what works. Make it easy to understand so that new hires can better integrate into your company. While the practical aspects of these things may change over time, simplicity will be the common thread.
Most companies focus on staying ahead of their competitors in terms of pricing, services and products offered, and innovation. These are foundations to success, but many neglect the importance of infrastructure. Efficient procedures, sturdy principles, and a strong sense of purpose are essential for scaling a business. All of these keep companies competitive because they directly impact the bottom line.
Watson said that most companies fail because either they cannot succeed with their original business model, or they can’t sustain their growth. When companies grow quickly and neglect implementing efficient procedures, they become less efficient and therefore less cost-effective than their competitors.
As a result, they end up with a lower margin and eventually go out of business because “someone else comes in with a better product at a cheaper price point with a faster way to deliver service to the consumer,” says Watson.
Remember: Complexity Has a Cost
In his thirty years as an investor and entrepreneur, Watson found that complexity is costly and the best ideas are often the simplest. Scaling a company should be a calculated process, yes, but it should be simple. One important thing is to make sure you don’t try to be all things to all customers. Clearly decide for yourself who your customer is and who your customer is not, and then deliver amazing service to your target customer and give them what they need.
Complexity can sneak up on entrepreneurs. Every time you add a new system or a new piece of software, no matter how amazing it is, you are still adding complexity to your business. Even a growth spurt can add complexity, especially if you hire too many people and don’t take the time to place them in the correct roles.
You have to really think through what you need and what you can live without. Complexity has a cost because it takes away from the focus of your company. It takes away from the reason you went into business in the first place. Make sure your processes are in place and you know what is truly essential so you can create a smooth path forward.
If you want to scale your business, you must be focused and your business plan must be simplified. Center your business around a singular mission, and make sure every process implemented along the way contributes to the overall goal. Read more of Mark Watson’s insights to find out more tips for your company.