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4 Key Essentials to Scaling Midsize Businesses

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The Essentials of Scaling Midsize Businesses

Many entrepreneurs turned midsize corporate CEOs find themselves struggling to adapt to the unique challenges of midsize corporations. The very fact that you have “midsize challenges” is an indication that you aced the challenges of the startup-turned-small business, but now you have to amp up your game in order to successfully scale your business to exponential levels and execute your exit strategy and/or reach your true potential in the market.

Many times in my career, I have helped companies scale for both of these reasons. Through these experiences I have brought the success formula down to four key essentials to scaling midsize businesses that have to be in place in order to maximize shareholder value.

1. Everyone Is Replaceable Including the CEO

In the technology space, there is a phrase I have heard over and over: “single threaded.” The term generally relates to software code, but in a business environment it means that one individual in the organization hold “the keys to the kingdom” and future success depends on that person remaining with the company and contributing at a high level. The individual may be the CEO, CTO, an extraordinary sales person, or another key contributor. No matter who it is or what function he or she performs, the business is at high risk in this type of scenario.

I once scaled a business unit of an outsourcing company from $300K in annual revenue to $10M in one year and replaced myself after 18 months. I then went on to build another business unit using the same strategy. This approach allowed the company to scale rapidly and reach their vision. Remember it is all about the people—all of the people. So it is imperative that the right organizational strategy is in place and implemented to counter the single thread threat.

2. Improve the Mechanism by Which You Deliver Your Value Proposition 

Many midsize companies do not challenge the strategies that have made them successful to date when they are expanding the company. If you are at $10M in revenue scaling to $20M, this may not be a critical component, but if you are $20M and attempting to scale to $100M then your sales, marketing, and customer support strategies need to be reassessed and new strategies developed to fuel the growth and sustain profitability. This may start with the vision of the company and an overall business strategy.

There is an excellent case study and approach in a blog by Rob Donaldson entitled Market Driven Strategic Vision Makes a Difference to emphasize this point. One of the key elements of a go-to market strategy that is often overlooked is the identification and management of key business processes. I cannot emphasize enough the importance of this component, as it is the answer to repeatability and profitable growth.

3. Adopt a Philosophy of Sustained Organizational Health

I recently had a discussion with the CEO of a major consumer rent-to-own company who grew his business from an idea to three billion dollars in annual revenue over twenty-five years. Although many factors contributed to the success of his company, he says that he has always focused on the health of his organization and adopted a servant leadership management approach for the company to ensure that the company remains healthy during rapid expansion and through organic growth and acquisition.

Patrick Lencioni, author The Advantage, says, The single greatest advantage any company can achieve is organizational health. Yet it is ignored by most leaders even though it is simple, free, and available to anyone who wants it.” Mr. Lencioni advocates the four disciplines model to achieve organizational health:  i) Build a Cohesive Leadership Team, ii) Create Clarity, iii) Over-communicate Clarity and iv) Reinforce Clarity. I highly recommend this book to anyone who wants a do-it-yourself guide to organization health.

4. Become an Analytic Competitor

An analytically competitive organization is one that uses analytics extensively and systematically to out-think and out-execute competitors. The start point is financial planning. You need more than a “bean counter” to scale your company, beat your competition, and retain profitability. Financial planning is critical. There is an excellent PowerPoint on slideshare by Saarthi Consulting that describes the financial planning process for scaling your business as six main components:

  1. Have you crossed the chasm?
  2. Business cycle validation
  3. Profitability per sale
  4. Customer Support effort
  5. Product Service Digression
  6. Cash flow predictability

Business owners need to decide what scale of business they really want. You may be happy at the level you are now and have a great life style. Good for you. But, if your goals are to expand and grow your company, keeping in mind these four key essentials to scaling midsize businesses will make the journey fun and exciting.

Frozen Fire is a Dallas internet marketing and video production company that helps companies harness the most powerful aspect of modern marketing—the internet—to engage customers in memorable and meaningful ways. Ways that ignite sales and business growth. Contact us to learn how we can help your business.

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