Research shows 70% of startups find it hard to scale their business. It’s easy to go wrong, yet the rewards are compelling. One study says that startups that succeed with scaling are known to raise upwards of 250% more money than anticipated.
But the truth is that scaling a business requires thoughtful, strategic planning. According to data from McKinsey, only 22% of new businesses in the past decade have successfully scaled.1
So, what’s going wrong? Why can’t business owners get it together and move their businesses forward? More on that ahead. First, let’s define the difference between scaling and growth.
Scaling vs. growing—what’s the difference?
The terms “growth” and “scale” are often used interchangeably. While the two are related, they have distinct differences. Growth refers to increasing revenue at the same rate that a business adds resources—such as new team members, technology, and capital, to name a few. On the other hand, scaling is when an organization identifies ways to grow more efficiently, resulting in revenue growth at a substantially greater rate than increases in resources and expenses.
The goal is to take the business to a new level of success in a way that is sustainable—and profitable. But, the truth is even if business owners want to scale, something often gets in the way.
What’s holding business leaders back?
Here’s where the concept of the “worst number in business is one” becomes increasingly relevant. If you want to effectively scale a business, three essential roles must be filled within the organization, otherwise successfully growing a business in a scalable way is close to impossible.
These are three essential roles every business needs:
The Artist: This is a skilled producer who is driven by their passion for the business. This person started the business and their identity is the business. They are also the person who generates most if not all of the income.
The Entrepreneur: This is the risk taker who is focused on business value. They aren’t emotionally attached to the product or service but love the idea of growing and scaling the business.
The Leader: This is a people person who is operations-minded. This person is fantastic at optimizing business systems and they’re fueled by managing or organizing the processes within the business as well as the people in charge of those processes.
What role do you play?
You may be one of these roles, or you may be a combination of two or even three. Most, if not all business owners wear the hats of all three of these roles within their company at some point. If they didn’t, they wouldn’t be where they are today. But what got you here, won’t get you there.
Every successful owner that has effectively scaled their business has ALL of these roles filled in their organizational structure. They have dedicated, full-time positions set aside for each role. Situations where one person drives all of the work and thought leadership within the organization typically leads to burnout and prevents the business from truly scaling.
The army of one stranglehold on any business relates directly with the practical psychology of the business owner. Ultimately, the thing that is preventing you from growing and scaling your business is you. I can safely say that we all know how to grow and scale a business. The question is: How do you trigger a shift in your mindset that ultimately makes it possible to scale?
TWR can help you get there
TWR’s coaches help leaders like you succeed, so you can work more productively with your team to scale your business. Remember, the seemingly easy things to change are not always easy when you’re a leader. That’s why so many owners and managers fail to do them. TWR can help you overcome barriers to quality leadership with proven strategies that allow you better connect with employees—and manage your bottom line.