“Do things that don’t scale.” -Paul Graham
Worse. Advice. Ever…
Depending on the stage and size of your business, this mentality could spell disaster. The further along your business is, the less this applies to you.
Yet, it’s something ALL entrepreneurs struggle with. We’re ADD. We focus on the things we like doing, or worse yet, the ones that are easy. We write the blog posts, share on social media, make flyers, cold-call customers…
That’s called a job, not a business. If you’re essential to your company, you’re an employee, not an entrepreneur. And there is nothing wrong with that. If you’d rather be self-employed, that’s fine.
But for founders building next-level, fundable, scalable businesses, you CANNOT be a critical cog in the business. If you are, you throttle growth, innovation and profit. And your business will NEVER be saleable.
Yet, unscalable is often necessary
So, Paul Graham’s pretty smart. In the early days, grinding is the ONLY thing that gets you going. And often, it’s the strategy that sets you up for success (even if it means playing dirty — more on that here and how to take advantage of platforms).
But, once you’re beyond the scrappy startup stage, beyond clawing for every little ounce of progress (anything to survive), you need to think bigger.
You need to think scalability.
Scaleable isn’t always smart
There are lots of strategies to build and grow a business. Most revolve around acquiring customers. It’s money in versus money out, and you need MORE.
And from a scalability perspective, outside of paid ads, social media’s one of the most explosive growth channels you can have. Where else can you reach thousands or millions with your brand’s message, seemingly overnight.
But despite the fact that Instagram and Pinterest are almost infinitely scalable, they aren’t a good fit for me. I know almost nothing about the platforms, they aren’t all that targeted to startups and entrepreneurship, and they take a ton of effort to get right.
And while I’m a fan of spray and pray (see this post for why), it depends on how much the bullets cost. Experimentation is key here. Constantly be testing to see what works, and what doesn’t. And wherever possible, have your team/tools do the testing for you.
As a founder, your time is incredibly valuable. Never forget that.
Protecting your time
So, what do you do, and what do you delegate? Better still, automate… And then there’s the things you kill entirely.
We’re all familiar with the Pareto Principle: 20% of effort yields 80% of results, etc… I won’t rehash that here, or outline how to kill unproductive initiatives. (Here’s a great article for that to optimize yourself/work).
As an entrepreneur, your resources are limited. So are mine.
And whether you’re an entrepreneur or solopreneur (which I am personally), you need leverage. So, let’s talk leverage.
Automation for impact
I’m a founder/CEO coach for world-positive businesses. I help leaders 10x results, acquire more customers, scale faster, fundraise and fine-tune their startups for serious future growth. As such, I’m in the service business. It’s all about attracting clients, but how?
As a one-man shop with a few VAs (virtual assistants), I have to automate and outsource to be effective. And I write a lot. You’re reading this blog, aren’t you? But where, that’s the question?
My team reposts blogs to Medium and Linkedin, creates video versions to post on Youtube and cross-promotes on Hackernews and Facebook groups.
We use If This, Then That (IFTTT) to post automatically to Twitter, Instagram and Reddit. It creates a Tumblr version, schedules posts to Buffer, and more… all without me having to do a thing.
I just write (mostly).
What you shouldn’t automate/outsource
One of the biggest mistakes I see CEOs make is outsourcing core competencies. If it’s something that drives the lion’s share of your business, keep that close.
If you’re running a CPG ecommerce company, you better be good at advertising. Reducing your CAC (customer acquisition cost) and increasing LTV (lifetime value) are the two biggest drivers of success. This is especially true the more generic/commonplace your product or service is (like the 7-figure ecommerce company I built — it was ads or oblivion).
So, what is your USP (unique selling proposition)? (Not sure about your USP? See this post)
Is it original products? Customer service? What about incredible design and branding?
Whatever it is, own it and optimize it. Capitalism rewards extreme excellence. And you don’t have to do everything.
A few examples:
Shopify helps sellers start selling faster, and easier.
AWS handles all your hosting and storage.
Slack simplifies accepting payments.
If there’s an existing solution, DO NOT build it yourself. We’re living in the world of microservices. Zendesk, Zapier, those obnoxious chat interfaces… it’s easy enough to get up and running.
And while that’s awesome, it also spells more competition. When it took $5M in funding to spin up a server farm, startup opportunities were limited. Today, entrepreneurs are more empowered than ever… how will you stand out amongst a crowded field?
The risk of scaling
“Quantity has a quality all its own”
But bigger is definitely not always better. If fact, when most organizations try to scale, quality takes a dip. Pixar produces a couple blockbusters a year, not a couple hundred. And if you’ve ever listened to a daily podcast, it’s not as polished as the less frequent publishers.
As increase output (or team size), things change. Some of that’s inherent, some’s unfortunate.
The two things to remember: What is your USP? What are your KPIs?
Does scale amplify or erode it? That’s the question. And, where is that equilibrium/optimization point?
How far can you push the envelope before things tip towards unfavorable?
Things to scale
Anything that builds your moat or a flywheel for your business.
Here are several examples:
Youtube driving the bulk of your visitors (and customers)? Consider doubling down on it. As the “top of the funnel,” content creates an (often) evergreen flow of visitors and traffic.
Twice as many videos, twice as many visitors… right?
Not so fast. Actually, it’s often exponentially better. More videos increases your chances one goes viral, and Google rewards constant content creation with increased search exposure and recommendations.
Steven Spielberg without syndication would just be a bum with a camera. Unless you’re working to share with the world, the world ain’t listening.
So, how can you leverage existing channels and social platforms to spread your message and repurpose content?
If your CAC < LTV, spend as much as you can. Even at breakeven, building a larger customer base increases the likelihood of referral (here’s a great referral strategy to boost virality). And, if your product/service has network effects (here’s a post on designing virality/NFx into business), fueling your flywheel means faster long-term growth, better results and more profit.
Running an ecommerce company? The fastest way to increase revenue and profit is simply offering additional products to your existing customers.
Of course, you need to be careful here. Creating shitty products or scaling too quickly can lead to major issues (quality or cashflow), but in general, additional options allows you to serve additional customer bases and increase LTV of your existing users.
What’s working in your business?
And what haven’t you tried because you’ve been too busy putting out fires?
Do things that scale, and scale yourself in the process. It’s the only way to build an epic company.
Would love to hear your thoughts in the comments below.
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