So, your brand is starting to grow.
Sales are coming in, customers are happy, and it’s clear that you’ve achieved product-market fit.
So, it’s time to scale up, right?
Maybe - but maybe not.
The thing is – a few key constraints must first be addressed to ensure your business is ready to scale successfully.
Not addressing these constraints can cause a growth disaster that brings your company to its knees.
But have no fear - because I’m here to help.
Today I’m going to walk you through 3 key constraints to scaling so you can assess them BEFORE making the decision to double down on growth.
By arming you with this wisdom, you’ll be able to discern if transitioning into scaling mode is right for you.
If not, you’ll know where to place your focus to prepare for scaling later.
Let’s dive in!
Scaling Constraint #1 - Marketing
If you think about your business as an airplane, your marketing is the engine that propels the business forward and gives it enough speed to take off and stay in the air.
If your marketing results begin to slow as you scale, your plane runs the risk of stalling and falling out of the sky.
As a result, if your marketing is not ready for scale, then your entire business is not ready for scale. As such, marketing is the first scaling constraint that you must address before moving into hyper-growth mode.
You need to prepare your marketing function to acquire new customers and increase brand awareness on a larger scale than ever before. Your strategies also need to remain relevant and aligned with your growth goals.
The marketing constraint to scaling refers to the challenge of adapting and evolving your marketing practices to meet the demands of larger growth goals and changing market dynamics.
Scaling requires a strategic approach to marketing that accounts for increased competition, changing consumer preferences, and the need to reach new audiences while maintaining the loyalty of existing customers.
Constraint #2 – Leadership
As your brand scales, so will head count and business complexity. Right now, it may work for most people in the company to report directly to you, the founder.
But let’s be honest, this reporting structure doesn’t scale.
There’s a lot of research that shows a single manager can only effectively lead a team of 5 to 7 people. Beyond 7 it becomes impossible for the manager to maintain deep enough relationships to produce quality results.
For these reasons, if you want to scale successfully, it’s essential that you build a world-class leadership team.
The leadership constraint to scaling involves developing a leadership team who can handle the increased complexities and demands that come with growing the business. This includes nurturing a strong company culture, delegating responsibilities, making informed decisions, and fostering innovation.
Without capable leadership, your brand will face challenges like communication breakdowns, lack of alignment, and difficulty in achieving growth goals.
Addressing the leadership constraint involves identifying and developing key leaders within your business and establishing a clear leadership structure that can guide the business through the stages of scaling.
Constraint #3 - Cash
If your marketing is the engine that drives your plane forward, then cash is the fuel that keeps the plane running. If you don’t have access to the right amount of cash at the right time, your engine will shut off, and the plane will stall.
The cash constraint to scaling refers to the challenge of managing and maintaining sufficient cash resources to support the increased operational expenses, investments, and working capital requirements that come with scaling.
During periods of scaling, brands experience a strain on their cash flow due to increased inventory, hiring, marketing spend, and capital investments. Without a solid finance strategy, a growing brand can face cash flow issues, which might hinder its ability to take advantage of growth opportunities or weather unexpected downturns.
Overcoming the cash constraint involves effective financial planning, managing expenses, optimizing working capital, securing additional funding (if necessary), and maintaining a healthy balance between growth and financial stability.
In summary, not all brands are ready for scale.
Before deciding to double down on growing your brand, make sure that you won’t fall victim to the 3 scaling constraints outlined in this article.
You must make sure that you have the marketing strategy, leadership team and cash resources to fuel your scaling goals.
Without them the incredible brand you’ve built thus far runs the risk of crumbling beneath your growth.
One final note on this topic before I close.
If you don’t currently have a CFO on your team and you can’t afford one full time, consider hiring a Fractional CFO. A Fractional CFO can help remove all 3 scaling constraints I outlined today.
Marketing – a CFO can measure and assess marketing performance and help you understand which areas are working on and not working.
Leadership – A CFO can provide the executive-level finance leadership you need to scale alongside healthy profitability, cash flow and confidence.
Cash – A CFO can implement monthly financial forecasting and identify strategies to improve margins and cash flow.
If you have any questions about getting ready to scale, feel free to reply directly to this email. I’m happy to provide quick, free advice.
Until next time, scale on!
Photo by micheile henderson on Unsplash