Nobody starts a business and thinks to themselves “I hope we stay the same forever.” Change is natural, and growth in particular is a welcome change for any growing company. However, it is important to recognize that with growth comes the necessity for a strong foundation. Your business is becoming susceptible to a wide variety of problems if it has not been created to support rapid development. Business owners need to have a definite idea about how scalable their business is – without it any aspirations for the company will have no basis in reality. According to Investopedia, scalability is “a company’s ability to grow without being hampered by its structure or available resources when faced with increased production” and this is a factor that potential investors will also take into serious consideration before investing. In short, in order to build a business that is properly prepared for the future one must not only focus on driving growth, but also on creating a business model from the beginning that will support growth in the long term, allowing you to create scalable success.
There is a plethora of reasons why a business can fail, from bad hiring to overspending to lack of capital, and a recent study from the Startup Genome Report found that 90 percent of startups fail primarily because of self-destruction rather than competition. Among those failures, the biggest reason was companies expanding before they were ready. Hiring too many employees too fast, spending too much on customer acquisition before the product is prepared, or boosting marketing spending without analyzing core metrics are just a few of the ways in which a company can put the cart before the horse, so to speak.
Unfortunately, there is no one-size-fits-all business model that will ensure your growth is scalable. However, in general I have found that growth is about implementing a rigorous, customer insight and data-driven process with sustained effort to remove friction. When I joined the family business in 2006, it was a small but successful chain of barbecue restaurants that had just begun to franchise locally, but I saw that there was a hole in the market for a Texas barbecue chain that operated on a national level. I set my sights on creating some fairly rapid growth, but made sure to strategically make capital investments in areas such as information technology, marketing advertising, construction, real estate management, logistics, and even accounting to ensure that we would not only be able to sustain such a growth strategy, but also keep up with a larger player that we would eventually see ourselves competing against.
If there is one piece of advice I could give you above all else, it would be to never divert your focus from what is truly most important: the customer. After all, any sort of growth will be for nothing if it does not also create a loyal customer base. While it may seem counterintuitive, sometimes the best way to scale is to take the focus off of scaling in the first place. Instead, spend that time and energy learning everything you can about your customer, spending time with individual customers, and yes even listening to a customer’s complaints. Find out the best approach for your business to build and maintain relationships, and make sure this is occurring from the top down. By building customer-centered practices into every facet of your business, you remind every single person on your team that at the end of the day, these are the people who will truly help your business scale, more so than any other form of strategy.
Scaling a business also requires learning who you are as a company and what you have to offer your customers that differentiates yourself from the competition. This is where creating a strong brand comes into play. During our company’s scaling process, we were certainly met with learning curves that taught us where to lean into certain areas and where to pull back to ensure that our brand translated well on a national scale. For example, when we opened our first out-of-state location in Denver we painted it with Texas flags but quickly found that while our Texas roots were a huge part of our brand we needed to be more strategic in how we translated them outside of the state.
Identify the weak points or tough spots within your specific sector and come up with a strategy early on for how to overcome them. In the franchising industry one of the most difficult challenges in scaling comes with ensuring sustained quality standards throughout the entire system, which is why we developed a “Barbecue University” training program for each of our new owner-operators. Thanks to this intensive four-week course, we are able to ensure that whether they are having our barbecue from our original pit, or at our first international location in Abu Dhabi, our customers will get the same experience. Your brand is what sets the tone for your company’s culture, the standard for how you make your hires, and help you establish the kind of client experience you want. It will impact marketing, sales and design efforts, and the kind of company you ultimately become.
Speaking of marketing, I can’t emphasize enough the importance of marketing when it comes to achieving rapid and sustainable growth. Of all the areas to invest in aspirational growth, I would say marketing is one in which you can spread your wings a little bit. This is where you can look beyond local promotions and ad campaigns, strategically searching to grow your reach in innovative ways. As I said before though, every move you make toward scalability should be based on a data-driven process. For us, that meant looking to the future and seeing how information technology such as big data could be applied to the fast-casual industry. Working with a business intelligence service provider, we developed our own proprietary data platform that has allowed us to synthesize key performance indicators from across the entire business. Through the platform, we have obtained real-time feedback from our point-of-sale systems, marketing promotions, loyalty programs, customer surveys, and inventory systems, allowing us to make informed decisions and place our attention on other growth-related activities while also giving us an edge over our competition.
Since I have run our family business, we have seen our locations grow from 20 to over 500, expanding to 44 states and three international locations. However, we would not have been able to achieve this without putting in place a strong foundation based on concrete data. In order to have a scalable business, you need to ensure that it has the ability to withstand pressure and sustain its levels of profitability as sales volume grows. Your business model should be flexible as you take your time with funding and validating your market. Nobody wants their business to stay small forever, but by utilizing your resources and working smarter rather than harder you can prepare for monumental growth while preventing the growing pains that come with it.