Why Your Business Cannot Scale, and the ONE Simple Answer.
Why your business cannot scale, and the ONE simple answer.
Maintaining a strong insurgent mission is critical to long-term sustainable growth in any business, but most especially for small business owners, who are usually the driving force behind their organisation. Scaling a business effectively requires high levels of commitment, focus, and strategy and is the sure factor that categorises all successful companies around the globe.
If you have been in business for a while, and have experienced reasonable revenue growth, you will know that competing at the front-line in your industry can sometimes leave you sapped and frustrated. The old start-up zeal pales when staffing issues threaten your reputation, margins are slim and business growth has slowed to a crawl.
We have recognised from working with businesses just like yours that that more than 70% of SMB’s are thrashing around in the Wilderness stage of the Business Lifecycle.
If you are in the Wilderness, you will be feeling overwhelmed, frustrated, you have sub-standard profitability, you are most likely trading time for money, struggling with staffing issues and well.. what is a weekend?? You are more than likely reactive (your business is running you) and you’d love to escape it, but no one will buy it in its current state, and you can’t afford to just walk away.
Sound familiar? Here’s some stats to add fuel to the fire:
According to this recent census report, over 55% of small business owners in Australia work more than 40 hours per week, with 30% working over 50 hours. To add fuel to that fire, the median weekly total personal income of employees was $1023 compared to the business owners who are bringing in only $5 per week more at $1028. No wonder a lot of business owners are frustrated! NSW had one of the most challenging reports with business owners actually earning $7 per week LESS than their workers.
So, what is going on here? Small business owners struggle to scale.
The Three Reasons Your Business Cannot Scale
Your business lacks a fixed output
Small businesses often start out by engineering every solution for a customer from scratch, and many leaders consider this an advantage – it’s personalised service, right? However, operating in this way means that you have created inherent inefficiencies in your system. You will be able to identify this when someone asks you “what’s your prices” and you tell them you will put together a quote for them. All of your services should be clearly defined, and the outputs systemised so that you can rinse and repeat. Any service that needs to be built from scratch should be at a premium cost, and not the run of the mill offering.
You perform work on time-based rates
Hourly rate charge outs has been a common thread with Australian small businesses. If you are still charging per hour, or your pricing is based around an hourly rate, you are locked into a time for money trap that will constantly limit your ability to scale. Think more along the lines of say a pharmaceutical company, which spends a massive amount of upfront time and money on R&D and testing, and then passes those costs off later to consumers even though very little additional time is needed for a sale.
You rely on variable remuneration
When your pricing structure is based on variable remuneration, then you only earn revenue based on certain inputs. No agreement between fixed outputs and fixed renumeration. Businesses that know how to scale develop consistent revenue sources that allow them to budget effectively and plan important capital projects that drive future business success.
The One Simple Answer You Are Looking For
There is a very simple answer to your scalability issues… Productisation.
Productisation is a structured offering designed to deliver a predetermined outcome for a specific niche at a set price. In short, it is your answer to your scalability problem. It’s also your never-taking-a-holiday problem.
There are 4 essential elements to productisation
1. Structured offering
When you achieve product consistency and apply it to a target market, you can build a company that is rooted in success on purpose, rather than haphazard luck.
2. Predetermined outcome
You must create products that deliver predetermined outcomes and can be replicated over and over again, relieving established pain points at consistent costs.
3. Specific niche
Scalability is all about honing-in on an offering that has actual value for a specific customer base, rather than trying to be all things to all people.
4. Set price
Charging a set price enables you to create economies of scale and build sustainable growth that can be replicated quarter after quarter.
If you want to be able to wrench your way out of the day-to-day overwhelm, and start making good money (more than your employees at least!), then scalability is vital. We can help. We will work with you no matter where you are based in Australia
If you’re ready to delve more deeply into the productisation strategy and learn how it can transform your company, get in touch.
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