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Why some businesses scale and others don’t

Why do some businesses scale and others don’t?

 

Ever since I started my first business, I’ve been trying to figure out why some business scale and others don’t. It’s always been a dream of mine to build a fast scaling business like the stories we hear of the tech companies in Silicon Valley. There have been many business books written based on years of research, on companies such as Apple, Amazon, Google and Facebook and all of them offer their own views. Here are some of my favourite books that explain this.

  • E-Myth By Michael E. Gerber
  • Good to Great By Jim Collins
  • The Intelligent Entrepreneur By Bill Murphy

Based on these books I drew up this diagram below to try and simplify these conclusions and this is what I came up with:

The 3 lines represent a linear growth of 3 different companies over a 10 year period

If we accept that these are 3 business all started as a “One Man Show” by 3 Entrepreneurs from the same background, intelligence, education, country, financial class and support. How can one business scale to R20M, the other R50M and the last one to 100M turnover in 10 years?

Take a moment and think of a few reasons of your own before you read further.

Here are some of the reasons other Entrepreneurs mentioned.

  • He/ She was happy with the R20m
  • Money beliefs/ Money blueprint
  • Adoption of technology
  • Marketing and sales strategy
  • Right bums in the right seats on the bus (Jim Collins)
  • They knew where they were going. They had a vision of what the business would look like when it was done and could communicate the vision to inspire employees and investors and attract clients. (Michael E. Gerber)
  • Company culture. They had team members not employees (Dave Ramsey)
  • The R100m company was hungry, motivated, determined, basically had a bigger drive.
  • They had a reason above money. They had a why (Start with why – Simon Sinek)
  • Could scale lean (Lean Startup – Eric Ries)

 

I could go on and on but the above illustrates my point. These were all decisions, habits, beliefs, and visions of the Entrepreneurs who started and ran these companies. It is safe to say that 90% of the reasons we can come up with can be categorised to one collective: The Mindset of the Entrepreneur. There are other facts such as luck, timing of the market and something that we can’t describe, but it is known as the X- Factor. For now, let’s just focus on Mindset as I believe this to be the biggest differentiator and the one thing we can control. If mindset plays such a big part what can we do to cultivate a mindset similar to these successful Entrepreneurs. Are some just born with big mindsets and the rest are doomed to run companies that never scale?  I don’t think so especially considering slogans such as:

  • Want to increase your mindset, increase your circle of influence.
  • You are the average of the 5 people you spend your time with.
  • Want to be a billionaire, hang out with billionaires.
  • Want to change your mindset change your habits.
  • Aim at nothing and you will hit it every time.

These slogans suggest that there are actions and habits we can change to cultivate a mindset similar to that of successful individuals

One of the first things I would suggest is to start spending time with people that are where you want to be. Find groups of people that inspire you and will keep you accountable.

We always default to our worst habits that is why pro golfers still hit thousands of golf balls a week so that their worst habit is still a pretty good shot. What are your worst habits and how do you want to change them? Make a list of your top 5 limiting behaviours and next to it what you think it should be

Build a vision. I’ve heard of Japanese companies with 1000 year generational visions yet most of us don’t even have a 5-year plan.

Communicate your vision. You want people to follow you, clients to work with you and investors to invest in you. That starts with communicating your vision so effectively that you inspire people.

Motivation is like taking a bath, you have to do it daily – ‘Zig Ziglar’. Most of us have exercises for our physical fitness but not many of us exercise our emotional fitness. These are things like training our mind to think positively and blocking negative words from other people that brings us down.

How you start your day is critically important to the success you will achieve that day. Here is some examples of a morning rituals:

  • Wake up earlier. I try to wake up every weekday morning at 5am
  • Meditate. Meditation is a great way to clear your thoughts that is clouding your vision
  • Daily affirmations. Use daily affirmations to set the tone of the day.
  • Bulletproof coffee. Here is a link for more info: Bulletproof Coffee
  • Exercise. It’s difficult to have a healthy mind and energy without a healthy body
  • Plan my day with purpose. Start each day with intention and decide what will make today successful

This can be daunting so I would suggest to start with one or two and build up from there at a pace that is comfortable to you.

These are some of the techniques that has worked for me. Try it out and let me know what effect it had on your mindset and what else really worked for you.

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