Do You Have S.P.A.C.E. for Growth?


You’ve heard it before, but it doesn’t make it any less true. You have to work smarter, not harder if you want to scale your business.

Scaling a business isn’t as simple as just putting your head down and grinding it out.  In fact, we often talk to business owners who are maxing out their time and effort trying to grow their business and they are very frustrated with the results they’re getting.

What does that actually mean?  Well, here are 5 key ideas that you need to establish in your business before you’re going to be able to scale successfully. As a way to remember the list – think about having the S.P.A.C.E. for growth:

5 Ideas You Must Implement if You Want to Scale

S.   Simplicity

Imagine a situation where you had to explain a really complicated idea to someone? Maybe you break out the diagrams and the charts and graphs, maybe you just go into excruciating details. Whatever you do, it’s a painful process and it takes a lot of work.  Now try doing that 100 times a week to dozens of different people. It would be exhausting and not very successful.  That’s what it’s like to try to scale an overly complicated business.

The best business models and the best value propositions are the ones that people ‘get’ right away, with minimal explanation.

  • Netflix – the ability to watch shows and movies whenever I want
  • Chipotle – a burrito, bowl or taco of fresh ingredients that I can see and select quickly and easily
  • Amazon Prime – 1 annual payment for ‘free’ 2-day shipping and ‘free’ access to online music and content

Can you explain your business in a single sentence or a few words?  Have you simplified your operational processes to the point where it’s easy and obvious how new employees fit into your model (think McDonald’s adding a new fry cook)?

Complexity will slow you down. What could you do to simplify and streamline your business?

P.   Profitability

Most business owners tend to focus on revenue when they think about their business. The top line is a lot easier to calculate (how much did we sell this month) and because it’s a bigger number, it tends to be more fun to think about.  But revenue can’t tell you how your business is actually doing. How healthy it is.  For that, you need to be looking at your profitability.  Great revenue, even if it’s growing, doesn’t mean ANYTHING if you aren’t keeping any of it.

As you grow, there will be times when it will be difficult to maintain profitability. You’ll have to make investments – people, equipment, space, etc. And often those investments start costing you before they will pay off.  However, as long as you’re maintaining a healthy margin and not trying to grow too fast, you should be able to keep things in the black.

What’s a healthy profit margin?  It varies a lot by industry, but a good general rule of thumb for small businesses is a range of 10% to 20% profit margins.  If you’re much below 10% then you’re running a significant risk that a bad month or two could take you down.  If you’re running much above 20% – enjoy it, but don’t plan on having it last. You’ll start getting competition and pricing pressure if things are that rich.

You can’t scale if you’re not profitable. How closely do you track your profitability and are you in a healthy range?

A.    Accountability

It doesn’t matter how talented or hard working you are as a business owner. If you want to scale your business, you’re going to have to rely on other people and the most important trait they need to have is accountability.  As a leader, you need to be able to carve out large pieces of the business and have others take ownership of the results needed for success.

Right now, if there’s a problem in your business, who’s staying up late at night to figure out how to solve it?  If you, as the owner, are the only one doing that, it’s going to be a painful (and likely unsuccessful) grind to grow your business. You must have a team that’s engaged, that cares about the results, that wants to win – and you need to let them make the important decisions…and fail occasionally. That’s the only way you’ll make significant progress once the business is bigger than just you.

Do you have a leadership team that is making things happen?  What would it take to get others ‘owning’ critical parts of your business?

C.   Clarity

Where are you headed in your business?  What are you all about?  If you asked 10 people (employees, clients, partners) those questions, how many different answers would you get?  Most of us would get 10…a few might get even more than that!  😉

If you want to scale your business, it’s not enough to have a general idea of where you’re going and who you are, it must be crystal clear.  Greg McKeown – the author of Essentialism calls it your Essential Intent and explains that it needs to be inspiring and concrete.  Everyone should easily be able to answer the question

“How will we know when we’ve succeeded?”

Author Mike Michalowicz talks about the importance of having Immutable Laws, those unbreakable rules you follow that make it  your business.  They are a mix of your core values, ethics and general business principles that you feel very strongly about.  If someone breaks a law, they’re out.  They are a fantastic tool for helping employees and customers understand who you are…but they have to be communicated clearly (and frequently) in order to be useful.

Are you currently operating with clarity?  Do you clearly communicate a vision that your team is embracing and can measure?  If you’re not all on the same page and headed the same direction, you will not be able to scale your business.

E.   Extraordinary

Regardless of the industry you’re in, it’s likely that you have competitors.  You can start, and even run a moderately successful business by delivering more value than you charge for. But if you want to thrive. If you want to be able to successfully scale your business, then you need more.

You have to be different in some important way, you have to stand out from those competitors.

You need to be extraordinary.

What do you do that you’re competitors aren’t currently doing (and that your clients love)?  If you have trouble answering that question, then you’re going to have trouble growing the business.  If nothing else sets you apart, you’re eventually going to have to compete on price and unless you’re Walmart, you’re not going to win that battle.

The good news is that you can be extraordinary in a lot of different ways. You could offer up a higher level of service than everyone else. You could be the ‘smart’ choice that focuses on education, or long-term value, or ease of use or premium quality.  There are lots of options, but you have to choose to be extraordinary in some way and continually make it happen.

Are you extraordinary in some way now?  How?  Would your clients agree with you?  How are you communicating that?

S.P.A.C.E.  for Growth…

Scaling your business isn’t easy, but it’s practically impossible if you don’t have a strong foundation.  This isn’t a complete list, every business is different, but if you want to grow you will definitely need at least these 5 ideas built into your business:

  • Simplicity
  • Profitability
  • Accountability
  • Clarity
  • Extraordinary

What do you think? Did I miss a key concept?  What else would you add?  What do you disagree with?  We’d love to hear your thoughts.

Shawn Kinkade    Kansas City Business Coach