I understand the fear of failure, it can be paralysing. The challenges and uncertainty that come with running and then scaling up your business can often overwhelm you with “what ifs” and scenarios building, that can potentially leave you standing still and not growing for moving forward, despite your best intentions.
I was recently asked to participate in an RCSA panel discussion with Greg Savage and Nikki Beaumont on the challenges of scaling your recruitment business. When I think about business, I believe recruitment is like any other sector, you need to know why you are scaling. Here are my key perspectives on scaling.
Key 1 – Do you have the right people around you?
Before you even think about scaling up your business you need to be 100% sure your business is people ready. To do this you need to make sure you have intelligent, dependable business people around you that can teach you how to grow. I learned this from my leadership team, they have been my teachers. You need to be able to look at yourself in the mirror and realise you don’t know everything. Coaches and mentors are also important resources. A mentor can give you direction, advice, suggestions, motivation and the support you can turn to when you need help to clarify your thinking and decision-making process.
You need to be able to look at yourself in the mirror and realise you don’t know everything.
Key 2 – What are your real reasons for wanting to scale up?
Is expansion part of your business’ Values and Vision? Or are you only doing it because you feel it is the ”next step” you are supposed to take in your business journey? Also, are you building an asset or is this just your job? Remember the bigger the business, the bigger the problems. You need to be clear that your desire to scale up is aligned to your true desire to see the business grow and expand. The next thing to consider is the Economics of the Exit, what will your business do if you leave? Are you building an asset that Shareholders can build on once you exit the business? This is a good reason to scale up your business.
Key 3 – Challenges and dangers you might not have thought of
More people will put your culture to the test. You need strong people to keep behaviours in check. Your strategy must align with the company culture or it will be doomed to failure. Disconnection from your people in the growth phase can lead to unwanted resignations. You need to implement sophisticated people practices around growing and developing your people. A bigger business will mean more mature operations around people.
You also need to be aware the operational and compliance processes will become a focus which will mean you will lose some agility as you need more governance frameworks. Be careful about diluting the ”Secret Sauce” that got you the wins, to begin with.
Profitability is a key factor. Your business must be able to self-fund. In our decision to scale up, we hired leaders within Reo, and focused first on the retention and then the attraction of talent to the business. A key question we asked is, “What is the right mix between revenue growth and margin maintenance?” Don’t compromise minimally acceptable margin for revenue, as your cost to serve will go up but your margin will go down.
A bigger business isn’t better than a profitable one!
Final key point
Don’t Invest against the market – you need to know where the economy is at. We get fed a lot of rubbish from industry magazines about the performance of our competitors. You need to figure it out for yourself. Last year our economy was slow. Growing against economic growth is not a good idea. The balance is finding where growth takes place over increased profits. When profits aren’t where they should be and you still choose to grow, you could see yourself over investing quite quickly.
Always keep in mind, a bigger business isn’t better than a profitable one!
Can we send you an email?
Join more than 7,000 other smart finance professionals by signing up to our newsletter. You'll get a monthly email with new blog posts, job news, views, and insider tips. Don’t miss out on this valuable advice!