3 Common Mistakes That Can Cause Your Scaling Business to Implode

Y'all, there is a lot of real terrible advice in these internet streets these days that is causing people, who are focused on scaling at all costs, to blow up their business. Not blow up in the “Look at me, I'm an overnight success story, making millions of dollars so now I can live that entrepreneur lifestyle with my Tesla and all the things,” I'm talking blow up as in their business has now imploded, they are constantly putting out fires, they are feeling so stressed and overwhelmed at the cash-eating monster that they have created, at the things that are always breaking in their business, at all of the effort and work it takes to try to keep up with this unsustainable approach to growth. Let's do this differently. Let's avoid these mistakes. In today's episode, we're talking about the top three things that I'm seeing that are really causing problems when it comes to scaling your business.

Are you ready to grow from solopreneur to CEO? You're in the right place. I'm your host, Racheal Cook. I've spent the last decade helping women entrepreneurs start and scale service-based businesses. If you're serious about building a sustainable business, it's time to put the strategy, systems, and support in place to make it happen. Join me each week for candid conversations about stepping into your role as CEO, the hard lessons learned along the way, and practical profitable strategies to grow a sustainable business without the hustle and burnout.

Hey there. Welcome back to the second installment in the Truth About Scaling series here on Promote Yourself to CEO. I was really thrilled with the feedback and the conversation started from the first episode where I opened up this conversation. I just think that there is a lot that is left unsaid, there is a lot of “Look at me. Look at me” when we're talking about scaling and no conversation about what it really looks like behind the scenes or how those businesses are actually doing. It's kind of the Instagram effect. We see the highlight reels, we see all of the talking about the seven-figure businesses, but we don't actually talk about what it looks like to run those businesses. That's what I want to continue diving into in this series. If you didn't hear the first episode, go listen to it because that sets the stage for where I'm coming from when we're talking about the truth about scaling.

Now, if you are ready to grow your business and you went through the Business Growth Checklist like I recommended, again, you can find that over in the show notes, then we want to make sure your infrastructure is in place and that you're being smart about how you are approaching growth. Because the truth is going after hyper growth for an extended period of time, where you're focusing on doubling or tripling or 10xing your business, it usually isn't very sustainable, especially for many of the entrepreneurs I work with. Because let's face it, none of us that I know have a massive pot of gold that we can sit here and just spend to our hearts content. We have to be smart and strategic about how we're approaching growth so that we are doing it in a more sustainable way.

Today, I want to talk about the three biggest mistakes I see people making when it comes to growing their business, when it comes to getting from that success stage up to the scale stage. If we're not careful, we can make it harder on ourselves than it needs to be. Specifically, we can actually get to the point where these mistakes will blow up your business, and not in the “Oh, look, my business blew up overnight. Now I'm a millionaire,” but “Oh no, now my business is imploding because the infrastructure wasn't in place and I wasn't actually ready for the level of growth for the number of clients that I am currently taking on.” Let's talk about these three key mistakes that I see people making so that we can be more strategic, we can be smarter about how we are approaching sustainable growth.

The first mistake I see is entrepreneurs creating a cash-eating monster. If you are in this boat, you know it because at the end of every month, you might look at the revenue you're bringing into your business, it might be a great amount of revenue. You might already be bringing in $10,000 a month, $20,000 a month, or $30,000 a month and you still are like, “Why am I not paying myself what I really want to pay myself? Why does it feel like no matter how much money I'm bringing in, I'm never getting ahead? I'm never actually able to reap the rewards from this.” You might also, on the other hand, be thinking, “How is it that I just don't have the money to do the things I want to do in the business?” Money can quickly start to disappear and you're like, “Well, I can't invest in the coach I actually need or can't invest in the service provider I actually need.” We got to stop creating cash-eating monsters in our business.

How does this happen? How do we create the cash-eating monsters? One of the first things I see especially for earlier stage entrepreneurs is they over invest in expensive technology usually because some influencer that they are following recommended something. They recommended a system or tool that is $20 a month, $50, $100, $200, or $300 a month, and they didn't think about the long-term implications of that. Before you know it, you've added up all of these tools that are, of course, all monthly recurring subscriptions and you are spending $1,000 or $2,000 a month on technology that you might not actually need yet. If your business isn't ready for that level of technology, then instead of being able to deploy those resources, that money into another area of your business, it's tied up in something that's not actually revenue generating.

Where could this be happening for you? I'm pretty sure if you are following any of the major influencers—I call them entrepreneur influencers because they're not actually working high touch with people. They're monetizing their fame as an entrepreneur—but one of the ways they do that is through affiliate links to software. You've probably seen this. They will recommend software that, again, is a monthly recurring subscription. But I often see this with email marketing software. You might see people recommending that you need something like Ontraport or Infusionsoft. These are the two big ones I hear about the most and they are not cheap, my friends. These are very expensive and very robust email marketing systems. When do these make sense? These make sense when you actually have, one, a list size that will pay for the cost of the email marketing system, but two, when you need to have the sophistication and automation that these tools can do. These tools usually require a level of expertise to do those automations that most of us don't have. You might even have to hire a consultant just to set it all up or just to manage it day-to-day.

This is like going to get a Ferrari instead of your Prius. Going for something that is so souped up, so over the top and you really don't need it, you just need to drive from home to the grocery store. What are some more streamlined or simpler options that you could have? I don't want you to necessarily go for the free option, I also see people who try to get away with free for forever and it just isn't serving them, but there are a lot of really great services like ConvertKit, which I love. I'm not even going to drop my affiliate link in here. I just recommend it so much because it is something that can grow with you and still has the automation tools you probably need. My business has been running on ConvertKit for years with our email marketing system. It is a fraction of the cost of some of these much bigger tools. Think about if you have anything with a recurring monthly fee whether it's your email marketing, it could be your membership site, I also see this a lot for people who are running courses and they end up spending a monthly fee for a course they're not even running throughout the year. They might only be running this course two or three times a year and so six months out of the year, they're paying a fee to host a thing that they're not actively selling. Again, it's taking resources away from your business.

Some of these things just means looking for a more appropriate level. You might not need an Ontraport or Infusionsoft, you might just need a ConvertKit. You might also not need a recurring monthly subscription for technology if you can find a one-time payment option where you're buying the tool once and not paying that ongoing subscription fee. That might make more sense for you. Do a technology audit and figure out where you are spending money because chances are you don't need all the bells and whistles that that influencer entrepreneur told you that you need. You need to start simpler. You can always upgrade later. You can always get fancier later. But until you get to the point where that thing is really paying for itself, it doesn't make sense to overspend on technology. In fact, there's a lot of free technology we still use in my team. We still use the free version of Asana to do our project management. We still use Google everything—Google Drive, Google Folders, Google Docs, Google Sheets—we use all of that to run a lot of our systems. We use our Google email system. We don't over invest until we actually need to.

The next area you can create a cash-eating monster is hiring too many people too fast. This is again a balancing act right because often, I see women entrepreneurs, one of the areas they struggle is they don't hire fast enough and they end up getting completely overwhelmed because they're trying to do it all themselves. But at the same time, if you hire too many people, you can be in a situation where you're actually paying everybody but yourself. That's not going to work out long term. As you're making decisions about hiring people, one of the things that I tend to find is you need to really think about “Do I need this person long term on my team or is this just a one-off project?” This was really helpful for me when I found myself in this pickle. Probably about five or six years ago, I had over-hired on my team and I had a lot of people on retainer that I actually didn't need. It wasn't working out for me long term. I really needed them for a few projects and once those projects were done, I found I was trying to come up with things for them to do. I couldn't justify anymore the cost of their retainer because it wasn't directly impacting revenue.

When I sit down and think about our team, I really now think about, “Okay, are they going to be a revenue generating part of the team? If they're not going to be a revenue generating part of the team, do I truly need them on a retainer or do I just need them for a one-time package? Or is this something someone else on the team can take on?” When we hire too many people, we spread our resources too thin, we end up having to spend more and more time managing. There might be an opportunity for you to bring somebody who's already on your team up to speed and take on another task or another project, another thing that will help you to not be overspending in this area. If you are spending, I would say, more than 25%, 30% of your monthly revenue on your team, then we need to really look at “Are they generating revenue for you? Are they helping you generate revenue? Are they freeing up your bandwidth so you can stay focused on revenue generating activities?” If they're not, then we might need to scale back the team a little bit until we can put more people or more resources into revenue generation, so marketing and sales.

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The next area that I see people spending too much money is overspending on branding, on websites, on all of the flashy stuff. This is a huge pet peeve of mine. It's a pet peeve because one, I've made this mistake myself, but also, I hear from people all the time because they're comparing themselves to the celebrity entrepreneurs, the influencer entrepreneurs and they see their branded photo shoots, they see that these people are doing photo shoots just for a specific launch, they see how beautifully done and customized every part of their launch process is, from their free opt-in pages to their sales pages to everything, it's all custom, all brand new, all very flashy. That is very expensive and the payoff for that is honestly, just not a high enough payoff, especially when there are tools you can use that will cut the cost dramatically. You do need to have great branding and a clear website and a professional website, but now there are tools out there that make this easier than ever to where you don't have to go pay somebody to customize it all the time because those custom expenses do add up. They could be taking away from the budget that you need to deploy somewhere else in your business.

I don't even go out and get custom branding for everything that we do. In fact, one of my favorite things that we did with The CEO Collective launch this year when we put this together, I did have a designer come up with a logo because I did feel like that was a worthwhile investment. I worked with a local designer. She also designed the logo for The CEO Retreat, so basically she's taken over all of our logo-related stuff. But she created a brand board for us and then we used that brand board with all of the specific color codes with our logo, knowing exactly what our fonts were, and we went and purchased a sales page template—I believe it's from a company called Funnel Gorgeous. I'll link it up—and we just customize that ourselves. For the cost of a template, for the cost of having a logo created and a brand board created, we were able to pull together what I think is a very professional-looking sales page for our CEO Collective. It was maybe $500 to do it all compared to hiring a designer to come up with everything.

This is where you can save a lot of money because there are templates out there that are gorgeous. Oh my gosh, you all don't even know how hard it was to create sales pages before all these templates became available. There are amazing tools you can use like Canva that can help you make sure your graphics look great. You don't need to be, again, overly investing in all the technology for your launches. We use WordPress. All of the things that we used for this were a one-time fee. Buying Divi for my main website was a one-time fee. Buying Elementor, the tool that we used to put together the sales page template, was a one-time fee. The sales page template was a one-time fee. The landing page is created using tools we already have. This type of thinking will really help you because maybe there will be a point where I'm like, “You know what, I really want to zhoosh this up. I really want to invest more.” But we just rolled this program out this year, I was not wanting to over invest in an area that I didn't think would make a massive difference in sales and it still looks great.

I want you to be thinking about this, I want you to be looking critically at where you are spending money. If it is not going to make a big difference in sales, then don't spend the money there because if you're just going after it because some influencer, celebrity, entrepreneur said, “Oh, this is what you should use,” chances are, one, they're getting a commission on the back end to send you there, and two, it's not going to make a major difference. It really isn't. What we need to do is we need to audit these expenses. We need to know our burn rate. If you're just getting started, you need to know how fast you're going to go through your cash reserves, how fast you're going to go through your startup fund. That startup fund might just be a credit card, it might be your savings account, but you need to really be keeping an eye on that because often, we see people who spend all their money really fast not realizing it could take much longer than you think to recoup that investment.

You need to know your monthly overhead expenses. If you're not tracking your numbers, now is the time. Now is the time to start tracking your numbers and get really clear about it. I've mentioned the book Profit First before, quite a few times, but one of the things he talks about in going through that book is getting a hold of your expenses and doing this audit and cutting anything you don't need. You might find that there are tools you're using that have a free or lower paid option. You might find that there's an equivalent tool that's a lot less expensive. You might find that there's a template or something that is less expensive that you can use. These are going to be smarter decisions for most of us because it will free up cash flow for you to put into something that is actually going to generate growth. I hope that was helpful talking about how we can avoid creating a cash-eating monster.

Now once you have gone through your expenses, you've audited those, you're making sure you're not overspending in areas that don't make sense, where should you spend it? Should you just dump it all in marketing? Okay. Mistake number two: thinking more marketing is the answer. More marketing could be the answer, but I want to say right now that Facebook Ads is not an ATM and posting more on Instagram is not an ATM. I hear from a lot of people who are posting on social media or they're getting on calls with me and they're saying, “So and so said all I need to do is spend more on Facebook Ads,” or “So and so said all I need to do is show up on Instagram Stories each and every day.” They buy into this mindset that more marketing is going to fix everything. If you are setting up a sales system—so this could be a funnel, this could be an opt-in that leads to a product, program, or service—and then you're just trying to brute force, just push it out in front of as many people as possible and you're not seeing results, you're not seeing conversions, you're not seeing people sign up for the free thing, you're not seeing people buy the paid thing, more marketing will not fix a bad product market fit.

This is where I see a lot of problems start and we need to actually look at what is going on. First, if you are sending people to a free opt-in, a freebie to grow your email list—this is a strategy everybody hears about that they should do—if you are sending traffic there and it is not converting, as in you send 100 people to the landing page to get your free checklist or to get your free training, whatever the free thing is, and 50% or more are not signing up—yes, I said 50%. I know that's high compared to industry average but I actually want you to have good marketing—if 50% or more are not signing up, then that means it is not about doing more marketing, it's about fixing the messaging.

The same applies if you are trying to make sales for something. If you are sending 100 people to a sales page and you're not getting one to five people buying that thing—and these were people who are actually ideal potential clients—then it's not a marketing numbers problem, it is a messaging problem, it is a product market fit problem. When I'm going through and analyzing things with my clients, I want to know the numbers because this really helps me. Sometimes people think that they're having a volume issue, that they need to do more posting, more sharing, but what they really need is to dig into their actual offers and test a few more things. This is something that no one really talks about. I feel like a lot of times, we get in this mindset that we just need to create one freebie and that's all we need to do to grow our email list. The honest truth is you need to test your messaging and you need to test it a lot.

Over the course of my career in this business, I can't tell you how many free things I've put out just to see how they work, just to see what resonates. Currently on my website, we have three main free offers, but if you were to go through all of the archives of all of the things we've put out there, I can tell you we've probably tested dozens to get down to these three that are performing really, really well. We wouldn't know what exactly was going to be the best free offer, the best free checklist, the best free thing to put out there unless we tested it, unless we tested the message, unless we tested it with actual real-life people. If you're not seeing results from your free thing and you are sending enough traffic to it—we don't know if it's a traffic problem or a messaging problem until we look at the numbers—but if 100 people are landing on that page and you're getting no opt-ins, it is likely a messaging problem, it is likely the wrong thing for the people you are targeting. They don't understand it. It's not relevant enough. There's too big of a disconnect between what they're looking for and what you're trying to offer them. There's no amount of doing more marketing that's going to fix that. We have to actually get to the root cause with the message.

This is the same thing that I see with paid programs. If you are sending a ton of traffic to the paid thing and no one is buying it, then sending more traffic is not going to fix that. No amount of Facebook Ads is going to fix that. We have to make sure that your people actually want what you have to offer. This is where we need to get really honest before we start scaling our business and we need to test things first. This is one reason with my clients I talk about testing with your hot market first, then your warm market, then your cold market. What does that mean? Your hot market is people who already know, like, and trust you, who've likely engaged with you on a high level in some way. These could be former clients, people who have already purchased something from you, referrals coming in, so they're a really, really hot lead, they already have that credibility boost from being referred from somebody else. We want to get your offer in front of those people first because they're the most likely to buy it. If those people aren't going to buy it, then we might need to go back to the drawing board. If you're not able to get it sold to the people who are the most likely, the most engaged with you and your brand, there's a challenge there. We have to go back and maybe rework how we're presenting this product, program, or service.

If they do buy it and then you move it into your warm market, your warm market is your email list, your social media following, people who are engaging with you in some way, they're listening to your content, they're getting to know you and your brand. If you promote your offer to your warm market and you've done the things—you've emailed them more than twice, you've emailed them like a full on email promotion, you've made sure that they see it on social media, you reached out to people who engaged with you, so they commented on your social media post, you actually DMed them, they click through to learn about the offer that you have, and you personally follow up, you actually did the work—but if you go through all of that and people aren't resonating, they're like, “Eh, this isn't really what I'm looking for,” then we need to get to the root of the problem.

What can we do here? If those people aren't buying, you definitely don't want to go to the cold pool of people. The cold market is where Facebook Ads lives. Facebook Ads is getting in front of people who don't know who you are, so let's not go there. If it's not going to convert to your hot market, it's not going to convert to your cold market. Let's fix the problem. This is where we need to get back into market research mode. We need to get on the phone and talk to people. We need to do 100 conversations challenge. We need to actually survey our audience and get to know what it is that they're looking for. We need to figure out the disconnect here. Chances are if you take the time to pause and do this work—which no one is talking about this, they'll just say go post more Instagram Stories—but if you can do this work of talking to your audience, talking to your clients, and really understanding where they're coming from and what they need and meet them where they are, then we can fix the problem. But we can't scale anything if people aren't converting because there's a bad product market fit.

Off my soapbox for that. Let's get to the third mistake that I'm seeing from people. The third mistake that we're seeing feeds into both of these other things, which is over complicating everything in their business. Do you really need a 37-step funnel? Do you really need that? I would have to say no, you don't. When it comes down to it, business is way simpler than everyone is making it out to be. You do not need to add this level of complexity. Here are some reasons why I'm not a huge fan of these super complicated systems. One, the more things that you have going on, the more steps, the more that different technology has to talk to each other—this is a big thing—one, the more expense. These things get very expensive like I mentioned in the first mistake. You end up buying all of this different technology, all of these different tools thinking that you have to have them all. The expense adds up and if it's not proven, if it's not actually ready to scale, it can take away resources that you need to deploy somewhere else.

The other thing is the more steps, the more technology, the more things going on, the more things can break, the more opportunity for things to go wrong. We have seen this so many times in people's businesses where they're like, “Oh, I set up this funnel and it should all be working perfectly,” but then we go in and we realize, “Oh, there's a broken link in here,” or “This tool is not integrated properly with this tool and that's why people aren't getting through the whole funnel.” The more steps, the more opportunities for things to break. When things start breaking, then the more experts you need to keep it going. Most of the entrepreneurs I work with did not get into business to become a technology expert, to become a marketing automation expert. If you don't have that expertise, then it means we have to hire someone else to go figure out what we did. We don't necessarily want to have to constantly be reaching out to people saying, “Why is this not working? Why is my website broken? Why is my sales page not working? Why is my opt-in page not working?” It gets really complicated and it doesn't need to be.

The other thing that really I think about a lot, because I've seen this happen to so many people, the more complicated your business, the more opportunities for a change in the market to mess up your business. I see this happen a lot when people have a whole system built around one specific tactic that they're focused on. Facebook Ads is a great example of this. You guys have heard me harp a little bit about Facebook Ads here. Facebook is kind of a love it or leave it type of situation right now. They can be great but I have seen instances where someone was running a whole funnel with Facebook Ads at the very top of it, they were running a whole system that depended on them hitting a very specific cost per lead acquired, cost per email address, but when Facebook Ads started getting a whole lot more expensive, suddenly everything broke and they did not have anything else in their strategy to take over to get those new potential clients into their system.

I've seen that the increase in cost of Facebook puts people out of business. I've seen the increase in changes of Facebook Ads, like anybody who's running Facebook Ads, you know that they're changing it all the dang time. You have to become an expert or pay an expert, and it's very expensive to pay the experts. Most Facebook Ad managers are going to cost several thousand dollars and they're going to expect you to spend thousands of dollars every single month in ad spend so it doesn't always make sense. I've seen ad accounts shut down, which can cause a whole nother issue. We've seen people who've built out all this stuff, depending on Facebook Ads, and then suddenly, their ads can't get approved, the ad account gets shut down, or the expenses just go out of control, they can't figure out what's going on and now they're like, “Oh, crap, how am I going to get people into my business?” We can simplify this. You all have heard me talk about the five-part marketing system.

When you sit down and think about that, like really think about that and compare it to what you might have heard about all these funnels, automations, and crazy things, over the years, we have simplified this so much to make sure that we're not setting ourselves up for a system that's constantly breaking down. This is probably one of my biggest pet peeves; just watching people who are like, “I set up this crazy system. They can't figure out where it's broken, they can't figure out why it's not converting, they can't figure out why it's not working the way that it should be based on the online course I took about it,” and then they jump to something else. Y'all, at the end of the day, we need to bring more humanity back to the business and think about how we can simplify these things.

One way that we simplified this in our business—and we're still working on it this year—but in the past, one of the things I had going was an automated on-demand webinar funnel for a program I ran called Get More Clients. It's currently not available but I tried the very complicated on-demand system that several celebrity entrepreneurs recommended. That on-demand system was set up so that when people went to the landing page, where they could opt in for the free webinar, it was supposed to drop down some specific times they could join the webinar. Then we had to connect it to another piece of technology to add a countdown timer. Then we had to add it to another piece of technology to make sure that they only saw certain things if they took certain actions. By the end of the day, it was like this Frankenstein-looking system to me. I was just like, “These things all have to talk together perfectly and they were not.” No matter how many people we tried to get involved, we were just like, “This is not working the way I really want it to.” We decided to just simplify the whole thing and we put an opt-in page, a registration page for the on-demand master class right on my website. I just built it out in Divi. We set it up so that we just said, “Hey, it's on demand. I'm not going to ask you to choose a time.” You can tell it's on demand, that's it.

I put the pre-recorded video on there. There was no fancy technology there. It was just an embedded video of the masterclass I had recorded. Then when they opted in, they got an email sequence, a very simple email sequence that wasn't connected to some crazy countdown timer or whatever. We just said, “Hey, you’re going to get this four or five-day sequence. We're going to give you a code to give you a discount on this program if you decide to get it. This is the last time we're emailing you about the program.” We didn't make it more complicated than that. That thing converted like crazy but it was so ridiculously simple. Keeping it ridiculously simple is what made it so effective, honestly. It made it so much easier for my team and I to manage that, to ramp it up, and just have that thing going on autopilot behind the scenes.

I hope this episode was helpful for you. Again, this is a very practical no-nonsense series of The Truth About Scaling because I feel like we need to have more practical conversations here. The chance of being like an overnight success story, even though that's what people are marketing to us, is pretty far between. That is not the norm. We need to be thinking more practically about our business and more profitably, honestly, so that we're not overly spending on things and unable to take home what we actually want to take home. Again, to recap, here are some key things: don't create a cash-eating monster, audit your expenses. If your expenses are out of control, then we need to bring it back, we need to simplify a little bit. Go to less expensive technology. Think about “Do we need all these people on our team right now or can we streamline a little bit?” Don't overly invest in your branding and your website. Is there a template or something that will give you that polished professional look that we're all going after, but without overly investing to the point where it's not actually going to make a major impact in your return?

The next thing is: don't get stuck in the “more marketing is the answer”. Showing up more on Instagram Stories is probably not going to change a bad product market fit. If the thing is not selling to people who already know, like, and trust you, we need to go back, do some research, and fix the actual underlying problem. More marketing won't fit that. Facebook Ads is not an ATM, it's not going to magically fix this. Go back to basics before you try to scale it up. Finally, don't over complicate everything. The noise out there about how complicated business needs to be, y'all, it's completely unnecessary. It just is unnecessary. We don't need to have the 37-step funnel. We don't need to have this whole ascension model where you have an opt-in with a Tripwire, with a low ticket program with this and that and this. It's making it so much more complicated than it needs to be. Overall, my whole point with this series is to talk about “Hey, how do we serve more people? How do we grow more sustainably? How do we keep up with the level of sales that we want?” and do it without breaking our business, without making it harder than it needs to be, without working 24/7. Let's just think a little bit smarter about these things.

I'd really love to hear your insights on this. This series is kind of a different one for me. I feel like I'm a little ranty because these are just things that make me so frustrated to see how people are getting stuck in these areas. Let me know. Tag me at @racheal.cook on Instagram. Let's have a conversation. I want to hear from you. I want to hear your thoughts on this one especially. For the full show notes, and of course, for the first episode if you haven't listened to it, make sure you head over to either my site, rachealcook.com/show, or go into the podcast player that you prefer—Apple Podcasts, Spotify, Stitcher—we're on all of them. Make sure you're subscribed so you can get the whole series. Thanks so much for listening to this week's episode of Promote Yourself to CEO. We'll talk soon.