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The Truth About Scaling Your Business

by | Last updated: Apr 27, 2022 | Business Growth, Podcast, The Truth About Scaling Your Business

Is it really possible to double, triple, or 10x your business in just a year? Or to take your business from 100k to $1,000,000 in revenue within just 36 months? If you listen to all the noise online, scaling seems like the name of the game and what we all should be focused on. But the honest truth is scaling for the sake of it can be detrimental to your business. So in this series, we’re talking about the truth of scaling your business.

On this episode of Promote Yourself to CEO:

2:44 – The difference between growth and scale. While the terms are used interchangeably, they’re not the same thing at all.

6:25 – Entrepreneurs focusing just on scaling sales and not putting infrastructure in place create unstable and unsustainable businesses with irate customers and bad word-of-mouth.

9:25 – Emergency panic mode triggered by a large influx of customers creates chaos. Exhausting sales cycle leads to burnout with the type of massive, expensive launches you see online all the time.

15:15 – All the expenses going into massive launches in pursuit of scale focuses on top-line revenue, not profit. The entrepreneur gets paid last and doesn’t actually end up pocketing a lot of money at all. 

18:00 – This year exposed how fragile so many businesses really are. One launch or a bad month away from having to close up shop.

Show Links

Promote Yourself to CEO is sponsored by The CEO Collective – a 12-month implementation experience for women entrepreneurs ready for next-level strategy and results – without the non-stop hustle. If the Truth about Scaling series resonates and you’re ready for clarity on the next steps to sustainably scale your business with our support, start the process at TheCEOCollective.com/SCALE

Is it really possible to double, triple, or 10x your business in just a year? Or to take your business from $100,000 to $1 million in revenue within just 36 months? If you were to listen to all of the noise online, it would seem that scaling is the name of the game and that is what we should all be focused on. But the honest truth is scaling for the sake of scaling can be detrimental to your business. In this series, we are talking about the truth of 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, CEOs. Welcome back to another fun series here on Promote Yourself to CEO. The truth about scaling your business; I felt like this was such an important topic to tackle because there is just so much hype, so much BS that is leading to so much frustration and so much overwhelm for entrepreneurs who are feeling like they're not doing it right when they hear about these people who are having seven-figure launches, seven-figure months, and all of these things. They sound great on the internet but we're not really talking about what it looks like or what it means to really scale your business aside from making more sales. If we don't talk more about what it truly looks like to scale behind the scenes to run your business as you're scaling, as you're growing that fast, then it creates this unrealistic picture as if just making more sales is the magical solution that will solve all your business problems.

I unfortunately have witnessed, over the last 12 years, so many people who get going so fast in their business that they burn themselves out and they burn their businesses down because their business cannot keep up with the pace of growth that they're going after. Let's dig in, let's talk about this. How do we more sustainably scale? How do we get more intentional about the growth we're going after in our business year over year?

The first thing I think we need to talk about is the difference between growth and scale because I hear these words being used interchangeably, and really they're not the same exact thing. Both growth and scale is about increasing revenue, about making more sales into your business. But there is a key difference. When you are in growth mode, you have a business that is increasing revenue but also simultaneously increasing the costs associated with each sale. As your business is growing, you're taking on additional expenses to continue keeping up with that level of growth. A lot of times, this is where most businesses are focused. Honestly, the mature business out there in the world, they're saying two to five percent a year is the standard annual rate of growth that a lot of businesses go through. Now, scale is different. Scale is when you're able to increase revenue but there are no additional associated costs with that.

I'm going to say that when you're scaling, there are associated costs, they're just not going to be as high, especially when we think about scalable business models that everyone is talking about right now. If you're in a scalable business model, you create the thing once and then you are able to sell as many of it as you want. For example, this could be an online course, this could be an ebook, this could be some digital product, program, or service. These are scalable in that you can create it once and sell it multiple times over. But what we often see behind the scenes is that business owners who are focused on thinking that these are 100% scalable and all they have to do is sell more and more and more, they neglect to make sure the other pieces of the puzzle are in place in order to effectively sell and deliver at scale. What often happens is they create a customer service nightmare for themselves.

If you've ever been in a situation where you watched a business blow up overnight, they might have sold hundreds, thousands of the thing but it took forever to get a response back. They couldn't keep up with the customer support requests. They couldn't effectively get the product out to you on time. When this happens, it starts to create a lot of stress and tension in the business and it leads to dissatisfied customers. When you can't actually take care of your customers or your clients, then they're not going to return, they're not going to buy from you again, they're not going to give you rave reviews, they're not going to give you referrals or talk about you to their friends and family. They're pretty much going to go out there and say, “Hey, I have not had a great experience with this business owner.” This is what I'm hearing especially in the online space, the online coaching space, the online business space, the online course space. I'm seeing a lot of people who are going after the scalable model but they have not put the infrastructure behind the scenes to effectively take care of their clients. They are focused on the sales over the service. We can't do that. We have to make sure that when we are making a high level of sales in our business, we also have a corresponding high level of service that can take care of our clients at the pace that we are acquiring them.

This is really important to know. There's always going to be overhead to manage each customer relationship. There's always going to be people who need to email in and have questions. There are always going to be people who need to change their credit card. There's always going to be payments falling off that we're going to have to go out and get back on. There's always going to be some client management that needs to happen. Always. When entrepreneurs are so focused just on scaling their sales that they don't put the infrastructure in place, then they lack a lot of these systems internally in their business. It makes their business incredibly unstable and unsustainable.

Customer service is one of the biggest areas where we can see it because if you purchase from that company, you can see that they are not keeping up with this, they don't have a good system in place. But internally, they could also be struggling with their financial systems, with their cash flow systems, with keeping their marketing system going while they're trying to catch up with their customer service system. They create an internal feast or famine challenge because it turns into a situation where they're always putting out another fire because the infrastructure is not in place.

Now if you have listened to my episodes about the path to predictable profits and we talk about the Business Growth Checklist, you can see in the Business Growth Checklist, that I talk about over and over and over again, there are three key stages of business: the startup stage, we're figuring out what we're selling, who we are selling it to, what people actually want and getting them to buy. Then we get into the success stage and this is where you start to build out those systems. This is where you're building out your marketing system. You're building out your sales system. You're building out your product, program, or service delivery system. You're building out your intellectual property. You're building out your financial systems. You're building out all of these internal systems that need to be in place before you go push the scale button. Because when you let in a flood of new orders and you let in a flood of new clients, your business has to be able to support it.

The other thing that we tend to not think about is when we hit that scale button, which is what I think a lot of people think it is. They think that saying scale is just like, “I'm going to go dump tens of thousands of dollars in Facebook ads. All the money is going to come in to me and then whatever happens after that, we'll figure it out when we get there.” If they approach it like that, they are starting to create a real problem behind the scenes because now they are creating this cash eating monster that they have to keep up with because they're constantly putting fires out and trying to fix problems instead of proactively designing their business. There's a lot here that we have to start to unpack. When we don't have the infrastructure in place, when we don't have these key systems in place, it often leads to a demanding cycle for business owners where they're trying to keep ahead of their expenses. When you're always in panic mode, emergency mode, trying to fix all the problems you just created with this massive influx of clients you were not ready to support, it can start to lead to this demanding sales cycle that's also incredibly exhausting.

You might see people buying into this. I've talked to so many people who have told me how burned out they got trying to launch their product, program, or service. They watched a lot of these very well-known entrepreneurs in the space who are doing these massive launches—they're doing them two or three or four times a year—and they're constantly living from launch to launch. I think it's important to talk about the true expenses of running your business in that way. This is a big reason why we don't do our promotions in this way anymore. We might still call it a launch but we don't do our promotions in this way because I don't want to incur all these crazy expenses and create a cash eating monster in my business. In the online world, we tend to see a lot of these massive seven-figure launches and no one really talks about the expenses that go into running a launch like that in order to get sales at that volume.

There's a lot of up front expenses that are going into this. If you are hiring a copywriter to write your sales page, they're writing your sales emails, they're writing your social media, you could easily have a hundred pages of copy that you are paying for, for someone to do these massive online launches that you're seeing. That's expensive. We're talking tens of thousands of dollars just to have the writers. Then we look at the graphic design and a lot of these, again, very big online launches, they are investing heavily into branding. They might have had a photo shoot. There's $5,000, $10,000 by the time you hire the stylist and do all of the layout and interior design. Then you have the graphic designers who are putting together the sales pages, and all of the different collateral they need. They might have very well-produced videos. Again, there's another expense; the videographer, the editors, all of those people. This is a lot of upfront expense, a lot of upfront time and energy expense that is not guaranteed to pay off. We're going to talk about why this is important.

Then we have to think about the cost to acquire new clients. A lot of these massive launches aren't just acquiring clients straight off their list, people who've already found them and who already know who they are, who already are interested in working with them. A lot of them are also acquiring huge numbers of clients either through affiliates or advertising. Advertising is another upfront expense and advertising costs have only gone up in the last 10 years. When Facebook ads first rolled around, people were able to quickly scale, make a lot of sales because advertising was so inexpensive and so few people were doing it. That is not the case anymore. It is noisier than ever before, it is more expensive than ever before, and it takes a lot of understanding how ads work in order to make it pay off. It used to be just running ads directly to your launch, your sales funnel, your sales page. Now there's a lot more strategy behind it and a lot more expense behind it. Just taking the ad spend and adding in an ads manager, someone to run that whole thing, that's another huge upfront cost.

Now, affiliates, you might think, “Well, you don't have to pay them until they make sales for you.” But for a lot of these massive online launches, they're giving away 50% of the cost of the product back to affiliates. They also usually have an affiliate manager, somebody who's keeping up with all the affiliates, they're actually running a campaign to the affiliates to help the affiliates promote the product, program, or service. It's basically as much work as the launch itself. Affiliates take a ton of time and energy in order to get the payoff out of it. There is still an upfront expense with that. Some of these massive affiliate launches as well, they will have huge prizes associated with whoever makes the most sales for them. That's another huge upfront cost just to plan that and manage it effectively, and then behind the scenes cost, you're paying out 50% of the course or the program that people purchased.

We also need to think about the cost to the team. If you're watching one of these big massive online launches, you have to think about how much time and energy it takes for them for their marketing team, for their copywriting team, their content team, their design team, their project management team, all of these different people, the time it takes for their customer service team to answer all these questions, the time it takes for their sales team if they're hosting sales calls in conjunction with everything, it is a ton of time and energy that goes into this. Then the entrepreneur gets paid after all of this. All of these expenses, all of going into these massive online launches in the pursuit of scale is leading to the focus on the top line revenue instead of actual profit. We can see somebody who's running and has a million-dollar launch, but because they have had so many expenses going into making that million dollars that they didn't really think about, they're not actually taking much money home. They're not taking very much home. I would say a lot of these massive launches, if they bring back 20%, 25%, that is a good launch. Then that's got to last them for a few months until the next launch. It's creating this cycle where there's not as much as you might think for the business owner to pay themselves to reinvest back into the business or to build a cash reserve. This leads to a pretty exhausting cycle where they have to continue launching, they have to continue hustling.

Now why does all this matter? Why am I talking about this? One, because I feel like this misconception that if you have a million-dollar launch, you have a million dollars in your pocket. That is not true at all. The people who are talking about scaling the most, who are telling you that you need an online course or you need an online coaching program because that's the only way to grow your business, I don't think any of that is true. I have seen plenty of people grow sustainably at 30% to 50% over a year which is still considered rapid growth. If you are doubling every year, that is hyper growth. It's very hard to keep up with that and to continuously be building the team behind the scenes that can keep up with that. That is growing at a very fast pace that you could maybe do in sprints. But long term, it's really hard. I aim personally for about 25% to 30% a year and some years, I go over that. I've definitely had years where I doubled. It's a lot easier to double when you're only at $50,000 or $100,000 a year than when you're higher than that. But aiming at 30% a year makes it so much easier for me to plan ahead, the year ahead what I want that to look like and what team I'm going to need to hire in advance of the growth, in advance of the clients being there. Not because I'm trying to spend too much money up front but because I want to make sure I am keeping pace with the level of service I want to provide for the sales I want to make.

This year, I think what we have seen is how fragile so many businesses really are. There are a lot of businesses right now that are one launch away, one bad month away from needing to close the doors. In some industries, we have seen that this is unavoidable. If you are a brick and mortar business who's made it through COVID, you must have gotten very, very, very creative and already had some really solid infrastructure that allowed you to pivot on a dime. But for a lot of businesses that are not brick and mortar, they still were very fragile this year and are having a really hard time bouncing back. I think that when we focus on scale and growth over sustainability, over intentionally building out the infrastructure of our business so that we can provide the level of service that we truly want to provide at the pace of the sales that we want to get, that's a whole mindset shift that I don't feel like anyone's really talking about. That's what I want to talk about. I want to talk about how we can do this without over investing into these promotions.

Our promotions are incredibly profitable because I don't do most of the stuff that I just went through with these online launches. We've seen launches that are a million dollars for other people I know in the industry, and when I look at what we make over a year, our launches are not as big but we are so much more profitable. I put so much more back in my pocket, back in our savings account, back into building the business and hiring amazing new women who now are thrilled that they have a career with a business that cares about the future of women in this world. We can do this differently. Let's focus on scaling sustainably. Let's focus on keeping our level of service pacing right there with the level of growth we want. Let's stop talking about these insane numbers that just get harder and harder and harder to keep up with, and instead, focus on taking the actions that are going to consistently get us in front of more of our ideal clients, help us serve more people but without putting ourselves or our team through this roller coaster of trying to constantly keep up with a runaway train of growth. We can do this at a more steady pace.

I know for me, I'm 12 years into this business. I'm about to be 38 in February and I want to be doing this for a lot longer. I've got another 25, 30 years in me. I don't actually know that I'd ever really retire. But when I talk to entrepreneurs who have been around for decades, the biggest thing they say is, “Hey, you've got to be thinking the long game. You've got to remember this is a marathon and you've got to pace yourself.” Growth for the sake of growth without making sure that your service is keeping up with your level of sales is a recipe for disaster. It's a recipe for burnout and it's a recipe for burning down your business because you're constantly putting out fires, you're constantly retroactively trying to fix what you've broken again and again and again.

I hope you enjoyed this first conversation here on the truth about scaling. I have a lot more that I want to dive into. We want to get practical about this. In the next episode, we're going to talk about how to avoid blowing up your business; the three key mistakes entrepreneurs make when they are scaling. We're going to wrap up the series just in time to kick off 2021 soon, talking about how to scale sustainably, like what are the things we want to think about so that we can be sustainable, so that we can take amazing care of ourselves, amazing care of our team, and amazing care of our clients so that we can keep up the level of service while we are serving more people, while we are getting more sales coming in the door?

I hope you're excited about this series. I can't wait to hear from you. As always, if you loved this episode, please take a screenshot and share with me on Instagram. Tag me at @racheal.cook and let me know your thoughts. For the latest show notes and full episodes, make sure you head over to rachealcook.com/show. Now if you don't want to miss any future episodes including the upcoming episodes in the series, make sure you're subscribed to the show on Apple Podcasts, Spotify, Stitcher, or wherever else you listen to podcasts. Thanks so much for listening to this week's episode of Promote Yourself to CEO. We'll talk soon.

Promote Yourself to CEO is sponsored by The CEO Collective; a 12-month implementation experience for women entrepreneurs ready for next level strategy and results without the non-stop hustle. If what I've been sharing with you and the truth about scaling series resonates, and you're ready to learn more about how we can help you sustainably scale your business, then I want you to go to theceocollective.com/scale. There you'll be able to start the process with me to uncover exactly where you need the most support in scaling your business, and if working with me and my team inside The CEO Collective is the perfect next step for you. I'll walk you through seven key questions that will help you to find massive clarity around what your next steps to scale your business are. Get started at theceocollective.com/scale.