What You Don’t Know About Scaling Your Business Will Kill It

Is it really possible to double, triple, or even 10x your business in just a year, or take your business from $100,000 to $1 million in revenue in just 36 months? If you were to listen to all the noise online, it would seem that scaling is the name of the game and that is what we all should be focused on. But the truth is, scaling for the sake of scaling can be detrimental to your business. In this series, we're talking about the truth behind scaling your business.

Are you ready to grow from stressed-out solopreneur to competent CEO? You're in the right place. I'm your host, Racheal Cook, and I've spent more than 15 years helping women entrepreneurs sustainably scale their 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 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 so much hype, so much BS that is leading to so much frustration, so much overwhelm for entrepreneurs who start to feel like they're not doing it right when they hear about all these success stories, people who are having seven-figure launches, seven-figure months, even seven-figure days.

All of that sounds amazing on the internet. But what we're not really talking about is what it looks like and what it really means to scale your business beyond just making more money and making more sales. If we don't talk about what it truly looks like to scale your business behind the scenes, how it looks to run a business that is scaling as you're growing incredibly fast, then it creates this very unbalanced unrealistic picture as if simply making more sales is going to be that magical solution that solves all of your business problems.

Unfortunately, I've witnessed over the last 15 plus years, so many entrepreneurs who are focused, they're going so fast in their business to scale-scale-scale, they end up burning themselves out, they burn their team out, they burn their audiences out, and then they burn their businesses down because their business is not designed to keep up with the incredible pace of scaling of growth they're going after.

Let's talk about this. Let's get real honest about what this means and how it impacts your business. How do we sustainably scale, how do we get more intentional about the growth we're going after in our businesses year over year? The first thing I want to talk about is the difference between growth and scale because these words are used interchangeably a lot and honestly they're not exactly the same.

Growth and scale are both about increasing revenue, about making more sales in your business. But there is a pretty important difference. When you're in growth mode, you have a business that is increasing sales, increasing revenue, but there are also increasing costs associated with each sale. As your business is growing, you're taking on additional expenses to continue keeping up with delivering those products, programs, and services that you're selling.

This is where a lot of especially service-based businesses are focused because if you're selling 10 websites a year and you're the one delivering all 10 websites, if you want to double, triple, or 10x the number of websites you can deliver a year, you're going to have to hire people. There's going to be a lot of associated costs to increase that volume of sales, that volume of service.

This is totally normal for most businesses. The mature businesses of the world, they generally go anywhere from 2% to 5% to 8% a year in their annual rate of growth that they're looking at. To be honest, we have been through a period of increasing inflation so you want to make sure that your business growth is at least outpacing inflation because otherwise, those costs are going to hit your bottom line. Meaning you're going to actually be effectively paying yourself less over time.

But that is important to note, that this is how most traditional businesses have operated. It's a small percentage of growth year over year keeping ahead of inflation as they continue to grow their business.

Now, scale is different. Scale is when you're increasing revenue, you're increasing sales of your products, programs, and services, but there are not as many directly associated costs with that. you can sell more without having a lot more expenses that are associated with each product, program, or service that you're selling. They're not going to be as high of expenses. This is what we're thinking about when we hear the word “Is that scalable? Is that a scalable business model?” that everybody's talking about right now.

In a scalable business model, you create the thing once, the product or program, and then you are able to sell as many of it as you want. For example, a lot of people, when they're hearing about these super scalable business models, it could be an online course, this could be an ebook, it could be a digital product, program, or service, these are all very, very scalable, in that you create the product or the program once and you can sell it multiple times over. It doesn't cost you any more to sell 10 as it does to sell 100, 1000, or 10,000 because all of the associated costs were really in developing the product or the program.

But what we see behind the scenes is that business owners who are focused on thinking this way, they're just thinking about, “Well, all costs were upfront in creating this product or program. Most of it is all being run by technology. We have so many amazing tools out there that allow people to buy something and automatically get the emails, the receipts, and the onboarding, get into their membership platform, or download that thing that they just bought,” a lot of that is automated so it doesn't increase the expense very much when there's so much that's automated behind the scenes.

However, when you see the behind-the-scenes of business owners who are focused on thinking that this is 100% scalable, all they have to do is sell-sell-sell, and they neglect to make sure the other pieces of the puzzle are in place, they are not able to sell and deliver at scale. What often happens is they end up creating a customer service nightmare.

If you've ever been in a situation where you saw a business blow up overnight, especially if they had a product go viral, then what happens is they sold hundreds or thousands of the product and they can't fulfill on it. They can't keep up with the customer support requests. They can't effectively get the product out to you on time.

When this happens, it creates a lot of stress and tension in the business. It leads to dissatisfied customers. When you can't take care of your customers or 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, their family, and their colleagues. They're pretty much going to go out there and talk negatively about you.

This is what I hear especially in the entrepreneurship space. I see a lot of people who go after scale at all costs, but they have not taken the time to make sure that their business had the infrastructure behind the scenes to not just do the marketing and sales, but to effectively deliver their product, program, or service and actually take care of their clients. They are focused on sales over service and we can't do that. We have to make sure that when we are going after high volume of sales in our business, we also have a correspondingly high level of service that can take care of our clients at the pace that we are acquiring them.

This is so important to understand. It is so crucially important to know. There is always going to be overhead to manage each customer relationship. There are always going to be people who need to email you and ask questions. There are always going to be people who need to change their credit card information or their shipping information. There are always going to be people who have a payment that falls off. Maybe their bank declines the payment, they don't have enough money in the account, or they have an expiration date.

Now we have to go out and get that back on. We don't want people to just fall off if they're on a payment plan or they have an agreement with us. We have to proactively reach out and save that revenue. There's always going to be client management that needs to happen always. When entrepreneurs are so focused just on scaling their sales, and they don't have the infrastructure in place to scale their service at the same time, then they lack a lot of systems internally in their business. It makes their business incredibly unstable and unsustainable.

Customer service is one of the biggest areas where you can really see it because if you purchase from a company and you see that they're not keeping up with what would be considered an appropriate level of customer service at appropriate speed to respond to things, then that's a red flag because chances are they don't have a good system in place.

Internally, because they put all of their effort on the front end on marketing and sales but not on the back end, they might be struggling with their financial systems, with their cash flow systems, with keeping that marketing system going while they're trying to catch up with their customer service and delivery system. They essentially 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 in our business.

Now if you've listened to my podcast for a while, you have heard me talk about the Business Growth Checklist. I talked about the Business Growth Checklist, go grab your copy, over and over again because this is so important to really understand and be able to wrap your head around. There are three stages of growth that I've identified for most of the businesses that I work with: the startup stage, that's where we're figuring out what we're selling, who we're selling it to, what people actually want, and getting them to buy it from us.

Then we get into the success stage. This is where you're starting to build out these systems. 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 and your cash flow systems. You're building out your team management systems and your customer service systems. You're building out all of these internal systems that need to be in place before you go to push the scale button.

You have to do this if you don't want your business to implode. Because if you go to hit that scale button, and you don't have these systems in place, you don't have the infrastructure in place, when you let in a flood of new orders, you get a flood of new clients, your business has to be able to support it without breaking down.

The other thing that we tend to not think about when we hit that scale button, which is what I think a lot of people think of it as like they think scale is saying, “Well, I'm just going to go dump tens of thousands of dollars in Facebook ads, all that money is going to come into me and then whatever happens after that, we'll just wing it and figure it out when we get there,” when people approach it like that, they are creating a massive problem for themselves behind the scenes. Because now they're creating a cash-eating monster that they have to keep up with because they're constantly putting fires out. Chances are they're constantly throwing money at problems instead of proactively and intentionally designing their business to scale.

There's a lot here to unpack. When we don't have that infrastructure in place, when we don't have those key systems in place, it leads to a demanding cycle for business owners where they're just trying to keep ahead of their expenses. When you're always in panic mode and emergency mode, you're trying to fix all the problems that you just created with this massive influx of clients that you are not ready to support, it can lead to this demanding sales cycle that is incredibly exhausting.

You might see people buying into this. I've seen so many people, so many of my peers who I've talked to who got burned out when they were trying to launch their products, programs, and services the way that a lot of well-known celebrity influencer entrepreneurs in the space have taught them to do. If you were to watch the space in the world of entrepreneurship, especially for scalable models, (online courses, online products, online programs, group coaching, etc.), there are a lot of well-known celebrity influencer entrepreneurs who make it look so flashy and so sexy.

They're running these massive launches two, three, or four times a year. But honestly, if you were to look behind the scenes, they are living from launch to launch. Instead of paycheck to paycheck, each launch is bringing in just enough revenue to keep this whole thing going and really so that they can keep putting out fires. I think it's so important to talk about the true expenses of running your business in this way and this is a big reason why I do not run my business this way. I do not do these massive crazy all-out launches that are super sexy and super over-the-top production because it's not as sustainable, not for me and not for my team.

We decided that slow and steady is the way that I want to continue to grow. We might still call it a launch but we don't do our promotions this way because one, I don't want to go out there and incur a bunch of insane expenses that are not actually necessary for me to bring in the clients I want to work with and serve the clients I want to work with.

I don't want to create a cash-eating monster in my business. In the online space especially, we see a lot of these massive businesses talking about million-dollar, multi-million dollar launches, and no one talks about, “Okay, that's what you brought in on the top-line revenue. But what were the expenses that you had to incur in order to get sales at that volume?”

There are a lot of upfront expenses going into these very flashy promotions. They are hiring copywriters to write their sales pages. They're hiring copywriters to do their sales emails or social media. You can easily have, for one of these big launches or promotions, hundreds of pages of copy that you are paying for and you are likely paying tens of thousands of dollars just in copywriters.

Then we look at graphic design and branding. A lot of these big promotions, big launches invest heavily in branding. Some of them even have dedicated photo and video shoots just for these big launches. There's $5,000, $10,000, $20,000 by the time you hire the stylist, and then you do all the layout, the interior design, the set design. Then you have graphic designers who come in, they put together the design of the sales page, all of the different collateral that they need, different marketing collateral.

They might have these high-end videos being produced, and again, another big expense line. The videographer or the editors, all of those people, this is a lot of upfront expense. This is a lot of upfront time, energy, and expense that is not guaranteed to pay off. We're going to talk about why this is so important.

Then we have to think about the cost to acquire each new client. A lot of these massive launches aren't just acquiring clients straight off their existing email list or their existing community, people who've already found them, who already know who they are, who are already interested in working with them, a lot of them are also acquiring huge numbers of brand-new clients either through affiliates or advertising.

Advertising is another big upfront expense, and advertising costs have only gone up in the last 10 years. When Facebook ads first rolled around, a lot of people were able to very quickly scale to take advantage of the fact that it was so expensive when it just came out. No one knew how to advertise on social media or online when it first came out. But that's not the case anymore. Ten, twelve, fifteen years down the road, it is noisier than ever. It is more expensive than ever and it takes a lot of understanding how ads work in order to make it pay off.

It used to be you could just literally log into your Facebook Ads Manager and run ads directly to your launch, your sales funnel, your sales page. Now you really have to have a bigger strategy behind it. You have to have the ad spend behind it. Just taking the ad spend and then adding in an ads manager or an ads agency to run the whole thing is another massive upfront cost.

Now, affiliates are another way a lot of these big celebrity influencer entrepreneurs are making sales and bringing in new clients. It's easy to think, “Well, you don't have to pay affiliates until they make the sales for you,” but a lot of these massive launches and promotions give away 50% of the sale to the affiliates.

These require an affiliate manager, somebody who is keeping up with all the affiliates running the campaign to the affiliates to help the affiliates to promote that product, program, or service. It is just as much work as the launch itself. Affiliates take a ton of time and energy to get a payoff out of it. There is a huge upfront expense with that.

Some of these massive affiliate launches as well, they will have these prizes for the people who make the highest level of sales. Again, that's another huge upfront cost just to plan it and manage it effectively. Then behind the scenes, you're paying up 50% of your sales to your affiliates.

We need to talk about the cost of your team. If you're watching one of these massive launches, these massive promotions, then you have to think about how much time and energy it takes for their marketing team, their copywriting team, their content team, their design team, their project management team, all of the people behind the scenes, how much time it takes for their customer service team to answer all the questions, how much time it takes for their sales team, especially if they're hosting sales calls or having conversations with people in conjunction with everything, there's a massive amount of time and energy that goes into this.

Then the entrepreneur, the business owner gets paid after all of those other expenses are covered. All of those expenses, all going into these massive launches, massive promotions in the pursuit of scale, is leading to the focus on the top-line revenue instead of the actual profit. Profit is revenue, top-line revenue minus expenses. Remember that.

We can see someone who was running a million-dollar launch, but because their expenses are so high, they actually end up not taking home that much. I would say a lot of these massive launches, if they profit 20% or 25% after expenses and taxes, that's a good launch for them. That's what gets them the next few months until the next big launch.

It effectively creates a cycle where there's not as much as you might think for the business owner to pay themselves, to reinvest back into the business, to build a cash reserve, to increase their our own take-home pay, it does lead to this exhausting cycle where you have to continue launching, continue hustling all the time in order to keep ahead of the volume that you're bringing into your business.

Now, why does this all matter? Why am I talking about this? Well, one because I feel like this is a misconception that if you have a million-dollar launch, that means you have a million dollars in your pocket. That is not true. The people who are talking about scaling the most, who are telling you you need to create an online course or an online group coaching program because that's the only way to grow your business, I don't think that is true at all.

I have seen plenty of people grow sustainably at 25%, 30%, 40%, 50% a year, and that is still considered rapid growth where you're doubling every two years. That is incredible. If you're doubling every year, that is hyper-growth. It is hard to keep up with that and to continuously be building, managing, and leading the team behind the scenes to keep up with that. That is growing at a very fast pace that maybe you could do in short sprints, but long-term, year over a year, it can be really challenging.

I personally aim for about 25% to 50% growth a year. Some years I go over that, I've definitely had years in the past where I doubled, I will say, a lot easier to double when you're at $50,000 going to $100,000 or $100,000 going to $200,000-$250,000 compared to when you're past the half a million, million-dollar mark, it becomes a lot more challenging to have that 2x growth, 3x growth, much less 10x. That is growing at a really, really, really fast pace.

So aiming for a slower rate of growth anywhere from 30% to 50% rate of growth makes it easier for me to plan ahead. It makes it easier for me to think about what I want my business to look like. More importantly, if I make this number of sales coming from this many clients coming in the door, what does my team need to look like to support me with that? this is really where being a leader as a CEO is so crucially important because if you're waiting until you are in crisis mode, you're waiting until you're hiring in a panic, this is bad. That is the worst-case scenario.

The best thing you can do is be thinking about, in advance, who will you need to help you sustainably scale, not just the marketing and sales but the delivery of your product, programs, and service. This is what I want to keep talking about more because I just don't think people are talking about it. It's leading to these businesses that look very, very successful on the outside because again, flashy branding, high-end videos, it all looks so exciting, but then when you talk to people who have left their teams, you realize they're exhausted and burned out from working in these environments of just unsustainable growth.

I'm trying to make sure that I'm growing at a sustainable pace for my business, that I'm planning, not just for marketing and sales, but I am planning for delivery, I'm planning for my team, I'm planning for my infrastructure ahead of time so we are hiring in advance of the clients being there. We're making sure that our team is trained before we go into another busy season. I'm not trying to spend too much money upfront, because I don't want to create a cash-eating monster, but I do want to make sure that I am increasing how much I'm spending behind the scenes because I always want to have an exceptional level of service.

In the last few years, I think we've seen how fragile so many businesses 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 made it through the COVID years, the pandemic years, you must have gotten very, very, very creative and already had some solid infrastructure that allowed you to pivot on a dime and stay in the game.

But even for non-brick-and-mortar businesses, there are so many that were fragile and having a really hard time bouncing back from not just the pandemic, but from anything that creates a bad month, a bad quarter in their business. This is why I want to have this conversation because I think that when we focus on scale and growth over sustainability, over intentionally building out the infrastructure in our businesses where we're providing the level of service that we truly want to provide at the pace of sales that we can realistically manage, that is a whole mindset shift. That is a whole different approach that I feel like no one'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 in our marketing and sales and making sure that we have invested internally in the infrastructure to deliver what people are buying from us. Our promotions here at The CEO Collective are incredibly, incredibly profitable because I don't do most of the stuff that a lot of celebrity influencer entrepreneurs do. We have seen launches that are multi-millions of dollars for other people I know in the industry and when I look at what we make over the course of a year, our launches here at The CEO Collective are not as big, but they're so much more profitable.

I end up able to pay myself more. I put so much back into my own pocket into my savings account, into my retirement, into my kids' college fund. I'm able to reinvest back into building the business and not just hiring incredible new women who are now thrilled with the career they have with us, who are excited about working with a company that is all about the future of women in business, that is amazing to me. That is absolutely amazing to me.

It proves that we can do this differently. We can focus on scaling sustainably. Let's focus this month on keeping our level of service at pace with our level of marketing and sales, if not beyond our level of marketing and sales. Because I'm here to tell you it is seven times easier to keep a client than to go out there and get a brand-new one. If you are not keeping up with customer service, with the delivery of your product, program, or service, if you're not getting the results for clients, if you're not keeping those clients, you're not retaining those clients, you're making it harder than it needs to be.

This is why so many people have to over-invest in marketing and sales because their clients are not sticking around. They're leaving because the experience is not awesome. It's terrible. We want to make sure our level of service is pacing with our level of growth. Let's stop talking about these insane numbers that just get more and more unrealistic and over the top and instead, focus on taking the actions that are going to consistently get you in front of the ideal clients, the people you actually want to serve without putting you, your business, and your team through the roller coaster of constantly trying to keep up with this runaway train of growth.

We can do this at a more steady pace. I know that for me, I am 15 years into this business, 15 years into this business but I have still got easy, another 25, 30 years in me. I don't know that I'll ever actually really retire. I've kind of put out there that maybe in 10 or 15 years when I'm 50 or 55, I might reevaluate that, but I don't see not doing this work. I love it so incredibly much. When I talk to entrepreneurs who have been around for decades, the thing that they tell me is, “Hey, you've got to be thinking the long game.”

You got to remember that this is a marathon and you have 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. 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 have broken again and again and again.

I hope you enjoyed this first conversation here about the truth around scaling. I have a lot more that I want to dive into, a lot of lessons, a lot of mistakes. I want to get practical about this. In the next episode, we are going to talk about my top lessons in scaling my business behind the scenes, what I have learned the hard way. These are the things that I have definitely gone through myself as I've scaled my business, and it's a business that has made millions of dollars and it was not always the easiest thing. There are a lot of hard lessons you learn along the way and I'm hoping that by sharing my lessons learned, it will make your path easier, it will make your path smoother.

I hope you are excited. This is going to be a great conversation this month. I'm so excited to talk about the things that we want to think about to be sustainable, that allow us to take amazing care of ourselves, amazing care of our team, and amazing care of our clients when we're keeping up with the level of service while we're serving more people. I can't wait to hear from you.

As always, if you liked this episode, please take a screenshot and share with me on Instagram, tag me @racheal.cook. Let me know your thoughts. For the latest show notes and full episodes, make sure you head over to theceocollective.com/show. Now, if you don't want to miss any future episodes, including the upcoming episodes in this series, make sure you're subscribed to Promote Yourself to CEO 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.