Hello and welcome to the Business Abundance podcast.
Hi. I've got Ian and Rowan here today and we're
going to be diving into the biggest decisions
business owners feel they'll face, which is should
I scale my business and how do I do it right?
Because, yeah, I feel like people get confused
about when the right time is or how they do it,
whether they just employ people, what happens
if there's not enough work. The options are endless
about when people come to us and worry about
where their business is heading. And it's been
a future proofing. So when we look about it,
look at it, What do you reckon the biggest issues
are? Because it could be quite simple to be like,
I'm going to employ new employees and then I'm
just going to grow and it's going to be all hunky
-dory. What stops people from doing that? I don't
think anything really stops people from doing
it, from my experience. They just sort of go
and do it. And then it gets out of control. And
then they're like, oh, what have I done? Or people
don't do it. And they're like, oh, I'm not sure
exactly what you said. Should I employ someone
or how does that work? And they just get stuck
at that point. That's me. Or they just grow and
grow. Hey, mate. Hey. They just grow and grow
and grow and grow. And then they're like, man,
this is out of control. It was so interesting.
I was listening to a podcast earlier today and
they were saying like, if you have sales people
that produce really good results, why don't you
go and employ in a hundred? What's the problem
with that? Makes sense to me. Makes sense. But
then you think about... the operational side
of trying to support the amount of work that's
going to bring in, and that's where it just gets
a bit sad. But in theory, employ as many people
as you can in a successful business and you'll
grow. Well, in theory, correct. So if you've
got something successful, and it's making a dollar
and going well, and you can replicate it, then
that's probably a good recipe for when to scale.
And if you've got something that's successful,
but not going well, or not going well, but successful,
or makes a dollar and is hard to do, or It's
just a little bit more complicated than that.
It makes it very hard to scale because you're
just scaling whatever mess you have. The effort.
Yeah. Yeah. At what point do you look at a business,
let's say a sole trader, who is being successful,
has got money coming in, and then at what point
in the cash flow equation do you go, you need
a salesman or you need to hire someone to do
this so that you can concentrate on the business?
It's different for everyone, isn't it? Yeah,
that's kind of my point. as a sole trader who
has a business partner for the last seven years.
This is a counseling session about to happen.
This is our experience and we've just maintained
a certain level that keeps us comfortable. Probably
could look at scaling, wouldn't know where to
start. Yeah, I'm very excited about this podcast.
It's funny, like you have a consultant on hand
to talk to. Anyway, Z, what were you going to
say? I was just going to say that probably the
foundation of all of this is you can scale, but
don't scale your effort, scale the success, like
you're replicating that success. And if you're
scaling and it creates more stress and it creates
more burnout, you're not doing it right or you're
scaling the wrong thing. I think it's important
to think of the business as an entity or a model.
So that if that model is capable of being scaled
without your, like you're saying, increased effort,
that's a good indication you can scale. If it
means if you scale that model and you have increased
effort, there's only so many hours in the day.
So you're gonna have a natural bottleneck. So
the fundamental is there to, in your model, keep.
taking out the bottlenecks until it's reasonably
seamless. But it's a lot more complex than that.
And sometimes people lack the context or perspective
to do that. It's an interesting one. But at what
point do you do it? Once you're finding, hey,
this is working really well, we can replicate
this with other people's effort or with a machine
or with a process or whatever that is, we can
replicate it. People are happy to buy it, it
makes a bit of money and that model looks good.
That's a great time to scale it. and go back
to doing it as a salesperson, well, if that's
going to help Scarlett and all that other stuff
makes sense, probably a good time. If all that
other stuff doesn't make sense and they're just
selling stuff for the work for you to do and
you're already busy, there's no point. If we're
only employing a salesperson because we can't
do it and we're hoping they will, probably not
great because we're not telling them what to
sell, how to sell or anything like that. We're
hoping they'll sell stuff for us, which generally
doesn't work too well. Everyone always says like
start small and then build on that. What happens
for the small business owner that did start,
they're the single person and then they employed
two technicians and then they employed a salesperson
and then before they know it they have 10 employees
and they're like this is unmanageable but also
my goal is for the business to grow. I mean 10
years ago when they were just the sole trader
what they're at now is what they dreamed of being
but it's just not done well. They're probably
at that point and say what do we do now that
they're all being told or thinking, oh, now I
need an operations manager. I need someone to
run the business for, it's out of control. And
then they employ someone that, yeah, it's worse.
Yeah. It's the 90 % of the time. Yeah. Or in
retail where they've just, they wanted to grow,
so they bought more stock and then they employed
a couple of floor staff and then it just... the
stock is too much and that's where all their
money is and I know it's so sad. But that is
a lot of businesses and then you've got the ones
that do push through and follow through and it
might just be that they get the right employee
that fills a gap and helps them take that to
the next level. There's a bit of luck, maybe
they've had good advice or they've had a really
good plan, a good business model and they've
driven through. But it's kind of like winning
the lotto, you know, we all hope to win the lotto
and everyone's buying a ticket, but only some
people win it. And so when you see a successor,
oh, they did it. You don't know how lucky they
were along the way. And you don't know how many
people didn't do it. That's right. It's never
easy to scale. That's for sure. But it's going
back to having a really good model and, you know,
sticking to the basics, being patient. Scaling
doesn't sound patient. It's like, let's have
a crack. I hear scaling. I'm like, yeah, let's
go, send it. But it is probably more being patient
than doing that because you've got to make sure
you've got this right and this right and this
training down the path. And then once you do
that, you can press go, but you've got to really
be pretty disciplined about doing the right things
and sticking to that. Yeah. So if we have, let's
just say it is the sole trader and they want
to grow. What's that signal or that sign that
it is time or possible? Yeah, I think if you're
pretty busy, you're making a good dollar, customers
are happy and you think someone else can do what
you do. Perfect. Got the funds to support it.
Yeah. I often think to say to people, it's not
so much whether you think that will pay for itself
or et cetera, et cetera. It's probably more being
at peace with what the worst thing that can happen
will be. So if you can take that stress out of
the The equation makes life each day easier.
So you're not on such a rollercoaster. But for
example, your sole trader, some person working
for themselves, by themselves. If they go, I
put another person on, I'm earning $60 ,000 less
myself if they don't do anything. And they drive
me out the wall because I don't like them. That's
the worst thing that can happen. Okay. But if
that happens, I can do this. So I'm not going
to lose 60 ,000 because I'll sack them after
three months. If they drive me out the wall,
I'll find someone else after a month. So you
can sort of, okay, well, that's not going to
happen. That's probably not the worst thing that's
going to happen. The worst thing that's going
to happen is I'm going to lose three months wages,
15 grand, and I can try again. Okay. Are you
happy to invest 15 grand to potentially achieve
the goal that you want to achieve? That's much
easier decision than worrying about what it'll
be like in two years. What about this? What about
this? I find that pretty, pretty good way to
do it. One bite at a time then. Yeah, correct.
Yeah, I would have a good hard look at what what
does work. So for example, you know that the
software that you have works and you're on the
basic, what's the word, subscription. It's like
job management. Yeah, job management for the
business owner. You know it works and you know
that you've got one other person and you know
that they're reliable and so you sort of give
them more responsibility which takes stuff off
your plate and then you you upgrade that subscription,
which might seem like a really small thing, but
it means that you're giving them investment in
their job or responsibility within their job.
And that means that you can then take a step
back and look at the bigger picture of the business.
I think I just have, I see it so often when The
business owner is the one who takes on more work
as the business grows and then all of a sudden
they're the marketer and the salesperson and
then they're looking at business development
and it just Snowballs, so I would set up the
foundations first of can I trust the people that
I work with? To lead to that job and then you
can sort of grow with their help as well. No,
it's an interesting perspective Perspective to
look at it from and it reminds me of a conversation
I had with someone very similar example, actually,
they had one employee, but they're talking about
putting on an apprentice. When does it make sense
to do that? And again, we just discussed all
of that. And so like, well, is there something
for them to do? Oh, they could do this, this
and this. Is that going to create more work for
you to teach them or monitor them or et cetera,
et cetera? Yeah, probably would, you know, et
cetera, et cetera, et cetera. And they're like,
oh yeah, but at the end of the day, like I can
just... I could do some more work and I could
get the money and then I'll sort of cover the
cost even if they cost me something. And I was
like, hang on, if you're going to get an employee,
are you going to have to carry them or are they
going to help you? So, and again, someone was
talking about bringing a business partner in,
completely different sort of business. They're
going really well. They're looking to get a business
partner in to help with the management of the
business that they didn't really understand.
And this person had some runs on the board in
a different industry and whatever. And like,
oh yeah, they want this, and they want this guarantee,
and they want this guarantee, and all these sort
of financial metrics. Like hang on, they start
coming in, they're saying they're gonna look
after the business side for you, and they wanna
be your partner, and all this sort of stuff.
Like, you're carrying him. And, oh yeah, yeah,
but they're not gonna have these problems solved,
because they're gonna do it a lot. No, it's assuming
he's gonna solve the problem, but if you can't
commit to, I'm gonna make that stack up for myself,
he wants you to make a stack up for him, it sounds
like he'll probably get you to solve the problems
too. and you're talking about working harder
or doing some more work or giving them work so
that they can hit their target, so they can guarantee.
And I was like, well, if you're going back to
what you're talking about, yeah, let's look at
it. Are they gonna solve problems for you? Are
they gonna actually make your life better so
you can do other work? Or are you gonna have
to then go into marketing, you're gonna go on
the tools, you're gonna have to be sales and
all these things just to be able to pay their
wage or fix the problems they create. I always
have to check myself when I'm answering some
of those questions and I hear myself say, yeah,
yeah, but. It's like hang on a second. That's
probably not a good idea It's um, you find you
make excuses for the decision that you've already
made. Yeah. Yep. Yeah 100 % maybe even going
on that topic but a different topic so I'm looking
to buy a business recently and it's stacked up
with what was provided and then more information
as we we dived in we made it stack up less and
less and less to the point where it was actually
going to cost some money to have the business
and and it's like, oh yeah, but we could do this
and this and I could, I wouldn't have that much
wage because I'll be doing the work. And it's
like, no, hang on. Now we're talking about having
a terrible job and paying them for it. It's all
your bonus, not theirs. So go to, okay, well,
if we're gonna choose to employ someone, what
are they doing? How's it improving the business?
Being okay with the worst thing that can happen,
but they need a role. So let's maybe think of
what point can you, if you don't have anyone,
can you get someone? You need. either a product
or a service that can be replicated. You know
how to train them on it. It can be delivered
by someone other than yourself. So I had a sleep
test once for sleep apnea. Didn't have it, thank
you, I'm okay. But the lady who I went in to
see for my $300 to put the equipment on me and
do the tests and stuff, she'd been there one
week and she followed a folder with however many
steps and I was her test dummy pretty much. And
she got it done, and that was it. And that's
a national company with sites throughout the
country that's delivering a pretty useful service
for people with a manual. Most small business
owners are like, oh, he couldn't do that. He
definitely couldn't do it. That's how all the
big companies are doing it. But the thing is,
we might in business, being smaller, go, here's
our service. It's really niche. It's very high
touch because we can deliver that, whereas other
people, our competitors can't. But then that's
really hard to scale, isn't it? So you actually
got to go, well, what's high value that we can
do that other people can do for me without my
need for extra effort. And we also got to take
that ego out of it, don't we? Because there's
a lot of the times I look at what I do and I
think, well, I'm pretty good at it, but there's
plenty of other people who are good at it as
well. Yeah, mate, I tell you that every day.
Yeah, you are pretty good. There's plenty of
people out there who can do what you do. There's
billions of people. So when we're looking at
a business model, it needs to be something that's
rip. be able to be repeated by other people and
not with the buts. Oh, but if they were a good,
if they knew what they were doing or if they
were smart, oh, there's no smart, but there's
no good people out there. Maybe your service
is too complicated for this or maybe it's just
you need to do it. So I think that first point
when you get someone else in, can they do something
effectively be shown and deliver that? And then
like you said, it's one thing off the plate that
then you can go to. the next step in the business.
I always look at your franchises when it comes
to that sort of thing. And KFC is a good example
because it's got secret herbs and spices. It's
a niche. There's only one person who knows it.
When it first started, there was only one person
who knew how to make this chicken. And now they're
everywhere. So if they can do it, you can do
it is my message, I suppose. Yeah, great. I just
want to jump back, back to the sort of signs
you're ready, because there is sort of a checklist
essentially because you can't now I'm excited.
You can't see what we got. You can't scale if
you're not profitable. Well, I mean, you can.
You can, but it's going to be profitable in business
value or cash cash flow. You know, some people
scale and don't make profit, but the business
value is going up. So yes, that would still effectively
be profitable in the way you mean it. You've
got the clear processes. So that's that's the
KFC example, you've got a strong team foundation,
which is the employee situation that you've got
going on there. Customer attention is pretty
high. You'd have some sort of ability. So say
a bit of translation there. So if you're doing
work for people and then they never want to come
back, you probably shouldn't duplicate that.
Probably should fix the service. But once customers
are happy, then it's duplicate. Yeah, they're
lining up. two days in advance to buy a new phone
that they could get for half the price if they
wait a week. Yes, that makes sense. And that
you know that your product and service is actually
wanted. I would argue that that's probably the
checklist of whether you need to or you can.
Yep, and probably just you have the resource
to do so. So the resource could be space in the
office, it could be money, it could be finding
the right person. But yeah, you can adequately
bankroll it. And if supply is X, then demand
needs to be X plus two. A little bit more demand
than you can supply. We don't do maths. I'm talking
to the two numbers guys. Never mind. Always have
more demand than supply. So we already talked
about the team side of it and how we can... make
that easier for you. We've also got things like
automation, which sometimes is a dirty word to
some business owners because it feels like it
loses that human touch. And such a good word
to so many others. Yeah. or it's dirty because
it feels like you're replacing people's jobs,
which in small business generally is like...
So good because you don't have to deal with people.
Historically, whenever they've talked about people
replacing jobs, you look at Henry Ford with his
production lines and then robots. People had
to service the robots, people had to learn how
to program the robots, people had to learn how
to do different skills. So you're not so much
replacing a job as creating new jobs. Yep. So
you need to make... automation, your friend,
I think. So using that job management software,
not using just Excel. I suppose it's not necessarily
the word automation. I suppose most things can
be automated now, but we're talking systems and
processes, loosely translated to run on a stand.
So yeah. Having the manual for the CPAP machine
specialist. Yeah. Okay. So if we're going to
sell more websites, as an example, in your case,
well, How can someone do a website exactly the
same as I can do it or? With the parameters to
be a good result like I do it and you could very
easily write down a Simple to follow. Yep. Here's
here's the process Yeah, and then you have a
little process that you're reviewing certain
things to make sure certain boxes are ticked,
you know So we've got there with the right headings
and other headings that are going to result in
most traffic and you know a few bits and pieces
like that Here's an SEO checklist. Yeah. Yep.
So that data in the website They talk to the
client the client has a relationship with them.
So they a bit of a bond, they're going to learn,
but technically at the end it's getting checked
and it's going to be suitable as well. Fundamentally,
that can be replicated through countless businesses,
whereas we might think without that, although
it's not quite going to do it as well as us.
But it's not true, it's never the case. Yeah,
I think if you're thinking that this person can't,
or there isn't anybody out there who can do it
as well as I can, you probably need to check
yourself. Have a look in the mirror. and go,
do I want someone to be able to do it as well
as I can? This is why I think I can't find anyone.
Because if there's somebody else out there who
can do what I can, now there's a threat. Whereas
actually employ that person. So it's one of these
barriers to scaling from what I've noticed in
small businesses. People want it to revolve around
them for their ego or the fear of someone stealing
it. So if you do want to scale, you've actually
got to go, well, I want everyone involved in
this to outgrow it. Because then that's following
the business, there's more positions in the business,
you know, or they're learning and they can't,
they've gone further in the business, they go
elsewhere. But that model needs to have people
coming through it and learning and opportunities.
What's the saying? It's train people enough that
they can leave, but have a good enough culture
that they don't want to. Yeah. That's lovely.
I'm full of all the heart and feels today. Yeah,
or it's frustrating when you train them and they
leave. What happens if you... don't train them
and they stay. Yeah, yeah. It's a whole lot worse.
Yours is more cynical than mine. People talk
about employees and employment and downsides
usually from a negative, like humans, we'd like
to go complain first. Negative bias. So scaling,
we have one of the steps to scale. We need to
find a model that makes sense that we can replicate,
that's profitable. and we have resource for.
So we have the ability to find clients, we have
the ability to find people, we have the ability
to find equipment or supplies or whatever that
is we need to do. And then we need to be able
to turn that into a documentation and training
in a way so that it can be repeated and repeated
as it scales. That's the fundamentals to do it.
Doing it quickly and just employing someone.
You're deciding one night I'm going to scale
because that's my goal and I'm going to make
that choice and tomorrow I'm going to employ
someone. And hoping they'll deliver it. That's
pretty risky. You might get the right person,
but most of the time it doesn't work out and
you blame them and it's like, well, no, the model's
got to be solid and they've got to come into
that. Generally in life, if you're hoping for
some success in something, you probably haven't
got your systems in place and you haven't really
thought it through. Hope's a dangerous word.
What would happen? That's super negative. Yeah,
I know. Don't take my hope away, mate. Well,
I had that really high point of love and everything,
so I thought I'd bring it back to cynicism. I
was going to add, have courage. Have the hope,
have the courage. And growth, that's your goal.
Having a plan is better than hope, is my point.
For a lot of people, they might be listening
and going, well, you know, I've tried to scale.
It's taken me four or five years. It sounds like
it should be pretty quick. Well, it's different
when you've got a job in the business as well.
You've got limited time, so you're doing something.
You don't necessarily know how to solve the particular
things. So it can take time. You do bit by bit.
But the thing is, John, to put parts of that
business in little boxes, train, system, can
it be repeated? Can we ensure quality? We can.
All right, let's put someone in that box or something
in that box and then go from there. And the way
people can do it faster is, you know, they just
have more money resource or people resource before
they start. and they might get eight people together
from sales and marketing and delivery and underwriting
and all that sort of stuff. And I think Jack
Daly has a few different books, but he talks
about the finance company they set up. This is
a finance company they set up in the US. By the
end of it, he had 2 ,000 odd salespeople there.
But there was eight of them and they sat down
for two weeks and wrote up all the scripts and
all the processes and the calls and all the forms
and all of this before and after. And then they
set up the system, the CRM. And then they got
the people in and trained them. They did this
all before they started. So there's a ton of
upfront resource and cost going into that. But
then it started and everyone's ready to go. So
most people in small business don't or can't
do that because you need to make money to get
more resource at the same time. So don't feel
bad if you're taking your oil. It's just different.
I think even in the process of getting ready
to scale, you're making your business better
because you are setting. the foundations for
a successful business. You're just, you're learning
and testing. Yeah. And let's just say you do
create that template of a phone call. For example,
you're only going to end up hopefully with better
customer attention. So it means that your model
that you're creating now only gets better and
better. And then as you scale, it becomes threefold.
Yep. Look at resources as well. I was listening
to a fella, acquire .com. I think he's the CEO.
them and basically he finds small businesses,
sole traders, small to mediums and helps them
scale and invests as an equity partner. But he's
made millions upon millions of businesses around
the world get from zero to one million, one million
to ten million, ten million to a hundred million,
a hundred million to a billion. And these people
are out there who think different to me. They
just have this ability to look at something and
go, yeah, you could scale that if you did this
and this. How much is that worth to you? How
much is that advice worth to you? That's what
I see a lot. Hang on, I'm going to pump your
tires up again. Oh, stop it. Oh, keep going.
That's what I see a lot with the modeling days
that you guys do. You take a small to medium
or a soul trader and you crunch the numbers and
you go, well, maybe you need to have someone
doing this instead of you doing it. So now you've
got an employee and now you've got to sell the
products and now you need sales but before you
know you've got 10 employees and you've gone
from making 100 ,000 a year to a million dollars
a year. Use the skills that are out there that
you don't have and there's plenty of people.
The last thing I'd like to add on scaling, like
it is a complex thing so keep in mind this is
a short podcast that I think we're nailing the
fundamentals here, is that you don't have to...
overcomplicate things. You don't have to have
10 products and 10 services. You can just have
one really good service that you do well. And
maybe that's sleep apnea test. That's just the
one thing they're doing from every single town
and 300 bucks a pop. Yeah, let's just do that
one service, nail that and then just go to a
different town and do the same thing. You know,
we probably try to go, oh, we can do that. And
we can do that. Oh, we can do that too. And just
hard to replicate that. So sometimes we just
need to be boring and patient. And I love being
on. a bit more interesting, but like in business,
sometimes it's just a bit of patience. It's a
bit of boredom. It's just about doing the same
thing again and again. And then if you look at
a lot of the companies that are in all the different
towns, they're just doing one thing. They're
building that muscle, then they're flexing that
muscle. Oh, there you go. That's all about the
ball. So yeah, don't be afraid to keep it simple.
And you know, you don't have to be the biggest,
you don't have to be the best, you don't have
to do those things. You just need a good model
in the niche and be able to replicate it really
well and people will be happy to pay for it.
People will have to work there. So if you can
keep it simple, then That's a really good sign
to scale. In the process of doing it, I can imagine
it gets kind of humbling when you're kind of
big picture. You look at your business and you
go, there's no chance. If I add 10 more people,
it's going to be so exhausted. Yeah, I'm going
to be, I can't do it. Yeah. Which would be hard.
But it's good if you are thinking that then it's
good to change. What do you need to do differently?
Yeah. And if your goal is to scale or be, I want,
I want. 10 of this business in 10 different locations
and Your first step is now this isn't going to
work. Well, at least you know your goal is 10.
Yeah Starting one have a devil's advocate as
well find someone who's going to go know who
that's not going to work That's not going to
work. That's not going to work. That's not going
to work and then work through it That's the resource
if you don't know have the the knowledge resource
get someone that does find a mother -in -law
The mistakes would be scaling too soon. Not having
under resourced. Yeah. Not having the operational
foundation. Yep. Under resourced. Under resourced
again. And leadership readiness. Under resourced.
Resourced. Why don't you just say under resourced?
I have these giant boxes in my head with many
things on them just to make it easy for me. No,
that's fair. 100%, underprepared, underfunded,
no people, no clients, whatever, it's all under
-resourced, just not organized. No systems. Yeah,
no value, doesn't matter, not resourced, not
resourced value. You might get lucky and scaling
will happen, there's a chance that that works.
Lighting strikes, people win the Powerball as
well. And then going back to what I meant before
about being okay with the worst that can happen,
that's how you tick that under -resource box
and all those different categories, this is the
worst that can happen, can I deal with that if
that happens, am I okay with that? Okay, if I
am okay with that, you're probably resourced
enough. Good to go. Yeah. Yeah. I want to see
people get their goals. I just want to see them
do it in a healthy, like, a way that doesn't
stress them out. So, yeah, if you are scaling,
make sure that you set that foundation first.
And keep it simple. It's that easy. Advice as
old as time. Keep it simple, stupid. All right.
On that note, we'll wrap it up here. I wish you
all the very best and we'll see you next time.
So long.