THINKING AT SCALE!

DOING MORE AND MAKING MORE WITH LESS!

Let’s talk about an important topic regarding your business, and that topic is growth. I work with business people every day in the coaching academy who are growing their businesses in one way or another and I’ve grown more than a few businesses myself, so I have some idea about the challenges that entrepreneurs face as they do grow. But, before we go into the main topic and how to deal with it, lets first define what I’m talking about because I’m going to be talking about 3 types of growth in this episode. We’re going to be talking about the first phase of a business, we can call this the launch phase, then the growth phase, and then the scale phase. I often hear business people throwing the terms growth and scale around interchangeably, and they’re different things so let’s too briefly on the 3 different phases. 

The launch phase is just that, the phase of a business when, say, an appraiser or a real estate agent hangs their own shingle and puts themselves out there for business. They’ve taken some kind of risk by going out on their own, so to speak, and they’ve launched their business. This is when the new business cards come in the mail, they’re building a basic website, they’re getting their social media set up, and scraping up whatever clients will have them. The launch phase for appraisers, I would say from experience, is from zero dollars up to the high 5 figures, say $75,000, $85,000, $95,000 or so. The company size in the launch phase is a team of one, typically, maybe two or three if you count a virtual assistant or two. Although, that’s typically one of the things we’re working with appraisers and business owners with in the growth phase. The founders role is very clear because the founder is also the technician, the accountant, the marketing department, and so on. The founder is doing everything and that’s how they earn their income. Nothing wrong with this phase of a business, other than the founder often gets overwhelmed and burned out and there is a limited future in the launch phase. The biggest problem I see in the appraisal industry, you could say this is an issue in the real estate industry as well, is that many stay in the launch phase forever. I meet appraisers who have been doing this for 15 or 20 years who have never left the launch phase. They’re still a one person shop, they do it all, and all of the income is theirs. Again, nothing wrong with this phase if that’s what you want to be doing. However, many launch phase entrepreneurs will complain secretly that they worry about the future, and they do this typically when something either happens to them, a close family member, or they see or hear a news story where somebody became unable to work or provide for their family. 

One of the other downsides to staying in the launch phase is, of course, that the founder rarely has much free time to climb Maslow’s pyramid toward the self actualization level at the top of the pyramid. They tend to stay stuck in the lower levels of food, clothing, shelter, security, safety, love needs, and a feeling of accomplishment. In my opinion, although one of the initial driving factors that has somebody launching a business is freedom and more income, the pursuit of that ends up being the thing that imprisons them in the business. The two primary ways out of the launch phase are to quit, take a job with somebody else, or to grow. Again, not judging anyone’s path in this regard. We all know good people who once owned a business who eventually chose to take a job with somebody else so that they didn’t have to worry about the paycheck, the clients, maybe the insurance, the hours, the collections, and everything else that comes along with running a business. As we know, running a business is not for everybody and everybody is not cut out for running a business. For the ones who do like the process and decide to stick with it, the options are to continue in the launch phase forever, head into the growth phase, and eventually into the scale phase, which we’ll talk about in a bit. 

From the launch phase, should one aspire out of that realm and into the next phase, they really only have one option and that’s to grow. The growth phase of any business might look very different from the growth phase of another business, so it’s important to clarify what growth means and looks like in your business. I can tell you generally what it looks like in an appraisal business, a real estate business, a lender’s business, a mechanical contracting business, a martial arts business, a salon/spa business, and a few others. Does that mean that your business will follow the same trajectory of growth as another one that’s similar to yours? Absolutely not! The beauty of all of these phases as that you get to determine, to some degree, what they look like for you. You get to choose the quality of business, your hours, your pay, your methods, and so on. However, there are some principles at play in each of these phases that are what we’ll call immutable, or unchanging over time, unaffected by individual differences in people, places, or circumstances. They are principles, not a guide to how to do something. We’ve already talked about some of the immutable aspects of the launch phase so lets talk about the aspects that separate the growth phase of a business. Before we do, however, I want to throw out there, as I often do, that words carry more than definitions and specific meanings. They also carry an electrical charge for the individual hearing, saying, or reading a particular word or words. The word ‘car’ means something to me b asked on my experiences with cars. It means something completely different to somebody who has been involved in a bad car accident where maybe somebody died. The word will forever carry a different energy for that person that it will for somebody who has never been in an accident, or even somebody who absolutely loves cars. I, for example, don’t really care much one way or another about my vehicles so the word car for me just represents a means of transportation. My son, however, is really into cars so that word carries a different energy for him.

The same is true for the word growth. Some people hear that word and get excited. That’s me! I hear the word growth, especially if its related to business, wealth, finances, and mindset, and I get energized! Other people hear the word growth, especially if it’s related to their business, and have a sick feeling in the pit of their stomach. The word carries a different energy for them, likely based on some prior experience they had around growth of some kind. Maybe they were involved in a family business that involved a bunch of employees, a growing company, maybe some heated family discussions on the topic. I can certainly relate with that. Maybe they grew their previous business and then lost it in a market crash or an economic recession. Maybe they lost it in a divorce. Whatever it is or was that has given the word ‘growth’ a negative energy for a person, it’s important to recognize that there is some negativity, or maybe a better word is fear, around growing your business. For many that I have coached over the years, and coach now, growth is something that most of them indicate they want, even if it’s in the form of just some increased efficiency in their current set up, which may still be the one or two person business. Growth does not have to mean taking on more people, more expenses, more hours, more work, more debt, and less fun. That’s typically what comprises the fears for most people around growth. Growth can, and should in my opinion, first mean growth in efficiency.

One of the first things I’m always looking to do when we start a coaching relationship is to get the student absolutely as efficient and profitable with their current set up, their current systems, and their current processes. Its not to add people, add costs, and burden the person with a long list of new things to do. The first steps are almost always to have the student getting more done in less time and with less stress. Its to help free up hours in the day that have been taken hostage by inefficient behaviors and practices, which almost every business has within it. To me that’s growth because we’re growing the amount of high value resources that most people have just lying around their office in the form of latent capacity and poorly used hours. Now, I will admit that one of the ways that we oftentimes help our coaching students with their business and personal growth is by making their first key hire, which is usually some kind of assistant to help them unload as many of those $10 per hour tasks they’re probably doing daily that are sucking their dollars per hour down into the toilet. In many cases that hire is a virtual assistant, often located in another country, that, for an extremely low cost will handle your emails, your voicemail organization, possibly your data entry on appraisal files, your accounting, and a whole slew of other things. If this is the first time you’re hearing about something like this, good! This is a very common use of virtual assistants and it should be one of the first things most of you do as your first easy growth step. The alternative, remember, is that you just keep doing all of that stuff yourself. If that’s you and you have no interest in working less and making more, this episode is not for you and I’m ok with that. I know that the vast majority of people out there are not interested in making any changes to their lives and businesses so that’s not the demographic I’m talking to with these kinds of episodes. My demographic for these types of shows are the ones who realize that they’re burned out, or almost there. They realize that they want more in the way of free time, wealth, money, freedom, and all of the things they thought they’d get by starting their own business.

If you hear the word ‘growth’ and shudder, listen up! Growth does not have to mean more time and hassles! In fact, if done right, it should mean fewer headaches, fewer hassles, and more time, along with more money in your pocket. Yes, you may have to develop a few new skills along the way, but that’s almost always the path to more freedom, wealth, and success. If the launch phase of a business, especially an appraisal business, is typically in the five figures range and is usually a one person business, then the growth phase is when the business hits the six figure range, has predictable sales, a good book of clients and customers, likely has 1 to 5, possibly more people doing something within the business, and is focused primarily on survival. The launch phase business should typically be focused on asking the question, ‘why would somebody choose me over somebody else?’ Maybe you’re the low cost provider of services in your market. Maybe you’re one of the fastest in your market. Maybe you’ve built an awesome reputation and all your clients love you and that’s your competitive advantage. By the way, if the last one is you, I can absolutely guarantee you that those clients are wondering why you aren’t growing and adding more ‘yous’ to the mix. If you’re the high value service provider in your market and you’re not growing and spawning more like you, you are most definitely leaving money and freedom on the table. If you really know how to take care of people in your market, you almost owe it to yourself, and to the market, to build more people like you. That’s a separate show though, so lets keep talking about the painless growth phase. 

In the primary growth phase, its you trying to be as efficient and as profitable as possible in as little time as possible. From there, its leveraging what you’ve learned and built to try and capture more of the market and earn some increased profitability through expanding your product and service offerings. You’ve created some efficiencies in your processes by leveraging the brains and efforts of others to do all of the things you probably shouldn’t be doing. What we typically say is that, at this phase, you should be hiring for your weaknesses. The founders role is still in technician mode doing some, maybe even most of the work, but at least they now have some help in getting that work out the door. They’re earning a little less per unit since some of that revenue goes to paying others in the chain of support, but their dollars per hour have likely gone up. They can essentially produce more in less time, and that is a huge win! This is one of the ideas that we use to leverage into the next phase, which is scaling. 

What is scaling and how is it different from growth, you might ask. Well, that’s what this episode is about because the concept of scaling is, to me, what everybody listening should be focusing on whether you ever want to grow or not because scaling in not just an act, its also a mindset. Just like there is a ‘growth’ mindset, there is a scaling mindset that doesn’t necessarily have anything to do with the act of scaling. The scaling mindset entails having a recognition that, even though you may never want to really grow, even though you may never want to sell your business, having a scaling mindset is about recognizing the need for systems, consistency in your processes, documenting and testing methods and approaches, about increasing your profits exponentially while only increasing your expenses incrementally, and trying to earn as much as possible in as little time as possible. This is where I lose most people because so many have been raised and trained on what I call the ‘farmer’s mindset’, which is the mindset of an ‘honest day’s pay for an honest day’s work’. You’re going to get up in the morning and start working in the field. You’re going to put in a nice long day of hard work, but satisfying work, and then you’ll feel good about the money you earn. Sun up to sun down, the farmer feels good about what he or she has created with their own hands and there’s no guilt associated with what they’re given for their product. 

My dad was raised on a farm with 9 brothers and sisters and that’s what he was given. Work hard, make some money, but don’t make more than you deserve. There is some unwritten calculation programmed into their heads that a certain effort is worth a certain amount of money, but no more. Work a full day for a full day’s pay and you can lay your head on your pillow with no guilt. And while I have no problem whatsoever with this work ethic, I do take issue with it as a mindset. Anytime we impose our own definitions of phrases like an ‘honest days work’, ‘more than I deserve’, and the thinking that anything less than what you previously did is unworthy of being compensated is a limited way of thinking, in my opinion. And I’ll gladly share with you that at least 75% of what I do as a coach is helping people overcome their limited thinking habits and patterns. 25% or less is about actually helping them develop systems and processes, although that is definitely part of it. Every one of us has some area of limited thinking, blindspots, ways of being and doing that we just accept as normal but might actually be holding us back. The most common fears around growing beyond where you are today typically revolve around one or more of 5 different things: fear of failure, fear of success (closely tied with a lack mindset), fear around change, fear of being responsible for other people, and fear of the unknown. Of course, there are some offshoots of those 5, but those are the 5 main categories. Give some thought to those 5 things and see if you can identify where you might be hanging out to avoid facing one of those fears. And this is where the scaling mindset can help. 

The scaling mindset, in addition to all of the things I just mentioned, becomes like a filter through which all of your ideas and processes can be put through to see if they’re worthy of implementing. So, lets give a little more context to scaling by pointing out the differences between growth and scaling. If the first phase of a business is the launch phase, the second phase is the growth phase, with the third phase being the scaling phase, you don’t have to wait until you move from the launch phase into the growth phase to think in terms of scale. The difference between the launch phase and the growth phase typically just involves a change in mindset and recognizing that you don’t want to be the only one doing it all. The challenge with the growth phase for most people is that, from an economics standpoint, when you’re in the growth phase and increasing your sales, you’re typically also increasing your expenses, and maybe at the same rate. We see this all the time where somebody is moving out of the launch phase into growth so they are able to go from, say, 10 order per week to 15 or 16 orders per week, but they have to pay somebody, some costs go up, and they end up with only a little bit extra at the bottom line. This is normal, by the way, because you’re building something and building takes time and it doesn’t come without costs. The difference between growth and scale when it comes to the economics is that, at scale, your sales numbers go up, your revenues go up, and your profits go way up because you’ve learned to leverage your systems, processes, and infrastructure to squeeze out more and more from less and less. You created the systems and processes in the growth phase, you created the checklists and the documentation in the growth phase, you trained some people in the growth phase, and now you’re ready to ramp up sales and push the system to the max to see what it can do. 

The good news is that you don’t have to grow to 20 people to test out the scaling mindset! You can think at scale even as a one person business. But you have to start thinking this way to get to the next levels. That is what this episode is attempting to get you to do: think about what it would take to get to 3 people, to 5 people, to 10 people or more. Just think about it. So many of you stop at the point of thinking because you’re afraid of one of those 5 fears. There is no added cost to thinking though so why not at least virtualize the process and imagine what it would take to operate a business at scale. Here’s what an appraisal business looks and feels like at scale, in my opinion and experience. An appraisal business at scale is a high six figures and above; this means $750,000 or higher, to well over a million dollars in sales and production, the team size is 8 or more, you’re hiring for attitude and aptitude, and the founder is spending the vast majority of his or her time coaching, teaching, leading, training, selling, visioning, strategizing, developing, and working on sustainability. The founder is not out appraising homes! Again, this is where I may lose some of you because, either you can’t imagine a business like that, or you simply don’t want to. You say, I love driving around and doing this and I never want to to do anything else. Ok, if that’s you, no problem! But if part of you says, “well, I do enjoy this but I don’t want to be doing it forever, or at least not like I’m doing it now”, then its time to at least think in terms of scale and start asking the questions. 

The questions are simple: what would it take to go to the next level? What would my business look like If I stepped back a bit and let others do some of this? Who would I need to become to build a business like that? What fears do I have around growth, and what fears do I have around me not being the one doing everything? The other important question to ask as you are growing your business is, “will this scale?” What that question is asking is, if I implement a new system or process, would it work this way for 5 people, 10 people, 20 people or more. Its ok if the answer is no at first, sometimes you have to build bridges before you can build skyscrapers. But, by at least asking the question, you are using the scaling mindset to think in a way that maybe you’ve never thought before. Even as a one or two person business, if you start to document your systems, your processes, and you ask yourself the question, “would this system, process, or method scale over many more people and bigger markets?”, you’ll find yourself building something that eventually takes care of you without you having to do the physical labor and production to create the revenue. Again, just to put an exclamation point on all of this so that you don’t shut down your mind to the idea, I’m not saying that you have to build your business to a million dollars and 15 paid employees. I’m simply imploring you to begin thinking ‘as if’, as if you were going to build that and what might it take in terms of mindset, overcoming your fears, growth in personality, knowledge, and leadership, and resources. Just the act and exercise of thinking at scale is an act of creation that has huge benefits long term.

Thank you my friends for tuning in again this week! Hopefully I’ve been able to add some value for you and get you thinking in a way that may have some long term benefits. If you’d like to think like this all the time, or at least learn how to think this way, as well as maybe put some of these ideas to work in your life and business, that’s what we do! We have three levels of coaching that you can take part in: a low cost level 1 coaching and mastermind group, a higher investment small group coaching team, and one on one coaching. You can learn more about all of them at www.realvaluecoach.com or www.coachblaine.com As always, feel free to reach out to me for a free coaching session if its something you’ve been thinking about. Until then, or until next week my friends, I’m out…