Every new entrepreneur dreams of growing their business. However, most seasoned entrepreneurs dream of scaling their businesses. Growing and scaling your business both have nuances. Unfortunately, these are nuances that most business owners don’t realize until their business stays stagnant and revenues plateau.
The common denominator between the two is the direction in which both methods are going. But the difference lies in the systems and the efficiency in running the business. In growth mode, entrepreneurs consider metrics as vanity metrics that don’t help the company’s bottom line. They may earn $10 million a month but have only $2 million in gross profits due to $8 million in expenses.
On the other hand, being in scale mode lets you get past the “growth mode.” Instead, it enables you to focus on scaling a business that decreases expenses and maximizes profits. To achieve the “scale mode,” we devised the 5E Scale Engine methodology. It consists of five tried-and-tested pillars on how to scale a business. Read on to find out!
The first 5E Scale Engine pillar is the EVOLVE stage. This is where you evolve in your personal and professional lives into a full-fledged leader and CEO who can handle a business with considerable manpower.
The first step in the Evolve stage is to change your mindset. As a leader, you want to get things done efficiently by using resources, people, teamwork, collaboration, or systems.
Instead of asking, “How do I get this done,” you must start asking, “How does the business get this done.” This means, instead of doing all the work yourself, you can start delegating some tasks to people who can potentially complete the task satisfactorily.
Imagine doing all the tasks yourself. This workload can become too overwhelming for one person with too many on his plate. In turn, you delay other people’s work and become the bottleneck in your company. STOP BEING THE BOTTLENECK!
A CEO who aims to be in the scale stage must have these three fundamental mindsets:
Sustainability revolves around the implementation of repeatable actions or systems that are beneficial for the company overall. For example, people are so fond of short-term hacks. Although these are fast methods of completing a certain task, these aren’t too sustainable. Since these methods aren’t repeatable, you’ll feel like it’s a vicious cycle or tiring chase than a satisfying reward. Sustainability means you must be focused and committed to the journey to focus on long-term results.
Intentionality refers to the intention of solving root problems to solve issues holistically. If you want to know how to scale a business, you must solve the systematic underlying problems. Or else, the small problems will keep on piling up, and you’ll never be able to solve them completely. And this is where the 5 Whys technique comes into play.
Here’s the 5 Whys in action:
Issue: The shipment was delayed.
- Why was the shipment delayed? (Because the people in charge shipped it out late)
- Why was it shipped out late? (Because we lacked supplies)
- Why did we lack supplies? (Because the supplier didn’t deliver on time)
- Why didn’t the supplier deliver on time? (Because our procurement department didn’t order on time also)
- Why didn’t our procurement department order on time? (Because the ordering software malfunctioned)
Once you know know the 5 Whys, you can then Leverage all the necessary resources, manpower, or equipment to make every course of action happen. And that’s how you can evolve as a company and as a leader.
The second stage of the 5E Scale Engine is ENVISION. Scaling a business means you need to know why you put up the business in the first place. In addition, you have to have a vision and a direction to steer the business towards. Without a goal or vision, you’ll get sidetracked and will no longer find the satisfaction you’re looking for at the initial phase of the business.
For example, if you don’t have a particular vision in mind, you’ll entertain the wrong opportunities along the way, And mind you, the wrong opportunities could seem so right at any given time. This is a disadvantage as you may be wasting time and effort or saying no to the right opportunities.
As an entrepreneur, remember to have a powerful vision. A clear vision that everyone in the organization strives hard to achieve every day. The anatomy of a powerful vision is:
- Powerful Vision = Core Values + Purpose + Envisioned Future
If you have a powerful vision, you’ll reap these benefits along the way:
- Improves your recruitment efforts
- Makes you a confident leader
- Enables you to hire the right people
- Lets you reach out to the right customers, partners, and vendors
- Lets you scale your business
Coming up with a powerful vision might be hard when you’re handling the ins and outs of your business daily. That said, try to step outside your normal routine or daily work environment. You can travel to your favorite destination or take a vacation somewhere and let your mind wander. Let your creativity flow through words and jot it down manually on a piece of paper.
Finally, reinforce the vision to your team. Let it run through their veins and ensure that you act on the vision and be a good example as well. Show your team and the entire organization what useful activities or actions help turn the vision into a reality.
After you reinforce the vision in your team, the next principle is to EMPOWER your people. Remember that creating a high-performing team could empower the entire organization and move mountains.
As you know, communication is a critical part of running a company. Without it, your business could be bound to fail. There are two questions when teams and colleagues communicate:
- How should people communicate?
- What should people communicate?
By focusing on communication, you can empower your team members and let them do their best because everything is clear. Moreover, communicating goals and methods will also bring people towards a common goal. Remember, running a group of people is different from running a team of people. The former is a bunch of people with their own agenda, and the latter is a bunch of people working toward a common purpose.
That said, build an organization to make every role and responsibility clear as well. Try to sit down and create an organizational chart, indicating every person’s role and department. This will enable you to know what everyone is keeping busy with.
To achieve all these, you need to hire the right people. Once you hire talented and skilled people, nurture their skills, so they become A-players. To ensure that new hires are comfortable with their new roles, ensure that the onboarding process is well-thought-out. How? By explaining the WHY and connecting it to the WHAT.
Explain these 5 Whys to new hires:
- Explain the company vision
- Explain the company’s relationship to external stakeholders
- Explain the company’s relationship to internal stakeholders
- Explain the new hires’ responsibilities
- Explain why they were chosen
The next and final step in the Empower principle is to create a powerful company culture. This is the element that will generate affinity within your people. Having a strong company culture will outweigh the financial benefits in an organization because it resonates within the entire team.
Always remember that high-performers are looking for three things:
- Meaning (The purpose of what your people are doing)
- Autonomy (The freedom to explore ways to complete a task)
- Mastery (Being competent in the work that they do)
Finally, high-performers feel a sense of fulfillment when superiors implement the Cycle of Good Work. It consists of five areas:
- Purpose (People must work on purposeful tasks)
- Ownership (The team must be accountable for the tasks they’re working on)
- Iteration (Accepting failures and doing iterations are a path to success)
- Education (Teaching and sharing knowledge and skills is beneficial to everyone)
- Recognition (Everyone appreciates to get recognition for their efforts)
ENGAGE is the fourth pillar of the 5E Scale Engine. Learning how to scale a business involves one thing — customer engagement. Some business owners think they can build a business, and customers will come. But this doesn’t follow when running a sustainable business.
If you want to ensure that your customers come and keep coming back, make sure you engage with them. To do this, you need to plan your customer journeys. That’s because regardless of how excellent your products are, they won’t sell if you’re not engaging with your customers.
Every organization has five steps in a customer journey:
Discovery means you’re trying to make customers unaware of your products aware of your products. You can monitor your progress through digital marketing campaigns by looking at particular metrics such as impressions, click-through rates, quality score, reach, or search engine ranking.
Consideration involves making customers think about how good and worth purchasing your products are. You can make customers consider your products through testimonials, ratings, trials, reviews, or even presale samples.
Conversion means a lead is now a customer who purchased your product. In this stage, ensure that you include clear calls to action, offer anything of value, and implement a smooth checkout process.
Fulfillment is when you structure your business offers to cater to your customer’s every need. The journey doesn’t end after your customer makes a purchase. When running a business, you need to give what your customer is always looking for. This is where you can provide guides, tutorials, customer support, follow-ups, videos, case studies, and more. All these contribute to customer success and fulfillment.
Renewal pertains to customers who love and patronize your product. Acquiring customers might be the easy part, but retaining them is a challenge. That’s why you should do everything in your power to provide them with the best customer experience, so they would love to invest more in your business.
Here are eight useful strategies in retaining customers:
- Provide an excellent customer experience
- Prioritize on solving customer problems
- Set appropriate expectations
- Create an efficient onboarding process
- Get regular customer feedback
- Communicate with customers regularly
- Create a loyalty program
- Foster customer relationships
The last pillar in the 5E Scale Engine is EXECUTE. This is where you eliminate inefficiencies in your business, as this will be the reason businesses fail. Do whatever it takes to optimize, delegate, eliminate, and automate processes. Overall, this will increase business output and productivity, reduce resource wastage, and lets you scale up your business.
There are five key elements in increasing business efficiency:
- Simplify processes and projects
- Decrease specificity of subject matters
- Decrease bottleneck resources
- Increase documentation and transparency
- Provide more training
To ensure you achieve efficiency in your business, create processes that make business operations seamless. The first step is to identify a task by asking these:
- WHAT happens when you do this task
- WHEN will the person in charge initiate the process
- WHO will initiate the process
Once the task has been identified, go through the ARSAD funnel to increase efficiency. The ARSAD funnel has five steps:
- Analyze (Analyze all the tasks every person in your company is doing)
- Remove (Eliminate unnecessary processes that don’t make an impact)
- Simplify (After eliminating unnecessary tasks, simplify the remaining ones)
- Automate (Eliminate manual tasks as much as possible and automate)
- Delegate (Delegate tasks to the right people)
The 5E Scale Engine is a powerful method that teaches you how to scale a business and build a business from scratch to get to its pinnacle of success. Use each pillar to guide you in building an organization, bringing together an excellent team, providing stellar customer journeys and engagement, and increasing business efficiency. With these guidelines in mind, every business owner will easily move from one stage to the next.
Moreover, the 5E Scale Engine guides you on how to scale your business. It lets you move past the growth stage and enter the scale stage with sustainable systems and processes. If you want to learn more, get the 5E Scale Engine playbook here.