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Advice or resources about scaling a business?

Practician

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Hi all. I'm beginning to scale my business up with the aim of going from the present 100K/yr profit pace to 1M/yr. I'm pretty comfortable dealing with most of the other aspects of running the business and finding resources to learn specific tasks, but I've never dealt in this range of scale before.

Are there any suggestions for issues specific to scaling? Or are there good resources about scaling, specifically? I don't want to be blindsided by something new I would have never thought about.

Some new issues I anticipate:
1. Cash/liquidity - Since revenue lags expenditures, and you're scaling up expenditures. So far, I've just been using a regular credit card and paying it off as I go.
2. HR issues - As the number of staff/freelancers grows (currently 2, aiming for 10-15 at least, eventually), the probability of running into people troubles increases. Is it worth hiring a middle-manager, etc.?
3. Market saturation or cannibalization - Outgrowing your market with declining returns. I see some ways to expand horizontally if I have to, but it's more efficient if I don't have to. Also, I may set up a second brand that is actually me as well to dominate the niche, etc.
4. No idea, but legal/accounting, etc. issues?

I don't think the details of my business are really important or relevant, so I'll only describe it briefly. Basically, I've created a very good slowlane job for myself in selling a form of art. (Before you ask, no, not porn!) I'm turning it into a fastlane business. Creating my own platform to gain control is rather straightforward. Dissociating my time from the product is trickier, but I think I've managed to figure most of that out. I did a couple trial runs using outsourced labor for various parts and could still turn a healthy profit. I essentially am turning into an art studio with myself as the art director, rather than doing the art myself. The barrier is quite high for a lot of this (assembling teams to produce good art for low cost is probably 10x harder than doing good art yourself, which is already hard enough). The need is already present and well-validated.

The final element is scale. Once the machine is working... why not go crazy growing? This last part is what I'm trying to figure out.

Thanks for any input!
 

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You'll just deal with the problems as they come up.

Find yourself doing all the art? Hire someone to design
Find yourself doing all the fulfillment and customer service? hire someone to complete those tasks
Find yourself doing all the bookkeeping? Hire a CPA/bookkeeper.

I wouldnt set a number on how many employees you want, id do it on how many you need to keep your expenses down and your profit high.

You'll "Scale" based on how many sales you get, which would correlate to how many new customers you can acquire and old customers you can resell. I'd focus on outsourcing or getting really good at marketing/sales so you can grow your business and plug the holes you end up having within the business with good people.

Good books - Profit First & Emyth Revisited
 
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Practician

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Some food for thought thanks to @Andy Black (I think?) who pointed to this article some years ago:

Do Things that Don't Scale
Great article. I haven't looked too much into tech startup resources since I thought they were less relevant (getting investors, etc.), but there's a lot of good stuff there. I will be looking more into Graham and the others.

You'll just deal with the problems as they come up.

Find yourself doing all the art? Hire someone to design
Find yourself doing all the fulfillment and customer service? hire someone to complete those tasks
Find yourself doing all the bookkeeping? Hire a CPA/bookkeeper.

I wouldnt set a number on how many employees you want, id do it on how many you need to keep your expenses down and your profit high.

You'll "Scale" based on how many sales you get, which would correlate to how many new customers you can acquire and old customers you can resell. I'd focus on outsourcing or getting really good at marketing/sales so you can grow your business and plug the holes you end up having within the business with good people.

Good books - Profit First & Emyth Revisited
Thanks! Will check out these books too for sure. Exactly what I was looking for.
 

Andy Black

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Hi all. I'm beginning to scale my business up with the aim of going from the present 100K/yr profit pace to 1M/yr. I'm pretty comfortable dealing with most of the other aspects of running the business and finding resources to learn specific tasks, but I've never dealt in this range of scale before.

Are there any suggestions for issues specific to scaling? Or are there good resources about scaling, specifically? I don't want to be blindsided by something new I would have never thought about.

Some new issues I anticipate:
1. Cash/liquidity - Since revenue lags expenditures, and you're scaling up expenditures. So far, I've just been using a regular credit card and paying it off as I go.
2. HR issues - As the number of staff/freelancers grows (currently 2, aiming for 10-15 at least, eventually), the probability of running into people troubles increases. Is it worth hiring a middle-manager, etc.?
3. Market saturation or cannibalization - Outgrowing your market with declining returns. I see some ways to expand horizontally if I have to, but it's more efficient if I don't have to. Also, I may set up a second brand that is actually me as well to dominate the niche, etc.
4. No idea, but legal/accounting, etc. issues?

I don't think the details of my business are really important or relevant, so I'll only describe it briefly. Basically, I've created a very good slowlane job for myself in selling a form of art. (Before you ask, no, not porn!) I'm turning it into a fastlane business. Creating my own platform to gain control is rather straightforward. Dissociating my time from the product is trickier, but I think I've managed to figure most of that out. I did a couple trial runs using outsourced labor for various parts and could still turn a healthy profit. I essentially am turning into an art studio with myself as the art director, rather than doing the art myself. The barrier is quite high for a lot of this (assembling teams to produce good art for low cost is probably 10x harder than doing good art yourself, which is already hard enough). The need is already present and well-validated.

The final element is scale. Once the machine is working... why not go crazy growing? This last part is what I'm trying to figure out.

Thanks for any input!
I’m in a similar position.

I’ve been following a sliding scale I came across in the TropicalMBa podcasts: learn a skill, sell the skill, scale the skill.

I’ve a skill. I can make sales. Now I need to scale.

Moving along those sliding scales requires I wear different hats: technician, salesman, biz dev.

(I don’t think you *have* to stop wearing the other hats as you slide along btw. I’m still doing the bulk of the technical work and the sales, and I think it’s necessary for what I want to do.)


I see my infrastructure as my “people, processes, and technology”. I found really good people who’d develop the processes as they went along, and who would develop the technology from the processes. I think people are the most important part of my infrastructure, because they will develop the other two parts.

I don’t want to grow beyond a handful of people. I personally want to scale by picking the right business model and leveraging processes and technology.

Getting the right people involves kissing a lot of frogs, communicating the vision, ensuring they have the same vision, and then creating win-wins.


I’m weakest at the biz dev, so that’s what I’m focused on at the moment.

A good book is James Schramko’s “Work Less. Earn More”.

Focus is key.

To get started we have to say Yes to everything. To scale we have to say No to everything.
 
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Practician

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I’m in a similar position.

I’ve been following a sliding scale I came across in the TropicalMBa podcasts: learn a skill, sell the skill, scale the skill.

I’ve a skill. I can make sales. Now I need to scale.

Moving along those sliding scales requires I wear different hats: technician, salesman, biz dev.

(I don’t think you *have* to stop wearing the other hats as you slide along btw. I’m still doing the bulk of the technical work and the sales, and I think it’s necessary for what I want to do.)


I see my infrastructure as my “people, processes, and technology”. I found really good people who’d develop the processes as they went along, and who would develop the technology from the processes. I think people are the most important part of my infrastructure, because they will develop the other two parts.

I don’t want to grow beyond a handful of people. I personally want to scale by picking the right business model and leveraging processes and technology.

Getting the right people involves kissing a lot of frogs, communicating the vision, ensuring they have the same vision, and then creating win-wins.


I’m weakest at the biz dev, so that’s what I’m focused on at the moment.

A good book is James Schramko’s “Work Less. Earn More”.

Focus is key.

To get started we have to say Yes to everything. To scale we have to say No to everything.
I read your comment before and after looking at some books, and they make so much more sense now. Ditto for some of the other comments above.

Some notes on what I've learned.

I finished Profits First. It was exactly what I needed to see some ballpark guidelines on scaling, and there was some good discussion on the different phases of a business by scale. Some of my main takeaways:
1. I needed to sit down and crunch the numbers a bit more. I essentially assign a project to each staff member, so my initial way of looking at things was that I obtain a profit per staff, and then multiply the staff. That's sort of still true, but I'm going back to budget on a monthly/cashflow basis as well to make sure the growth is supported, taking into account good/bad months and so on.
2. Rather than letting the expenses run wild (even if I expect a profit), I'm going to take a look at efficiency. Can I cut costs, increase the profits per dollar spent, and so on. Can I make anything easier. Some of this is obvious and I planned to do it already, like email marketing cuts down on advertising costs and generates easy sales. But I'm going to spend a bit more time working on this one.

I'm working my way through the E-Myth book. I'm pretty sure I read it a long time ago, but it's good to reread now that I'm specifically thinking in business-mode. I'm only halfway through, but some initial thoughts:
1. I should think more about developing processes. My field is art, so it might seem a bit tricky. Even so, there are definitely areas I can target, at least for easy wins to start.
2. I found this book to be slightly dangerous, in that it presents a lot of material and you can run down a rabbit hole. For example, in the discussion about the turn-key model, one of their bullet points is that the business needs consistent and optimized branding, colors, designs. There's a page or two discussing this. Good branding is obviously important, but I don't have the time to A-B test font colors on my website and so on. So I'm trying to go through with an 80-20 filter and figure out what is the most important business need. There was a brief mention of this in the Profits First book, where you use a system to label tasks as increasing profits, pleasing your best customers, or making your business more automated/repeatable. A task that does all three gets prioritized, and so on.

So now my aim is not simply to grow, but to grow a healthy, robust business.

I remember reading somewhere, maybe it was on the Wallstreetplayboys blog, that anyone can create a 100-200K job. I kind of agree with that. Creating a business is the hard part, and I'm realizing better what that entails. It looks doable, though!
 

Gepi

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Hi @Practician !
Interesting read, and super!!! where you already gotten with your talent and hard work! I wish you best of luck with your future endeavors.
I am in art/design as well, and scaling always seems hard because I trust no one to do the "artsy" part of my work as good as myself. I know! This isn't the answer.
I am also now reading Profit First, and have implemented some of the key ideas
Care to talk privately about some details? Because developing processes is exactly where I am atm, too...Maybe we can share some ideas. And since I will just assume you are in a different niche, maybe we can both profit from it?
 
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Practician

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Hi @Practician !
Interesting read, and super!!! where you already gotten with your talent and hard work! I wish you best of luck with your future endeavors.
I am in art/design as well, and scaling always seems hard because I trust no one to do the "artsy" part of my work as good as myself. I know! This isn't the answer.
I am also now reading Profit First, and have implemented some of the key ideas
Care to talk privately about some details? Because developing processes is exactly where I am atm, too...Maybe we can share some ideas. And since I will just assume you are in a different niche, maybe we can both profit from it?
I can chat here so other people can chip in.

Note that I make art for customers, not clients. Different approaches work for different people, but I strongly prefer a mass customer model. I can sell the same work over and over again. I retain all IP if I want to repackage or modify for other markets. I make all the decisions, not the client. Etc.

I would never do art for a client unless they paid me a ridiculous amount of money. That's just me. Or I can somehow sell the same art to more than one client.

This affects the scaling too. If you want to attract and retain a client base, you have to meet each one's customized needs. I think that requires a higher level of skill in your labor force. It's like the franchise model in the E-Myth book - use the lowest skilled worker possible.

With customers, I design the product knowing what a large number of people need or want. If someone doesn't like my art, it doesn't matter. I find the people that do. I create a fan base, not a client base.

I believe it is much, much easier to please a single fan base than to please a large number of clients. I also think it is easier to scale and has more ways to scale. (Start a second fan base, etc.) There are tons of benefits for a fan-based business.

There are plenty of successful client firms, but this is the business modeI I prefer.

@Andy Black Spent the first two hours of the New Year in my time zone reading Schramko's book. This is going in my tiny "bible collection". I don't need a ton of books, just a couple that I reread over and over. If I can execute most of what is in a bible book, I'll be all set.
 

Andy Black

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Gepi

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Hi Practician, thanks very much for answering! Happy to write, here, too. If I ask questions that you rather want to keep private, just say so (I like to ask a lot :) or feel free to just ignore it.
So, as it turns out, I work freelance (I am primarely a jewelry/3D-modeler), and I have "clients", not "customers". Of course, I'd much prefer the latter. And I am working on this issue right now, to get from 98% consultant/designer to at least 50% and the other half being products. I am designing my own jewelry line. I need to validate the need, I have an idea I think would be worth pursuing. I also illustrate a lot in my spare time and I particularly love drawing manga/anime/comic, so this is something I also train regularly, as I have a long-term project in mind with this.

So, my questions for you would be:
Are you selling prints (or similar "mass-copyable" products), and if yes, do you print yourself, or do it on (only) via platforms like Society6? Or is it digital only?
How did you get started, how long did it take to grow it like this, and how did you validate it at first?
How much time did and do you spend on working your business per week on average?
What do you think of Patreon, and did you at any time use it?
How do you chose people who help you in creating the art? Do you have a basic procedure to validate their talent/work ethics?

Would be awesome, if you could take the time for answering!
I just realized, that I most probably can not immediately give you some relevant or helpful information in turn, as you are just much further ahead than I am. So, this is really just me being in awe (and of course curious) of a fellow artist who already made it this far. Sorry about that :) And Happy New Year!
 
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Practician

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Hi Practician, thanks very much for answering! Happy to write, here, too. If I ask questions that you rather want to keep private, just say so (I like to ask a lot :) or feel free to just ignore it.
So, as it turns out, I work freelance (I am primarely a jewelry/3D-modeler), and I have "clients", not "customers". Of course, I'd much prefer the latter. And I am working on this issue right now, to get from 98% consultant/designer to at least 50% and the other half being products. I am designing my own jewelry line. I need to validate the need, I have an idea I think would be worth pursuing. I also illustrate a lot in my spare time and I particularly love drawing manga/anime/comic, so this is something I also train regularly, as I have a long-term project in mind with this.

So, my questions for you would be:
Are you selling prints (or similar "mass-copyable" products), and if yes, do you print yourself, or do it on (only) via platforms like Society6? Or is it digital only?
How did you get started, how long did it take to grow it like this, and how did you validate it at first?
How much time did and do you spend on working your business per week on average?
What do you think of Patreon, and did you at any time use it?
How do you chose people who help you in creating the art? Do you have a basic procedure to validate their talent/work ethics?

Would be awesome, if you could take the time for answering!
I just realized, that I most probably can not immediately give you some relevant or helpful information in turn, as you are just much further ahead than I am. So, this is really just me being in awe (and of course curious) of a fellow artist who already made it this far. Sorry about that :) And Happy New Year!
Most of my answers to your questions won't help you. If you find out that I spend X hours working per week, how does that help you succeed? Find an unmet need that people are willing to pay for. That's literally it. Everything else is a distraction.

I'm not sure about the ethics of this, take it as you will, but if you have repeat business clients paying you to design jewelry, you can bet that they are making more money selling the jewelry themselves. That's a hint of validation for you already, as well as what specific designs sell, and so on. You can investigate and figure out how it works, what people want to buy that's not available. I have never freelanced, only hired, so this makes me uneasy telling you this, but this is the raw reality of business. On my side, I always try to make sure there are moats to competition, ways they can never reach me even if they try to copy me. It's the same if Amazon starts undercutting your profitable product with Amazon Basics and so on. But I digress...

If you business is more consumer-oriented, like once-off custom wedding jewelry, at least you have some data about what designs are in vogue, what people want, copying some celebrity, etc.

A lot of what you are asking about is available on this forum or online from more experienced people. You can find resources on how to hire labor, for example. Also, there are different ways to validate an idea FAST, ranging from ads for mockups to doing LOTS of investigative research.

For me, I validated my idea by knowing my market intimately. I knew EVERY SINGLE major product and brand on the market, as well as how well they were doing. I knew the market well enough so that I could look at someone else's brand new product, and within a minute tops, often within a second, predict whether that product would flop or succeed. If I wanted to be a consultant, I could claim unabashedly to be the world's #1 expert in that market. But why would I sell my knowledge if I actually knew the keys to the market? I'd make my own money, which is what I do.
 

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Practician

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One more note on Patreon. I don't use it because there are more profitable avenues to develop first. However, the idea of recurring revenue is extremely attractive. (And an email list that people PAY for the privilege of being on? Lol! I think more businesses should look into it.) Right now it would be a distraction, but it's on my long-term radar.
 

Gepi

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Hi Practician,
thanks so much for taking the time and actually answering in such detail.
I will keep your advice in mind. You are spot on with knowing the market, the more I design, the more I learn the intricacies, the more I know what is actually wanted by the general audience I would be aiming for. I think this is not unethical at all. As long as I take my own ideas and not simply copy the ones I get through freelancing, just using it as guidelines, then this seems to me a logical step and a valid practice, or do I misunderstand this?
Already more questions are coming up, if you have the time and want to, I would again appreciate your perspective :)
You mentioned hiring, do you hire online/remote and are those freelancers, or do you hire them full time? What are your experiences, what do you prefer?
How do you make sure they do not sell your ideas themselves?

And yes, I agree that for some cases, Patreon is a really attractive channel to work through. On of my top long term goals I am working on right now is to have a specific kind of art that will be going through Patreon. Of course, it needs to be top notch for it to have a real impact, but where does this not apply. But then the upper limit is high, I saw artists who do similar things making 30k a month.
 
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Practician

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Hi Practician,
thanks so much for taking the time and actually answering in such detail.
I will keep your advice in mind. You are spot on with knowing the market, the more I design, the more I learn the intricacies, the more I know what is actually wanted by the general audience I would be aiming for. I think this is not unethical at all. As long as I take my own ideas and not simply copy the ones I get through freelancing, just using it as guidelines, then this seems to me a logical step and a valid practice, or do I misunderstand this?
Already more questions are coming up, if you have the time and want to, I would again appreciate your perspective :)
You mentioned hiring, do you hire online/remote and are those freelancers, or do you hire them full time? What are your experiences, what do you prefer?
How do you make sure they do not sell your ideas themselves?

And yes, I agree that for some cases, Patreon is a really attractive channel to work through. On of my top long term goals I am working on right now is to have a specific kind of art that will be going through Patreon. Of course, it needs to be top notch for it to have a real impact, but where does this not apply. But then the upper limit is high, I saw artists who do similar things making 30k a month.
I only hire freelancers. It's more agile. As someone else said, there's a lot of frog kissing, but the good ones are worth it.

They are working for steady payments and cash up front without having to worry about a ton of other details. I have to do a lot of work, spend a lot of money, and then hope to get paid after a while. I'm not worried about them choosing the hard path over the easy one. The market is complex and they don't see all of the parts, but they know enough to realize it isn't easy.

An example is making a video game (someone else posted recently). Yeah... good luck copying an idea into a successful video game, for example.
 

Gepi

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Dear Scot, was this recommendation aimed at Practician?

They are working for steady payments and cash up front without having to worry about a ton of other details. I have to do a lot of work, spend a lot of money, and then hope to get paid after a while. I'm not worried about them choosing the hard path over the easy one. The market is complex and they don't see all of the parts, but they know enough to realize it isn't easy.

An example is making a video game (someone else posted recently). Yeah... good luck copying an idea into a successful video game, for example.
Thanks very much again! Good comparison with the frogs!
What I quoted above, I think this is very important.
I will keep this in mind when hiring freelancers myself and doing
the hardest part: putting it together into something bigger, and greater than the sum of its parts.
Do you ever had to argue about some detail changes still being in the budget, and if yes, how do you solve such discussions or potential issues? Or do you have such a clear idea and communication of what is expected, so that your freelancers are just executing and know exactly what to deliver? I try the latter (just hired my second freelancer)...
 
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Practician

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If you haven’t, read Ready, Fire, Aim.

This book tackles this question perfectly.
This is golden. I tracked down an executive summary version, as the original doesn't seem available for Kindle. Now I'm going to have to buy my first physical book in like 5 years.

Dear Scot, was this recommendation aimed at Practician?



Thanks very much again! Good comparison with the frogs!
What I quoted above, I think this is very important.
I will keep this in mind when hiring freelancers myself and doing
the hardest part: putting it together into something bigger, and greater than the sum of its parts.
Do you ever had to argue about some detail changes still being in the budget, and if yes, how do you solve such discussions or potential issues? Or do you have such a clear idea and communication of what is expected, so that your freelancers are just executing and know exactly what to deliver? I try the latter (just hired my second freelancer)...
Yes, it's better if you give exact instructions, especially if you are working with something as open ended as art.

I almost never ask for revisions, maybe something minor once in a while. If I have to ask for revisions, it means I messed up. I didn't communicate clearly or I hired the wrong person.

Following instructions requires less skill than open ended design. Less skill means cheaper, larger labor pools. On your end, though, that requires you to break down the task into clear, specialized units of work. This is good for outsourcing. You are hiring technicians, not true artists, if that makes sense. You freelancers don't need to elicit emotion in the customer. They only have to color within the lines, so to speak.

Much, much later, I will look into hiring true artists for product design, but right now the bottleneck is implementation. Hence, the need for technicians.
 

Scot

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Dear Scot, was this recommendation aimed at Practician?
It's aimed at anyone who wants to know how to scale their business.

This is golden. I tracked down an executive summary version, as the original doesn't seem available for Kindle. Now I'm going to have to buy my first physical book in like 5 years.
The audio book version on Audible has served me well too.
 

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