How well could you scale up?

If you want to test out your growth potential, then simply ask yourself whether you have the ability to significantly scale your operations.  

Scalability is not simply selling more into a large marketplace – it requires you to scale up every part of your business, from procurement through conversion to final product sales and support.

You have to ensure that, at every increment in size, you have the capability and capacity to meet volume needs across every part of the enterprise.

Don’t get fooled by the hype of the sales staff who tell you that the market is huge and that they can bring the deals in. In the end, it gets down to a very deliberate plan for closing, deal by deal.

Remember if it were that easy, anyone could do it.

The fact is that sustained growth is incredibly difficult. Not only do you have to bring in the low hanging fruit, but you must then work deeper and deeper into the marginal sales where each successful deal takes more effort.

Without a relatively sophisticated sales and marketing plan, it is highly unlikely that you will make your growth targets.

This becomes even more difficult in markets that are growing at a slower rate than your own growth plans, because now you have to increase your market share by taking business off your competitors.

Don’t underestimate the amount of work and skill needed to do that.

Even if you can bring in the sales, the rest of the organisation has to be able to support those sales. If you think of the complexity of most supply chains, you can see numerous activities that must be co-ordinated to get product out the door.

Also remember that your suppliers need to be able to match your increasing procurement requirement, and your distribution channels need to be able to absorb your increased outputs.

What you need to do is to review every part of your operations to examine the impediments to scaled up operations. In some cases this will mean changing the way you procure, manufacture and ship.

You might end up changing your market interface to establish new channels to market. You almost certainly will have recruitment and training challenges, especially in periods of high employment.

But even in times when unemployment is high, you still need to find the right staff. If your skilled worker needs are in areas of high demand, you might need to look at outsourcing or sourcing some work from overseas.

Basically, if you want to pursue aggressive growth, you need to work out how you are going to do it. You can’t leave this to the last minute, as many features of capability and capacity acquisition require long lead times.

Beware of growth that comes from doing more things, rather than doing the same thing more times. Too many companies have stalled their growth by spreading themselves over too many markets only to find that they end up doing none well.

The easiest path to sustained growth is by doing a few things very well, and doing them more often.

Tom McKaskill is a successful global serial entrepreneur, educator and author who is a world acknowledged authority on exit strategies and the former Richard Pratt Professor of Entrepreneurship, Australian Graduate School of Entrepreneurship, Swinburne University of Technology, Melbourne, Australia.