Before you can actually scale a business, you need to ask yourself this question.
What do Usain Bolt, online dating and a scalable business model have in common?
More than you think!
Scale up is a great buzz word right now and everyone wants a part of it. However, many commentators talk about scale up as if all businesses can actually scale.
Let’s go back a few steps and define “Scale up”. Investors define this as the ability for a business to add turnover at a rapid rate but cost at an incremental rate. Sounds fair.
Most content or educational pieces talk solely about the business and it’s scalability. However, there’s one fundamental missing - the actual journey of the business founder and how this can positively or negatively impact the scalability of a business model.
Now this is where Usain Bolt and online dating comes in!
You will need to use your imagination, but for the purpose of this analogy: Usain Bolt represents the journey of the scale up business founder and online dating represents the scale up business model itself.
Usain Bolt & The Scalable Business Founder
Everything about the physique and mindset of Usain Bolt means he was born to perform at such a high level. OK – he still needs to train and keep himself mentally in shape but at 6ft 5 and just 12 stone, scientists believe his physique gives him an advantage over 99.999% of the worlds population. From a young age Usain confused nervousness with excitement, which meant he loved to compete and be centre stage. He didn’t know how to lose - Usain was born to perform at that level!
How does this link to a scale up business founder? Usain Bolt is of course an extreme example of inherent physical and mental ability and there are thousands of fantastic scale up businesses in existence but nonetheless, scale up is a mindset and your ability to grow and develop as a scale up leader is key to the success of your business.
Online Dating & Your Scalable Business Model
The science behind online dating is fascinating. Online dating websites use your data, such as location, interests, online activity, hobbies, interests and so on to find you a potential match. There is no guarantee that the match will be successful, but the statistics do show that this science ensures that marriages from online dating have a lower than average divorce rate.
Let’s compare this to a scalable business model. Much like online dating, science can correlate the traits of successful scale up business models. However, many commentators on the subject believe there is a long and fairly prescriptive list of criteria in order to identify your business as a scale up. I disagree. Much like online dating, I believe there are three key indicators you must “match” with your business model in order to avoid scale up divorce!
Here are the three indicators to watch out for:
#1 Value proposition
This is a clear statement that describes the benefit of your offer, how you solve your customer’s needs and what distinguishes you from the competition. Your value proposition allows you to set your business model aside from the competition.
My all time favourite example of a great value proposition is the Dollar Shave Club. In this example the cheeky brand highlights the benefits and value rather than its features. It also demonstrates its biggest selling point – price. Check out the video below
#2 Predictable cash and recurring sales!
Being profitable alone isn’t enough. Just as the ability to predict sales is key, you also need the ability to predict your cashflow. If the ratio between your best results and worst results is narrow, your business probably has a healthy customer base and evidence of recurring sales. This could well mean it’s time to scale.
Some of the most successful scale ups have capitalised on a great recurring sales model; the subscription model. There aren’t many better subscription models that Netflix http://unicornomy.com/how-does-netflix-make-money-business-model/
#3 Purpose, People and Culture
Great founders start businesses not to create a company but to solve a problem or to make a difference. Your purpose should be aspirational and inspirational but genuine. If you and your team understand your why, you’re nearly ready roll . However, you can’t scale a business model without great people and culture. The team is the company’s raw DNA, the purpose their religion, and culture their unique way of operating based on common values. If you get this right, exciting times are ahead.
Wallmart is a great example of a business that has grown revenues of almost $500bn on the back of a simple yet powerful purpose, which is to provide more for less.
So there you have it - Usain Bolt, online dating and a scale up business DO have an awful lot in common!
The other week I wrote a blog on "How to become a scale up leader" if you haven't checked it out already you can here