The cumulative survival rate of businesses started between 1995 and 2010 is just 25 percent, a US Small Business Administration research report finds. Moreover, data on business growth has found that only 5 percent of companies break the $1 million dollar revenue barrier. Even many of those businesses that do survive simply plod along, failing to capture larger opportunities.
We must consider why many companies shutter their operations and/or fail to reach their potential. What’s perhaps most alarming is that scaling too early or without the right strategy explains nearly 74 percent of startup failures, according to a report from The Startup Genome.
As COO of the Allure Group, I went from being the sole operations member early on to managing a large team spanning six facilities in New York. We’ve done this while maintaining true to our commitment: to provide the best possible care and services to our patients.
Here’s how you can scale your operations team effectively and turn any small business into a successful big company or franchise:
1. Know’s there’s only one boss
Sam Walton, founder of WalMart and Sam’s Club, once said, “There is only one boss, the customer, and he can fire everybody from the chairman on down by simply bringing his business somewhere else.”
Whatever your opinion of WalMart, you have to admit they have scaled remarkably well. But as Walton said, before you even scale a product or service, you must not only make certain there’s a market, but also that what you’re offering solves the pain point of the customer. If it doesn’t, you’re doomed to failure—even if you have the ability to scale effectively.
In fact, according to research from CB Insights, a staggering 42 percent of startups fail because there is no market need. This sounds like such a simple mistake, but you truly must analyze your markets to see if you can actually be profitable. If there isn’t sufficient need, scaling will not only be useless, it will be costly.
2. Stand out from the crowd
Food delivery is a rapidly growing industry, with revenues expected to reach $45 billion in the US by 2022 (up from just $12 billion in 2016). Given that this is the golden age for food delivery, one may think that those that attempt to scale a food delivery business have a good shot at great success. However, they’ll face fierce competition.
You must find a way to differentiate yourself. This is especially true in an industry where many competitors can easily operate in a similar manner. So, you have to have a unique value point.
3. Go agile
Burning through cash, not having the right team, and a poor business model are among the top reasons startups fail to scale. The way to avoid these mistakes is to implement an organizational culture focused on agility. Scaling in an agile manner is the key to optimizing efficiency, minimizing costs, and making the product the best it can be.
To scale up agile, you require the right processes, personnel, and culture. As BCG, a global consulting firm, notes, you can go agile by doing the following:
- Continually improving: Short iterations allow you to make fixes quickly. Consistently get customer feedback so your updates and changes are relevant.
- Being data-focused: Let things like A/B testing tell you what the best way forward. Use analytics to determine which customers bring the most long-term value.
- Eliminating silos: As COO, I make certain our operations team actively communicates and works with other departments. This ensures transparency across The Allure Group, which increases efficiency greatly.
- Setting clear expectations: You must actively communicate job expectations and who’s responsible for what tasks. Encourage an atmosphere where people take ownership of their work.
Additionally, as you scale, automate where possible to optimize business processes. As Ryan Deiss, founder of DigitalMarketer.com, attests, “When something works, figure out exactly what you did, step-by-step, to achieve that result. Write it down, and then try to repeat that result following your newly-created, step-by-step process."
4. Put the right team together
The Allure Group has been able to scale well because of the value it brings patients. This couldn’t have happened without hiring the proper staff.
For instance, we go the extra mile to ensure our care and services align with a patient’s cultural needs and preferences. At our Hamilton Park Nursing and Rehabilitation Center, we’ve implemented The Longevity Garden program, which caters to our Chinese residents by offering services in their language and in accordance with their traditions.
To make The Longevity Garden program a success, we’ve have taken steps to hire staff who possess the necessary skill set. This includes hiring registered nurse managers who are fluent in Chinese and English and having chefs that can cook authentic Chinese cuisine.
Those that care about the people they work with and believe in the mission of the organization will take greater ownership of their work and be committed to helping the business expand and reach its full potential.
Expanding beyond what you’ve envisioned
By having the right product, differentiating yourself, being efficient and agile, and putting together the right team, you can scale up your operations effectively and sustainably grow your business—even if you haven’t obtained millions of dollars in VC funding.
As you scale, just pay attention to other important factors that could derail your momentum, like cash flow and competitive disruption. Yet if you have the right people, systems, and culture in place, you can overcome such threats.