The strategy to scale profitably needs to be designed at the very core of the organisation. Effective synchronisation of people, processes, operations and technology can lead the way to successful business scaling. This is achieved when your business reaches the stage where your revenue is increasing exponentially, but your cost of servicing that revenue increases only marginally.
In the first two parts of this series, we discussed how to scale a business from a business perspective as well as from a people perspective. This next perspective revolves around operational execution.
Business scaling from an operations perspective
There are certain aspects to keep in mind when preparing your operations to execute for scaling:
1. Proactive not reactive
Knowing how to scale a business effectively means anticipating demand proactively and not reacting to it after the fact. Imagine you have done all the hard work to acquire new customers, then struggling to fulfil demand is hara-kiri. And yet, this is something one finds more often than not. Fancy launches are followed by crash and burn. The opposite is also true, of overestimating the demand.
However, if the planning has been done effectively then it will move in tandem. By its very nature, good business scaling strategies have inbuilt modularity and feedback mechanisms. It is about alignment.
2. Independent of the individual
Scaling happens when you become a cog; the system must work without high dependence on any particular individual. Smart people are needed to run the operations but the system must run indep
endently of who runs it. It is not fancy to say, I have become a cog, ego gets in the way. But look at all successfully scaled operations, the profitable part is running independently of the individual’s personality.
It isn’t abdication of responsibility, the ‘lead’ principle stated earlier clearly enumerates the expected role. It is about putting down a business scaling strategy with standardised repeatable processes and a proper delegation and responsibility structure.
3. Cash stack and cash flow management
There is now a greater understanding of the need to actively manage your cash flow. Media is filled with horror stories on cash running out and momentum being brought to an abrupt halt. So knowing how to manage cash flow in a business and its tracking as a significant metric cannot be overemphasized.
However, as important as cash flow management is the need to manage your cash stack. Don’t spend it if it is not business-critical. This needs business discipline and planning. Remember to manage both cash flow and cash stack by design and not by default.
Keeping these three critical aspects in mind when scaling your business will help you streamline operations and achieve systematic scaling.
Note: This article is part 3 of a series on designing your organisation to scale profitably. Find the first part here.