How To Scale A Business – DISCUSSION

This blog post is here to specifically discuss the "How To Scale Your Business" video.  In the video I share the Rapid Scaling Method to building the necessary foundation for growth.  What are your thoughts, strategies and suggestions? Join the conversation and share your comments!

Category: Skill Toolbox
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  • http://www.spiritofbroadway.org Brett

    wow…jacket?? Really?? Ever since you shared your list of business books, I have become a huge disciple of THE E-MYTH…it is my bible for growing my company, and many of your points in this video reflect Gerber’s work in EMYTH. Great video…this is exactly where I am right now. Wasn’t sure how to approach this subject…the universe provides…again.

    Thanks

  • Mike Michalowicz

    @Brett – LOL!!! I wanted to look really smart. Yes the E-myth is a phenomenal book, and I agree is the bible for building systems (franchise model).

    - Mike

  • http://misterpopsicle.com Kevin

    What if you’ve made some mistakes in the branding of your business and it doesn’t “look” like a million dollar company? Is it too late in the game to adjust your branding? If not, are there certain ways re-branding should be handled? BTW – Thanks again for another great video packed with amazing strategies!

  • http://www.shakoorinc.com erin shakoor

    This is very eye-opening. Many of the concepts are brand new to me, although I’ve in business for 8 years and really struggled the last year and a half. Thank you Mike!

  • http://www.80sartist.com 80sartist

    First of all nice jacket!
    I read so many positive comments about the E-Myth. I have it at home but there are so many other great books to read as well.
    How do you guys manage your time reading many great books?
    Each time that I finish one of them I ask myself: “What if I had read this book 5 years ago?”

    Do you have a system to share?

    Thanks for the video Mike.

  • Felecia

    Mike,

    Great video! It’s like you made it just for me. I have been racking my brain trying to figure out how to build systems within my ice cream business. My biggest problem is scalability with the estimation process maybe it’s similar to your computer crime company but when each situation or in my case event has different variables that determine price quotes how do you automate that “decision making process” so others in your company can handle it? Love the jacket and your “Don’t hire on experience” is priceless, so important!

  • http://www.TeaCHildMath.com Eugenia Francis

    Great video, Mike! Through trial and error, most of us entrepreneurs have perfected our systems whether it’s sales, marketing or customer service. A word of caution: just as McDonalds invented their system, be very protective of yours. To me, my “sytems” are like my TeaCHildMath Intellectual Property, all developed through endless hard work.

  • http://www.creatingwords.com Harry Husted

    What a great video. Thanks for the advice. I agree that having systems in place does help a business grow.

  • http://www.execulon.com Roger L

    Thanks for putting out a great video. I never knew it was called scaling. I’ve always been an organizer and process is a hugh part of organization. I did however, need a kick in the rump and realized I have not performed these duties as well as I should have to this point.

  • http://www.spiritofbroadway.org Brett

    Niya…I have the same problem with my business. When I bring in others to handle work, the creative people around me begin to quit, “we want to work with you!” I don’t know what the answer is except to tell them in advance what projects I am personally spending my time on. (I have never tried this, but I have been giving it some thought) While we all know that as a team of ONE we are the corporation, the fact is that none of us can survive as a team of one – everyone knows that including our clients.

    As a Board member recently pointed out to me, “Since you are in so much demand, you need to change the way you do business and add a price-point to hiring YOU specifically to do this job.” nice idea…don’t know if it will work, but I can’t do everything – like you – forever.

    Brett

  • http://www.thetaxdevelopmentcompany.com BiG Al

    Mike great job explaining it all! Systems can make a one person enterprise look like a 100 person enterprise if done correctly and is what I think is the first and best way to accommodate for exponential growth or aggressive expansion!

  • Mike Michalowicz

    #3 @Kevin – You can always re-brand, if your plan doesn’t come out as expected (which it almost never does). The trick is to first clearly identify the customers that your brand IS resonating with. Then identify their needs and how they want the branding to be. Then re-position to serve them.

    The funny thing is this is exactly what happened with The Toilet Paper Entrepreneur. I was positive the market for this site and book, etc. would be young college students with entrepreneurial aspirations. Instead the “consumer” is generally entrepreneurs (both men and women – but more women than men) who are in their 30s-50′s. The are a lot more details on the niche, but just at the broad stroke the market is different that I expected…. and I am THRILLED. The TPE brand needed to morph, which is has. And you can do the same!

    - Mike

  • Mike Michalowicz

    #4 @erin – Thanks for your honesty. It is NOT easy to make this shift, but is totally necessary to scale your business. Start systematizing and never stop!

    #6 @Niya – I must have missed your comment in the last one. Sorry about that. This is going to sound like I am a schmuck, but if clients get pissed you are not building good systems. It sounds like you are simply delegating. Systems/processes need to fully replace and improve what you do. Now I know at first blink it sounds impossible. I mean you are the best at what you do, and you are irreplaceable. But that is in fact not true. You need to work at a micro-level. Start building small simple processes and keep chipping away. Don’t just delegate the entire you, instead start with, perhaps, just responding to sale inquiries via email. Build systems to respond – form emails that are flexiable, automation systems that are “natural”. Then once you master that, do the next thing.

    It is not easy, by any means, but IT IS POSSIBLE. So get started… by starting small.

    - Mike

  • http://haveabyte.com Erik Knepfler

    Some advice I have: Even if you have a great piece of software to manage your service process, it does not replace the need to document processes and ensure they are being followed by your employees.

    Your example was especially interesting because my company offers a hosted CMMS/Operational CRM software intended to address a lot of the key areas of the sales and work management process for service businesses. It handles quotes, customer requests for work, workorders, contract rates, work assignment and scheduling, optional linking to inventory, and the final step of invoicing.

    Systems like our AyaNova workorder/dispatch scheduling solution only make that process documentation shorter, easier to write, easier to follow, and more scalable by avoiding instructions involving unmanageable, untrackable “paper” methods or hack jobs involving Excel and Outlook.

    I usually don’t take the time to talk about my products in detail in a forum but I *specifically* see a lot of businesses here who could benefit from it, such as:

    * Erin at Shakoor Inc.
    * Niya Sisk, Niya Christine Marketing & Design
    * Felecia’s ice cream business (possibly)
    * Kevin @ Mister Popsicle (possibly – your website is down – we can help with that too.)
    * Harry Husted, Creative Words Writing Services
    * Big Al – A. Darnell & Company, Inc.

    Our AyaNova workorder and service management system is worth a look by these folks, and to any lurkers here watching this video who feels that example resonates well with their business – virtually any service-oriented business, not just PC crime or PC repair. Any where each customer requires any combination of different work and services offered. We have customers that service radiological equipment, offer PC repair, cleaning, network topology design and consulting, accounting, phone systems, and many more.

    Thanks!

  • http://www.stopyourdrama.com Marlene Chism

    You are a great teacher. This was straightforward, and easy to understand. Great point on hiring on the AEI method versus experience.

  • http://haveabyte.com Erik Knepfler

    Niya,

    I’d suggest you explore job descriptions online for Creative Director and really take that role to heart. It sounds like that’s what you want to do, in order to grow your business, but you have difficulty with the idea of handing over the keys to a new project to new people. While they will be bringing their own ideas and creative spin to a client project, you’re still directing. Steve Jobs is a great example – he has had unusual and uncompromising visions over the years for various products and made sure everyone was on board, and was involved at whatever levels of detail were required to see his vision through. You can still be hands on but you have to be able to step back and let people do their thing as well, being in a creative business. You need to hire based on their portfolio compatibility with your style as well as how open they are to direction, and be able to release anyone that isn’t able to meet the creative direction you are establishing as the owner of your business.

    Erik

  • Mike Michalowicz

    #7 @Felecia – Definitely don’t hire on experience. That is the last thing to consider (or avoid). It all boils down to energy, attitude and intelligence. If you have a candidate that has that, you can teach them the experience part!

    - Mike

  • Mike Michalowicz

    @EVERYONE – Pay mind to what @Eugenia (#8) says. It is mission critical to protect your systems, particularly the parts that you invent – the so called secret recipe. Never share that with anyone!

    #9 @Harry – Thanks, brother!

    #10 @Roger – I dare say “scaling” is only on of the many current buzzwords. It could also be rapid growth management, expansion, expedited building, launching, systematizing, etc.

    #12 @BiG Al – You said it! Great systems can look like a 100 person company, with just one master puppeteer behind the scenes. And on the flip side a 100 person company with poor or no systems, will behave like a one hundred, one person shops.

  • Mike Michalowicz

    #15 & #18 – @Erik – GREAT, GREAT INPUT. Thank you!!!!!!

  • http://WWW.MADEXCLUSIVEKICKS.COM TREVOR

    THANKS ALOT SINCE 1999 IVE BEEN STARTING THEN STOP MY COMPANIES BECAUSE THERE WAS NOT A SOLID SYSTEM IN PLACE. ONCE YOU REALLY DECIDE TO BE AN ENTREPRENEUR THEN YOU MUST START BUILDING SYSTEMS FOR YOURSELF BEFORE I USED TO GET FUSTRATED WHEN CUSTOMER NIT-PICK FOR SMALL THINGS BUT KNOW I REORLIZE THAT THE CUSTOMER IS ALWAYS RIGHT & EVEN THE ONES THAT NEVER BUY YOUR PRODUCT/SERVICE YOU CAN LEARN FROM, SOMETIMES THE POTENCAIL CLIENTS THAT I KNOW MAY NOY BUY ANYTHING FROM ME I JUST USE THE OPPORTUNITY TO PRACTICE MY SALES PITCH, THERES ALWAYS A WAT TO HANDLE THE SITUATION.

  • http://americaskidtimes.com dparadise

    Another great video Mike- write the system down and you can then see the big picture.

  • http://www.rachelgaffney.blogspot.com Rachel Gaffney

    Mike,when I started making shortbread cookies, I was sub leasing a bakery and making them myself….I used to hand cut,bake,cool,pack and ship approx 1,000 by myself.My client base began to grow. I knew I just could NOT take the clients that were looking to buy from me. One of them was an 82 store account !! It HURT but knew I just could not fulfill. It took me 2 years of R&D to move to a commercial facility that would A)MAINTAIN MY STANDARDS and learn how to scale up…this was a HUGE process…I moved from making 1,000 to 25,000 cookies per shift !! Along with it came revised packaging specs etc. This is a great topic…I hope we can keep this post/topic ALIVE…..This is a CRITICAL point for me….Thanks
    Rachel Gaffney

  • Mike Michalowicz

    #23 @Niya – I may have a guy for you, but they specialize in technical recruiting (IT type folks)… if that is what you are looking for tell me and I will drop you the details via email!

    - Mike

  • Mike Michalowicz

    #25 @Rachel – Hey there Gaf!!!!!!!!! – It’s all about maintaining and improving standards for sure!!

    - Mike

  • http://www.activeport.com Julie Fogg

    @niyacristine

    That is really awesome (#29) that you are going the fine art route. So let me ask you this: do you have systems in place for operations and finance? Just curious.

    Also, I knew you heard me on the Twitter message – it was for other people to pick up on! ha

    What is that HR Recruitment Talent Management contact you are looking for? I did a search on search.twitter.com to see if anyone in my Twitter network matched either description but nothing.

    I have more questions but they will have to wait. ;)

    @julieblue

  • http://www.activeport.com Julie Fogg

    @niyacristine

    I could post that position on the Make Mine a $Million Yahoo group (409 members) or maybe the CEO of NAWBO-LA (@nawbola) knows someone but it still sounds Greek to me. I have your email address so I will shoot you a quick note.

    @juliefogg

    p.s. He is even more of a hero now that I know you feared for your life – KIDDING! =D But my daughter is hardcore like that. Boy I hope she grows up to be an entrepreneur lol!

  • http://www.ChicksAtSea.com Sandy Wheeler

    Mike: nice job with the vblog and touche’ on the coat. I listened last night propped up in bed with my earphones on as my dear hubby had already gone to sleep. Even so I kept agreeing with you and making comments apparently out loud and eventually woke him up. :)
    One thing I agreed with you wholeheartedly was that credentials for hiring need not be college, MBA, or experience. That a person with drive, intelligence and a good attitude were more valuable. All the information on the planet can be found in libraries and on the Internet. That’s all education does for you, it gives you the ability to find the information you need. What you do with info beyond finding it is the key. Can an employee adapt, retain, and utilize the info in a way that benefits your business?

  • http://haveabyte.com Erik Knepfler

    Niya,

    I would say yes, these will be indexed by Google. This discussion thread is linked from the TPE Blog page. I just double-checked that it’s reachable without watching the video by visiting from a browser I never use so there would be no TPE cookies or anything.

    As further evidence I did a quick Google for a phrase you typed and, while this thread didn’t come up (it’s still new) this one did, which has a comment you posted.

    http://www.toiletpaperentrepreneur.com/blog/the-secrets-to-innovation-discussion

    Erik Knepfler
    @HaveAByte

  • http://www.niyacristine.com Niya Sisk

    Oy vey…

  • http://www.westsidehawaii.com Fely Nicholson

    Document, Process, Make the systems, Simplify by breaking it down……great reminders, it’s so funny you do this for years for other people you work for and then you forget when you do it for yourself, thinking you can take short cuts by keeping it all in your head……..Thanks

  • http://www.activeport.com Julie Fogg

    @rachelgaffney #25 WOW. That must have been like sending a kid off to college when you transitioned from doing the work yourself to having it done. You are the poster child for the e-Myth example of the girl that bakes cherry pies. Ha! I’m really amazed (impressed) that you went through that process.

    If you are willing to comment about how you were able to do that, I would love details. I know it takes a decent pad of cash flow to take the time to implement systems since I have tried various methods over the years so I’m particularly curious about that.

    I want to share my experience with you. I had to dip into my home equity to give myself the education and time I needed to get the most critical systems in place. I hired a top consulting firm that helped Starbucks back when they only had 200 stores (I commented somewhere for @MikeMichalowicz that hiring a consultant with experience in YOUR footprint is critical!). I have tried many methods for putting systems in place but the most beneficial system for my company to-date is the work management software that was implemented last year (called AyaNova). It took us 6 months working with Erik Knepfler (@HaveAByte) and Max Spencer on what the flow would be today while allowing the system to evolve over the next few years. I had a different consultant provide options for applications which I went over the pros and cons with my buddy @miraclewanzo of http://www.hipundies.com (she is a fellow Make Mine a $Million award recipient and geek girl extraordinaire). She really put things into perspective for me as far as open-source vs. off-the-shelf and what both would mean over the next few years to my systems. After picking the application, we worked with @HaveAByte on the business process consulting, the implementation of the application and the hosting. It took one of our clients 2 years to roll out a similar application so vendor choice is important here. I’m definitely plugging @HaveAByte here because 2 years would have been nails in a coffin. We couldn’t have weathered this economic storm without this system in place. Our window of Accounts Receivable is much smaller which improved cash flow dramatically. The Quickbooks and AyaNova API rocks because accounting has all of the info needed in each work order – no more questions about mileage or onsite vs. remote support work orders (so clients are billed promptly and extra time isn’t wasted hunting down answers about a work order).

    I love AyaNova because this system removed 2 employees from payroll without any negative impact to customer service and work flow. In addition to saving money, we started billing accurately because Excel was kicked out of the system. One client alone was getting $40K worth of free labor each year. We are still *half* of the price of our competitors with this client paying the correct labor rates with this new system.

    Incidentally, @rachelgaffney, I did the assignment from this vlog for our repair equipment since the current system has become a major bottleneck. I’m curious if you have had to go back to your system(s) and tweak it/them one time or regularly since you went from producing 1,000 to 25,000 cookies per shift. I haven’t had to change anything in my work management software system in 12 months. If I add repair equipment to it, this will be the 1st tweak.

    I sincerely hope providing details here will help someone (not a competitor I hope lol) with creating and executing a system in their service business. I know I can learn a lot from @rachelgaffney and other TPE community members. Let’s keep this thread alive folks!

    @juliefogg

  • http://www.ChicksAtSea.com Sandy Wheeler

    @juliefogg. can I ask a question about your comment? when you said you kicked Excel out of the system do you mean that you stopped using the Office program Excel? Can you elaborate?

  • http://www.activeport.com Julie Fogg

    @LadiesTravel,

    Our company used work management software about a year into the business. Around 2005 we had a disastrous loss of data. Our accounting database and our work management software database was lost. We were growing too fast and the growing pains were making our clients and our company miserable. I was starting an entrepreneurial MBA from UCLA, we had just been authorized on a new line of equipment and knew I had to make some decisions on our systems. Since I knew I couldn’t make a solid choice because of time constraints, I decided we would use Excel to track work orders and print a daily sheet for techs. They would jot down their time, mileage etc. and submit those to accounting so clients could be billed. Every week, accounting required clarification on work orders. Talk about a nightmare. Anyway, it was a quick fix that I meant to resolve as soon as I finished at UCLA. Excel is a great program that my company continues to use but I can’t tell you how much damage it did to my firm for tracking, dispatching and billing work orders. AyaNova creates boundaries between departments in my company and with clients. Techs that mean well can still give excellent service but we can track and charge for their time. No surprises for the client when they get a bill because service isn’t initiated until a work order is opened by them.

    On an slightly different note, the vlog’s that @MikeMichalowicz does reminds me a lot of what I learned at UCLA. We had visiting professors from as far as Wharton. Operations, Finance, Management Development, Sales…you name it. The TPE community is like a refresher for that program plus it is framed in a way that I appreciate. Education is an ongoing thing for me, no doubt. Now what about that educational cruise you are planning for this group? :p

    @juliefogg