Ranking Revolution

Doug: Welcome to the ranking revolution
podcast, your go to source for strategies

and ideas for SEO, organic growth,
content creation, and online business.

I'm your host, Doug Cunnington.

Scaling a business is the dream, right?

More clients, more revenue, more impact.

But like most worthwhile endeavors is not
without its challenges is someone who has

both navigated the thrilling successes
and frustrating pitfalls of scaling.

I'm here to share some hard one lessons.

First, let me share a bit about
my background to give you context.

I'm a PMP.

I'm a certified project management
professional since 2008, which makes me

feel a little bit old, but I've had this.

Certification for a few years and getting
the certification requires extensive

work experience, a rigorous application
process, and passing a challenging exam.

It is multiple choice, but it's
one of those tricky multiple choice

where there's answers A, B, and C,
and then there's D and E where it's

like both A and B or neither A and C.

It's a tough test.

A lot of material in there.

I also have consulting experience.

I've worked with top tier
consulting firms and clients.

These are household names.

These are huge companies that
probably a lot of us like work with

or have an ongoing contract with
such companies, but I won't mention

them here, but basically I've learned
industry leading methodologies.

However, I've also seen firsthand
the inefficiencies that Do

exist in large organizations.

And I sort of fit in the middle
management area where I took

advantage of those inefficiencies.

So I could work on my side
hustles and side projects.

I also have success as
a solo entrepreneur.

I scaled my side hustle
into a full time business.

I managed a flexible team
where I sort of spawned it up.

I didn't have any full time hires
and I adapted quickly to changing

needs so I could grow quickly.

And then if I decided to scale
down in an easy way, I'll talk

about that a little bit more.

Also.

In the corporate gig, I played a key
role in growing a team from about 15

to around 100 full time employees.

I handled screening, I handled
interviewing, training, and onboarding.

There were a team of us doing this
stuff, but I definitely spearheaded

the onboarding and training portion
where I iterated and it actually

informed how we could do this on a
smaller level and it worked great.

So let's talk about the pros and cons.

And I'll also tell you about common
mistakes when scaling and maybe.

Some criteria to help you understand
if you're ready to scale or not.

It's actually more material than
I'm going to be able to cover today.

So I'm probably going to
cover in a couple episodes.

So for pros, some of these are
pretty straightforward, very.

Easy to understand.

So revenue growth, right?

If you scale, you're probably
going to earn more money.

Top line revenue, you will probably
have a higher production capacity.

That's kind of the goal
when you're scaling.

So you can produce more of the widgets
that you're producing, provide more

services, essentially bring in more money.

There's a good chance you're going
to have greater efficiency at scale.

And we'll talk about this
as a double edged sword.

Additionally, and I wrote this
separately, you're probably

going to have a higher profit.

So we talked about the revenue, but
we are probably most concerned about

the profit for most of us, the.

Certainly there are business models
like a SAS or maybe a services

business where you're interested
in purely the top line revenue.

And even if the profits stay around
the same, if you're bringing in more

money and you have more clout in the
industry, that could be valuable.

The others maybe a softer one, but.

Very important, nonetheless, a feeling
of badacity and accomplishment.

So if you scale and you face challenges,
you work your way through them and

you get it done, it feels really good.

At the end of the day,
it will be challenging.

And there are some mistakes that you're
probably going to make, even if you know

this going in mistakes will be made.

Last pro that I listed here.

There's a bunch, but basically
you could be one of the leaders

in your space or your niche.

The higher production can mean that
you are meeting customer demand

more effectively and potentially
taking over market share.

So you are the person that
does X in a specific industry.

And again, that could lead
to a lot of revenue growth,

not necessarily more profits.

But depending on your timeline and your
ultimate goal, like maybe you want to

be acquired or sell the business, then
just having higher revenue and being the

person, the business that does the thing
in your industry can be super valuable.

Everything is not rosy though.

So when you scale, Here are some of
the cons that you're going to run into.

It's not all rosy.

So here are some of the cons that
you'll run into when you're scaling.

It is going to be more complex,
pretty obvious, but a lot of people

just think, Hey, I'm going to grow.

I have an influx of money
and I'm going to do this.

But it's going to be more complicated
and it's going to be more stressful.

There's pretty much no way around it.

And if you expect it to happen, it will
be a little bit easier to deal with.

Similar.

And again, maybe some of these are
obvious, so I'll just stop saying that.

You're going to have more team members.

The team is going to grow.

That means you're going to run into
all the things that I talked about

before when I scaled the team from 15
to a hundred in my old corporate job.

Basically, you're going
to have to screen people.

You're going to have to find candidates.

You'll have to interview them.

You're going to have to train them.

And then you're going to have to deal with
the communication challenges that you're

going to run into with more team members.

There is no way around it.

When you scale.

You might amplify your inefficiencies
or your unoptimized processes.

And it will be painful because you
might not know that you have these

inefficiencies until you scale it.

And then it becomes apparent.

You could see the issues that you have.

And if you don't have optimized
systems, when you try to scale, you're

just going to make things worse.

There's probably going to be more waste.

Or mistakes or both in
your overall organization.

The thing that's kind of weird is
you're probably going to gain some

efficiency of scale, whether it's
physical production or maybe your

service based business or agency.

And you will gain some efficiency of
scale, even if it's just pure repetition

and iteration and people get better
at their job or a team gets better at

their job, there still will be waste.

The larger a system gets, the
more complex the system is, the

more waste there's going to be.

And we could point to the
efficiencies and hope that it's

going to be a higher trade off.

But you just have to be okay with the fact
that maybe a project runs and there was a

huge mistake and you kind of have to toss
it out and there's just more waste in it.

Last con that I listed here was
amplifying those inefficiencies

might look like an Kind of a faulty
order fulfillment process, or maybe a

mistake in the manufacturing process
if it is a physical product, but.

Essentially, you'll end up with
delays as you handle more throughput,

whatever your business is.

So this is one of the pitfalls.

This is one of the areas which
we'll talk about these common

mistakes as we transition.

But basically, things are going to
go slower as you're scaling, even

though you want them to go faster.

You're adding team members,
you're doing things so that you

can improve your overall output.

But as you're training, As you're growing
the team, you're going to hit some points

where things are going to go slower.

So let's get into these common mistakes.

So if you scale too soon, you're
going to potentially have an issue.

So there's a couple of pieces
that you should consider.

So one.

Maybe you don't have the skills
to actually start scaling yet.

So maybe you're early in your business
and you hear people talking about scaling.

And you're like, I want to scale
to seven figures or whatever, and

you just don't have the chops yet.

And you may need to spend more time
developing your skills in the area.

Maybe your systems and your processes
are not in a good place yet to scale.

So again, you have these inefficiencies
and if you try to scale you're

gonna kind of do a bad job.

Like it's just gonna work even worse than
it was before and if you're having any

issues with order fulfillment or working
with Clients or whatever your business is.

It's going to get worse.

All right.

It's going to get worse.

If you don't have things optimized,
it doesn't have to be perfect,

but it needs to be in a good spot.

Last one in scaling too soon.

Basically, if you don't have the revenue.

To cover the expenses, cause it's
going to cost money to scale.

And there's going to be
wasted in the system.

If you don't have enough money and
your, your cashflow doesn't support

it, then you shouldn't do it again.

One of these obvious ones, but there's
a bit of a balancing act of having

enough financial support, whether it's
internal, external maybe you're going

into debt and borrowing money to do this.

So you have to really have a.

Strong handle and understand
the cashflow situation.

This one is perfect to
follow scaling too soon.

If you scale too late,
that is also a mistake.

So there's kind of a Goldilocks situation
where it's just right when it's not

too soon, but it's not too late.

Couple signs if it's too late.

So maybe you've been struggling
keeping up and you're working.

I'm just gonna make up an example.

You're working 14 hours a day,
you know, six, seven days a week.

You could barely keep up.

And remember, when you start scaling,
you're going to have to hire people,

you're going to have to train them, and
there's going to be more complexity,

which means you can't spend all your time
on delivery or If it's a smaller team

and maybe you have three or four people
working with you, then they won't be able

to spend all their time doing delivery.

You're going to have to spend
a solid chunk of your time.

Maybe the majority of your time,
maybe, you know, 40 to 60 percent of

your effort is onboarding training
and getting things running because you

need to make sure as you're scaling,
people know what they're doing.

So if you're struggling to keep up
and you don't have time to train

new people, you've waited too long.

The other part is there's going to
be more work and more clients coming

in because you're hiring people
and you need more revenue coming

in to be able to pay for that.

And the thing is, if you are too busy,
you're too tired, you're making mistakes

because you're too tired, you're working
too hard, then you're going to have an

issue bringing on the new team members
and delivering with the same quality

that you or your smaller team were
able to deliver before you scaled.

Again, it's a bit of a balancing act
because you don't want to scale too soon,

but you don't want to scale too late.

Now, I'll give you a tip, right?

So there's a way that you
can do this in a gradual way.

And that's what I did.

That's what we ended up doing with
the corporate team that I helped grow.

By the way, if you have a chance
to do this, when you're working for

someone else, it's fantastic because
you're doing the work and you're

learning on someone else's dime.

So I was able to do that.

I was.

I was paid well, I had a strong team
around me and I had a lot of mentors

that I could turn to, to ask them
about what to do and learn from their

mistakes that they made in the past.

There were a few years ahead of me,
so it was a perfect way to learn.

So if you have an opportunity, do that.

So another mistake that people
make and it ties into this gradual

is basically if you try to scale
everything all at once is very quickly.

It's best to take this in stages.

So I'll give you a specific example
when I scaled up a content team,

but it could be any kind of team.

I took it slow and.

Going slow in the beginning
helped me grow faster later.

And the main thing is I
took an iterative approach.

So I was able to bring on a few people,
test, bring on a few more people,

test, improving all along the way.

So the main part was improving
the onboarding and training.

That was the most time consuming portion.

I actually hired fairly quickly
and just got people to do

project jobs on a small scale.

And I paid them.

So everybody won.

And then if I enjoyed working with
a person, I would Test them again.

So iterative process.

Here's exactly what I did.

I hired one or two writers at a time
and asked them for feedback on the

job aides that I created and other
training materials, and I would make

the changes to make sure it was, it
was clear any questions that they had.

Next, I would hire one or two
more writers, maybe a week or two

later, pretty quick to get this
feedback, and I use the same process.

So they do a paid project job, I would ask
for feedback, and I would get more tips

on how to improve the training overall.

So when I had about five or six writers,
I asked the best two, if they wanted

to be content managers slash editors,
usually only one wanted to do it.

And if they both wanted
to do it, then great.

I could go from there.

Sometimes there would be a delay
on the schedule, but basically

if they had an interest in.

Doing that role, I would promote that.

So the content manager would lead
a team of four or five people.

I made sure that the output of the writers
of four or five on that team matched

up with the amount of work that the
content manager and editor wanted to do.

So there was sort of a perfect
throughput for a specific team.

I was able to create.

I was able to create about four
of those teams of writers with

a content manager leading them.

After the first team, it went
much faster because I hired fast.

I did these projects where they were paid
so they would, they would work quickly.

I could test them very fast in just,
you know, two, three days or so.

And then once they were on board
and they were good to go, then

I could add them to a team.

I had a content manager who was already
experienced with a few weeks of writing.

Typically, those folks wanted a
little bit of a break, some variety

versus, you know, writing full time.

So, perfect way to spawn
up a freelance team.

Of course, you could do this if
you were hiring them for full time.

It was a perfect way to
hire a freelance team.

You could do this on a full time
basis as well, using the same ideas.

Overall, I was hiring on a small scale.

I was ensuring the training
was improved along the way.

I ensured that it was correct.

And then I promoted the stars of the
team so that they would be managers.

And then I wouldn't have a bunch of.

People that I had to communicate
with directly the whole time.

The next mistake that a lot of
people make is scaling too fast.

So when you have a big team,
it gets complicated with all

the communication channels.

So if you have 20 people working for
you in a fairly flat org chart where

everybody communicates directly with
you, then you're going to go crazy.

There's a lot of messages
bouncing back and forth.

And just imagine if each person
has one question per day and

each question requires maybe.

Two messages from you and two
messages from them, whether it's

in Slack or WhatsApp or some other
mechanism or email, you're going

to have some issues with that.

And you might be thinking
scaling too fast.

It doesn't seem like it's going to be
an issue, but sometimes if there's an

influx of money somehow, so imagine.

And a lot of you are probably
thinking scaling too fast.

It doesn't seem like a common mistake,
but a scenario that that might happen

is something good happens, right?

You have a lot of clients come in.

So there's a huge influx of revenue,
and then you have to deliver on

whatever it is you're selling.

So then you're like,
I have all this money.

I actually can hire a lot of people.

Or you have maybe.

external investment and you're like, I
just got 40, 000 and now I can hire a

bunch of people and you actually have the
revenue and you actually have the capital

to spend the money and you end up in a
situation where you create A super complex

situation with all the communication
channels and training and all that stuff.

And I've seen it happen.

I've talked to actually a lot of
folks after podcast interviews

and I asked, Hey, how's it going?

They're like, Oh my God, I don't
know what the fuck I'm doing.

And they, they have a big team of people.

Maybe they did a good job.

And their, their first couple
of clients, their first, you

know, six months or whatever.

And then they started advertising and
the word of mouth started spreading.

All of a sudden these folks
are completely overwhelmed.

They have a huge amount of revenue coming
in, but they're struggling with actually

delivering it and the quality goes down.

Speaking of money, overspending
can be a fairly major issue here.

I referred to understanding your
cashflow and finances earlier, and

it can be one of those situations
where, you know, you need to scale and

you're preparing and maybe you don't
have enough clients coming in yet.

So your cashflow and
growth should catch up.

So you Can benefit by the
sort of piecemeal step by step

approach that I mentioned before,
where you grow very slowly.

Don't hire like a team of 15 or
something like that, or set up a

contract to outsource with a company.

And you're like, I'm going
to need like, 20 people.

Don't do that.

Go very slow and that will help you
grow in to this scaling process in a

slower way if you're doing it before
basically your revenue justifies it.

And that's basically what I did.

So I wasn't pulling in enough money yet,
but I was reinvesting enough so that I

was able to grow without overspending.

The next portion, especially if you're
scaling fast is neglecting the culture.

So this goes for really more
full time hiring situations.

But basically if you're hiring a
lot of people, you kind of lose

the unique aspects that made your
business successful as you grow it.

And I mentioned before, I didn't
want to have all these communication

channels with 20 people.

I knew that I wasn't, I would
not enjoy that personally.

So basically it's tough to make
sure the culture is strong and

represent your business without
those direct touch points.

So there's a balancing act and you can
maybe foster this through some like

weekly all hands meetings all the way.

I hate that term, but basically
you just have like weekly meetings

to make sure the culture is strong
and however you want it to be.

The thing with my team is I was
intentionally growing it with

freelancers so that I could de scale
the team and basically evaporate

the team whenever I want it.

So if you are growing a full
time situation, then you

should keep culture in mind.

And the last one here is micromanagement.

So when you hire the team and
you're training them, you want

them to take work off your plate
and you don't want to micromanage

them because it takes up your time.

And basically no one
wants to be micromanaged.

If they want to be micromanaged, then
you don't want them on your team.

Most likely.

So when you delegate it, delegate
it and get out of the way.

So maybe the most important part is
understanding who is ready to scale.

So think about some of.

Your business indicators out there,
but essentially scaling isn't for

every one and timing is very important.

So we'll go over a few things.

We'll talk about business indicators,
financial indicators, systems, and

skills you have plus a couple red flags.

So I'm going to run through these pretty
quickly to keep this episode tight.

But if you do have questions,
Sign up for the email list.

There's a link in the show notes
and I don't send out many emails.

I keep you informed about
episodes that are coming out.

I'll probably let you know about other
stuff if something interesting is

happening, but sign up for the email
list and then you can hit reply and

let me know what you think if there's
areas you want to explore further.

So.

Business indicators.

It's great to see
consistent revenue growth.

You clearly understand the upward trend
in revenue over multiple months or

quarters, not just like a one time spike.

So it might be tempting to think that
one spike is going to continue forever.

But from a risk standpoint,
you definitely want to see a

trend, not a flash in the pan.

Next is profitability.

So it's great to have a high revenue
point, but it's so important to

have a healthy profit margin.

And as I mentioned before, even though
you might gain some efficiencies in the

scale, there's also going to be waste
and some of the profitability sort

of killers might Pop up unexpectedly.

So if you have a very healthy profit
margin, then it indicates that your

core operations are financially
sound and things are going well.

Next is market demand.

If there's clear evidence of
unmet demand for your product or

service, then you could feel a
little less risk on your shoulders.

So if you're in the, in the AI
market, there's a lot of growth

there, but if you're in, I don't know.

Some other, some other business that is
not as popular, then maybe you shouldn't

be scaling because there's not as much
interest, but AI is a perfect example.

Another.

Business indicator is
strong customer retention.

If you have great retention with your
existing clients and customers and they

keep buying stuff as you bring on more
new customers, you can rest a little bit

easier knowing that you have a strong
customer retention overall, and you've

seen the evidence over the quarters.

Financial indicators, these are
fairly straightforward, but we could

definitely go deeper if you want to
hear more about it in a future episode.

So obviously, positive cash flow.

So you have consistent and positive
cash flow, then you'll be able to,

you know, hire more people, continue
marketing or improve your marketing,

get infrastructure if you need it.

There's usually software costs,
sometimes some hardware costs,

depending on what you're doing.

Next is about customer acquisition
costs and being able to

acquire new customers cheaply.

It's becoming potentially more
difficult depending on your

industry or easier depending on
your industry, but having those low

acquisition costs is super important.

I think most of the time If, if you
assume that your acquisition costs

are going to grow, that's probably
accurate when you think about, you

know, customers from different social
media platforms or anything driven

by an algorithm, it typically gets
more difficult to acquire customers.

No matter the industry ads get more
expensive, algorithms change, things

are costing more money just in general.

And that includes customer acquisition.

The last key one to note in
finances is around your debt to

equity ratio and just debt overall.

But essentially I like to not go into debt
and borrow money to grow the business.

I don't want to do that.

It depends on your, your risk
level, the cost that it costs

you to borrow the money.

Definitely don't do this
shit on credit cards.

That would be super expensive way.

So if you have any questions, leave them
in the comments below and I'll see you

in the sound way, that might be okay.

Investors hard money loans,
whatever works for you.

But credit cards are a
terrible way to do it.

Anyway, if you don't have much
debt, that is a good sign.

As we're moving on to skills
and systems, this is an area

where I had a ton of experience.

It's where I really excel.

So you want to have documented processes,
SOPs, standard operating procedures, make

it very easy for new team members to Get
trained, have consistent results, and each

new team member have consistent results.

Very, very important.

You want to make sure your technology
is scalable, maybe taking orders,

maybe going through a order process
from a service based business.

Like if you're an agency, you want to make
sure when someone orders, that process

going through your website, the software.

Other maybe like ticket tracking or
whatever it is, you need to make sure

that scales well and doesn't crash or
slow down or introduce some major issue.

The good part, most of the time with a
technological problem is it is a problem

to solve and someone has probably faced
that problem before there is a solution

out there, you just have to find it.

Big skill is leadership and delegation.

So you need to be able to delegate
effectively and then trust your team

to execute and get out of the way.

A lot of times you hear folks
really improving their overall

output for the company.

Once they let the team do it, assuming
that they have hired the right

team and they've trained properly.

Finally, adaptability and flexibility.

Basically, whatever your plan is.

No matter how much time you put
into it, it is wrong, right?

It's going to be different.

You're going to try something
and it's going to have different

results than you expected.

There's going to be some external
factor that you didn't consider.

There's going to be an external
factor you did consider.

And then you're going to get a different
result than whatever you expected.

So you have to adapt and make decisions.

Be a leader and essentially
take a risk in those decisions.

Understanding that the main
thing you don't want to do, maybe

this is the whole point of this.

The main thing you don't want to do is
lose so bad that you have to quit playing

the game with a game analogy, of course.

So you don't want to go out of business.

You don't want to lose so much.

You don't want to go into debt.

You don't want to fuck up your cashflow
so much that you have to stop doing it.

Your project and get a job that
is I I'm getting like bad chills.

Just thinking about that, you know, for
me, getting a full time job would be.

It just hurts to think about.

I don't, I don't want to
think about it anymore.

Okay.

So skills and systems, let's talk
about a couple red flags here.

So I alluded to it earlier, but just
straight up, if you have overwhelming

demand, if you're too busy, if you are
stressed out, you're not getting enough

sleep, you're not getting enough rest.

You don't see your family.

You don't see your friends.

You're just working too much.

You're going to fuck it up.

You're going to mess it up.

So if you have overwhelming demand, you
need to figure out how to take a breath

and scale the team, how or scale the
business, however you need to do it.

Understanding that your actual output
is probably going to get lower for a

little while before it gets better.

That is just the way it goes.

Another red flag to bang on this
drum again is cash flow problems.

If you're struggling to pay your bills
or make payroll or you have to shuffle

money around to be able to pay things
and then borrow and you're just kind of

on the edge of debt, that is not good.

That is not good.

You need to stabilize your finances first.

Finally, a lack of direction.

So if you don't have a clear
vision on where you want the

business to go, the scaling can
lead to chaos and wasted resources.

And sometimes people scale
in a sort of a very wide way.

So instead of optimizing their
core product, they start selling

a bunch of other related products.

And it kind of dilutes their
whole message, the whole

thing they're working on.

So you should have a clear vision
and I will let you know, like I

mentioned before, whatever plan you
think, whatever vision you think,

the direction, it's going to be
different than what you expect.

So you will have to be flexible, but.

I'm going to mess up the quote, but
basically like the plan, the point

of the plan is to create the plan,
knowing that it's going to change,

like, it's just to go through the
process to think about as much as

you can, as much as a process as you
possibly can, knowing that you're wrong

because you can't predict the future,
you're just giving your best guess.

So basically you should have a
clear vision for where you want your

business to go while being flexible.

And it should be okay, but you just
don't want to be without direction

and just in a chaos situation.

So I actually have more notes on
the financial considerations on the

team building and a couple other
pieces, but that's enough for now.

So don't forget, sign
up for the email list.

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hit reply and then I get those emails.

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know, like, Hey, check out ranking
revolution, or maybe you see someone

ask a question in a Facebook group.

Just remember these shows.

And if you think a specific episode
could help, let the person know

that way they have a very easy way
to find the episode that they want.

You can just tell them the number, right?

A number that episode.

So it's super easy.

So thanks a lot.

We'll catch on the next episode.