The “scaling up” of companies

Last week I had the opportunity to meet with a former student I had not seen from many years. I was very glad to know he was ok and working on supporting companies to grow, after a long way of experience in several companies and environments.

During our talk, he gifted me with a book that its worth to comment on some relevant points. The book has the title “Scaling up”. Most companies start small and stay that way. On the other hand, there are big companies, but the most interesting is the reduced number of companies between the small and the big ones, most of which are responsible of jobs and innovation among the countries.

These companies, to survive and grow rapidly, focus on four basic areas: people, strategy, implementation, and cash. If the business is growing, the cash is more important than profit. Excellent leaders and teams or a brilliant strategy cannot save a company with cash problems. Only cash allows it to grow, but nothing consumes it faster than growth. Collect the pending accounts as soon as possible. Strengthen your accounting to send bills on time without mistakes to your customers and look for ways to improve your rentability. Do not spend cash on reducing taxes. Never solve cash flow problems with debt. Have a back up of cash to cover expenses and overcome difficulties. Use financial leverages.

“Successfully manage growing in a company requires three things: a growing number of capable leaders, a scalable infrastructure, and the ability to transit certain marked dynamics”. Place the right people on the right position, especially leadership positions. “Finding the employees’ strengths and focus on those advantages is the most important personnel management tool that could be suggested”. Find your X factor, what you do that leaves your competitors behind by at least ten times. Implementation is everything: first, align your main leaders boosting your company, make teams meet regularly, at least once a week, make sure they learn new things as a group and that they participate in rigorous and open discussions.

Find a metric or theme to accomplish a series of trimestral targets at least. What is the key element that puts everything in motion? Make everyone to focus on that. Plan a 15-minute meeting each week at the same day and hour, then meet one hour per week and half a day a month. “A good plan now is better than a great plan too late”. To succeed, focus. Remember your fundamental purpose, your great goal in the long term, the crucial metrics that will lead you to reach it, and the differentiators that make you stand out. Keep teams connected with your clients. Show the progress of the company in a visible and transited spot so everyone can follow the company’s success every day. “Instead of obsessing with income, focus on internal discussions to create a gross margin, the firs real line of the company”. Consider that “scaling up” takes time and the different stages of growth demand different priorities. Now let’s “scale up”!