Just The Tips, June 15, 2021
Just The Tips with Dean Holland and James P Friel
Signs You're Ready to Scale
Just The Tips is a business talk show for entrepreneurs and business owners who are tired of listening to the same old stodgy content. Interviewing (and sometimes roasting) top entrepreneurs from around the world, each episode is fun, witty and informative. It's a must listen for anyone wanting to transform their marketing, sales and business while having a laugh instead of falling asleep. We, not so humbly, believe it's the best business and marketing podcast in the world.
EP 203 - Signs You're Ready To Scale
Hi, I'm James P Friel and I'm Dean Holland. It's time to Fasten your seatbelts, boys and girls. That's right. If you're an entrepreneur, who's wanting to take your business to the next level and have a bit of fun while getting cutting edge advice on your business, marketing and sales. Welcome to just the tips.
Arguably the best podcast in the entire world, I guess. That's good, right? Yeah, that was good. Me. All right. But it was easy. It was the easiest thing we did all day. You get back.
Hey, what's up, everybody. Welcome to another episode of just the tips. This is your host, James P Friel. I am thrilled that you guys are here with us today. Um, we've got an awesome show lined up for you. And, uh, you know, one of the things that constantly is on so many entrepreneurs minds is how do I scale?
How do I scale my business? How do I make sure that like, I'm getting to that next level to where I want to be. And so today we're going to be talking about signs that you're ready to scale. Um, I'm honestly just talking for a few minutes before [00:01:00] Dean gets here. I just saw him jumping off is worse. Oh, here he is sauntering into the studio.
Welcome to the show. The bearded wonder from the United Kingdom, the one, the only Mr. Dean Holland. Ooh, there we go. Without trumpet fanfare. Yeah. I love that because it's like the, uh, the DIY trumpet this week. The budget version, budget version. Yeah. Yeah. We're uh, I'm, I'm on a, uh, a skinny studio set up right now, as you know, uh, just moved to Austin, Texas, and my, uh, my studio and the rest of my belongings are in route.
Uh, so today I'm coming to you with a lighter touch, which means Dean as a do it yourself trumpet. Well, no, it's still a, it's still sounds very good. And I'm sure people arrived just for ad good looks at humor, you know, just general charisma that [00:02:00] uses out of us rather than the studio quality. Right. Well, exactly.
And one thing that I didn't know before moving to Texas, like, were we, uh, we drove the car here. The rest of, you know, stuff is being shipped and the second. The wheels crossed over into the Texas border. The rest of my beard fell off and just left this mustache. It was the craziest thing. And then I looked down at my feet and I was already wearing cowboy boots.
We have a show, like, is it, is it just going to develop more of like a handlebar shape and just begin to protrude down? If, if, uh, if I were in charge, I could tell you the answer to that. But the truth is this thing just sort of has a life of its own. And Austin has it now. Like it's in Austin's hands. Uh there's.
There's nothing I can do about it. Um, so I don't know if it's going to go down. I don't know if it's just going to stay where it is. I don't even know. It could potentially. Uh, you know, handlebar out to the side, like there's really no telling, [00:03:00] um, we'll just have to see what happens honestly. Well, if that's not a reason for everyone to keep tuning into the shell, I don't know what it is.
I don't know. I'm sure everyone's on the edge of their seat, finding out what's going to happen with this mustache, um, to Austin anyway. Yeah, it was, it was, it was, it was awesome actually. Uh, you know, we. Broke it up into a few days. I had a, I had my bikes on the back and we went from Boise to a place called Moab, Utah, which is renowned for its bike trails.
And it's just absolutely beautiful, like red rocks, mountains, the whole thing. And, uh, the morning after we got in there, I went for a 15 mile bike ride before we kept going with the trip. And, uh, yeah, it was great. And then we drove down to Albuquerque. Uh, spent the night with our friends, uh, from lady boss, Brandon Kaylyn.
And we had all, we had all planned on being in, uh, [00:04:00] Austin for Memorial day weekend together anyway. So we just all drove the rest of the way together and it was nice. Yeah, it was good. It was a lot of fun actually mean it is awesome. And what, what what's, uh, what's the weather like in Austin? When I, when I visit, what should I expect?
Is this a warm, constant, warm place? Or is this rain or what's so if I weren't, um, If I weren't afraid to say this, I would say you should probably prepare to not wear any clothes because it's sorry. Yeah. Um, but I don't want to put that idea in your head cause it might just happen. So, you know, I guess go ones upgrade from that, like a Toga perhaps, you know, a very light fabric, linen type Toga, I think.
Okay, fantastic. Uh, it's simply the temperature here, I guess, is similar to what you might imagine. If you were in a spacecraft landing on the sun, um, that's about where it is, but just so again, how does this compare with like Miami? I remember getting off the plane at Miami one time before we were going on a cruise.
[00:05:00] And I was like, I don't know if I could live here. Yeah. I'd say, I'd say it's pretty close. Really? Yeah. It's pretty close to that. The, you know, the summer months are obviously hot. The rest of the year is, you know, way more moderate. Um, and you know, we did, we did it the right way. We moved right in the heat of summer.
Um, just, you know, just like baptism by fire, literally. And, um, but yeah, it's, it's toasty. It's toasty right now. It's definitely in like the mid nineties, uh, Fahrenheit. I don't know. You guys are crazy over there with your Celsius. 27, 28, maybe something like that. It's warm. Yeah. Well, there we go. We kicked off with just the travel, just the travel, just the weather, you know, uh, just the mustache.
I think that's going to be a new segment on the show. We're won't even be me, but it will literally just be the mustache. Um, six months from now, literally just doing his thing and a Jada's already named [00:06:00] the mustache. Uh, his name is Meacham and Meacham. Floy is a first and last name. So at some point, Meacham, Floyd will just take over the show and I'll just sit back and eat popcorn and just kind of watch it.
Yeah. Perfect. Yeah, that's blessable. So now that we've dispensed with an enormous amount of bullshit, um, I wanted to, uh, I wanted to really help people figure out how do they know when they're ready to scale? Like there's, I feel like there's so many people in the entrepreneurial world. Who are, are we scaling yet?
We got a scale, like, is that scalable? How's it going to scale this whole thing? Um, and I think to a certain extent, a lot of people are talking about scaling without even really knowing what it means necessarily. Um, and, uh, and so I wanna, I wanna. Give, uh, give some advice to people to help them understand like, well, how do you know if you're ready to scale?
What does [00:07:00] that even mean for you? And, uh, what's up, Narvin uh, saying hello in the comments. Good to have you here. And, and so I think, you know, that's, that's a, a big topic. I don't know that we're going to like squeeze everything into this show, but, uh, but I feel like scaling in general is a misused. Term or it's overused.
Maybe, maybe we could say it that way. Right? I don't, I don't know what your thoughts are on that. Yeah, no, I, I fully agree. I think, um, cause I've been guilty of this. This is why I'm going to call on my own thoughts of craziness over the years. Like I think there's almost like an, a bit of an obsession around scaling and just growing.
Like I want to, I want to go bigger and faster and you know, this side of things and cause I've said that in the past, like, come on, let's grow it. Let's just grow and just been hell bent on this idea of. Growing, especially when you're, especially when you're in a space or a market in an industry where, you know, there is a huge amount of scale and growth potential.
And I think when you [00:08:00] understand that there is potential, there, there almost is a, a tendency to want to chase after that, you know? And I think I I've been guilty in the past of like you, you said it perfectly, just, just when you were just talking there is like, Do you even know what scaling will entail?
Like have you, because if you haven't, if you haven't done it before yeah. You can think about scaling as this big and exciting thing, but if you've never been to that stage, like, do you even know, like all you're aware of what has to happen or what has you have to be focusing on to reach that point? I think it's such a great, great topics.
Like you say, I can look at me and think, yeah, I've been hell bent on scale and have no idea what that even means to reach that point, you know? Yeah, yeah, exactly, exactly. And so I think that. You know, just kind of pre pre-frame this conversation for me. When I look at a business, I see there's, there's really three phases.
There's start, there's grow and then there's scale. And I see those as distinct from each other and each one of them has [00:09:00] distinct, um, things that you need to do right in the start phase. Right. You're coming from idea to see whether you can. Get people to pay you for that idea. Like how, how much can you, um, uh, develop an idea into a market, right?
How can you create that, that traction, that initial, like, Hey, you've got something I want it, I'm going to pay you for it. Right. And that's, and that's a key objective in that startup phase. And we're not really going to get into that so much today. I think we had, uh, one of the shows that we referenced on.
Uh, or 200 episode show, if you guys are looking for more start-ups stuff, go to the episode with Sean , which I think was a great episode on really how to think about starting. But once, once you started something and you've got some traction going, um, then this is where I think people are like, okay, cool.
People like my idea let's scale. And it's like, you're not [00:10:00] ready. Right. So at that point, okay. A hundred sales. We're ready to go. Let's do it. Right. Let's take this thing to the moon and I want you to take it to the moon, but you've got to, you can move through the steps as fast as possible, but if you skip the steps, that's when you're going to have.
Um, a problem. Okay. And so growth is distinct from scale in my mind because growth is perfecting the model and building the infrastructure that will be required to scale. Right. And, and these stages overlap to a certain extent, but if you'll imagine that. You know, you're going to need to say, okay, what?
We've got the five pillars of our business marketing sales delivery, operations and finance. If you haven't figured out the, some of the systems in those areas of the business, when you try to scale, meaning like what does scale really scale is adding more volume. To what you're already doing, right? It's, it's, it's putting more [00:11:00] throughput through your business system and if you don't have the systems in place yet, then it's going to be very difficult and there's going to be a lot of, um, there's just going to be a lot of turmoil more than it's more than is necessary.
Um, and so that's, uh, that's, uh, a key piece of growth is to say, okay, how do we really finalize the model of the business? Such that if we add more in, we know what the predictable result is going to be. Right. That's the challenge. And that's the objective of the growth phase and, well, I, I just think just to, just to jump in quick, I think you've just made a really, really good and nice, clear, just, just sentence in what you say there about what does actual scale mean to add more volume?
Cause I, I would imagine, you know, again, looking at myself and I think a lot of people would be similar when we think about the idea of scale. A lot of times that's attached to more money just increasing the money. Like let's scale this up and blow up the bank account. Yeah. You know, and I think, you know, [00:12:00] just that one single thing you've just said there, I think a lot of people that feel maybe that way and they feel like, am I right?
Like, let's just blow this thing up. Like, I think that one small thought there of like adding more volume into what we already have. I think if people even just that first piece, just to step back and say, don't just think about blowing up the bank account more volume in that. Let's think about adding more volume to every component of this business in the way that it currently operates.
I think just that one thought that people might immediately start to think differently about being a, being in a position or being ready to scale. Yeah, absolutely. Cause it, you really need to make sure that things are stress tested right before you scale. Right. Yeah. Jay rock here said big boy shorts and clean undies are needed.
Um, I, I agree with that. Well said, um, we could just pack up the show right now. Actually. I think that is how, you know, when you're raised, you're wearing your big boy shorts, but, um, but I think, I [00:13:00] think the, uh, the point of, you know, thinking about am I ready to scale is it's not just about, am I excited? To grow faster, add more money to the bank account, all these other things.
Um, cause I think the thing that most people don't see is the problems that come with scaling, scaling, scaling is not without problems. Right. You're you're going to have more customers, which means more problems. You're probably going to have a bigger team, which means more problems. You're going to have like more logistics, more, you know, challenges in every area of the business.
And if those areas haven't been stress tested, then how do you know you're ready? Right. Yeah, right. Very true. Yeah. You gotta, you gotta know, like, you know, a great example, um, uh, that I'll use from, uh, you know, [00:14:00] your business. If I, if I can, on the cosmetic side of things is, you know, every e-commerce business is eventually going to have some kind of challenges with their supply chain, their inventory.
Or something like that. Right. And if you haven't thought through, well, how do we deal with supply chain issues? How do we deal with inventory issues now I'm not even just talking about, uh, like the cash side of things I'm talking about. Can we actually get the inventory to sell right. Yeah. You know, there's a lot of businesses, especially when you think back last year, people struggling with, you know, a major supply chain disruption.
Oh gosh. Yeah. We're like, uh, I can't get my product to my people. Right. And so what's your degree of confidence that you can do these things. And, um, and I, and I think that in the, in the abundance of excitement that everybody seems to have about scaling. [00:15:00] Very few people ask the questions. How do I know?
How do I know when I'm ready? Yeah, it's true. Yeah. Very true. I think I'm going to excuse us while Dean passes out from when it is it's allergy season here. Okay. You got to bear with me. I'm like, shit, you're looking, I'm not crying. So, um, no, I think, uh, like, you know, when you just look at this, what the, uh, the cosmetic side of things, you know, I think, cause I've got a couple of the couple of different businesses.
I think one of them is easier to, to analyze in terms of, am I ready to scale, but I can, I can say that, like, it's not always so obvious. In, in some business models, I don't think, you know, you just said there, like product supply chain, I think that's quite an, you know, somebody with a physical product business that, you know, they've got manufacturing or supply chains.
I think, you know, the idea of scaling that I think you would, you would probably easily think, well, okay, well we need more product, but I think some people that are going to be [00:16:00] listening to this probably don't as easily. See what areas of that business. They need to necessarily look at it. So is there a, you know, just, just throwing this up in the ass for first to talk loud, is that then some, some guidance or some things that we can talk about in terms of being able to start to look at these areas then, and, and what are these key areas that people might need to look at first, if they feel that they're ready to scale, they have, you know, gone out to market.
They've got some good results and they've got this, this excitement in them. Yeah. We've got a winner we're ready to scale this business up. Like what are the steps? And that people need to be looking at. Yeah, absolutely. Um, I think that the, um, the, the way that I look at everything is these five pillars, right?
Marketing, sales, delivery, operations, and finance, and on the, uh, the e-commerce, the product side of things, you know, the. Supply chain is part of delivery, but [00:17:00] let's say, let's say you have a service business. Let's say you're an agency. In fact, I work with, uh, you know, a Facebook agency that's, that's growing and, uh, making an effort to scale right now, the delivery on that is who's doing the service delivery, right?
Who is the person who's actually delivering the thing, making it work, um, all that sort of stuff. And, uh, and so. In that particular type of business, if you can't find more people to do the job, you're not going to be able to scale right now. You're not going to be able to just plug people in to scale, like, think about, you know, McDonald's for example, right?
So there's McDonald's is predominantly, you know, a product business, but there's people that are required. To 40 a real estate business. Ah, I don't even know. Right. But let's, let's just say that, that, you know, uh, we take the, how to get the hamburgers and [00:18:00] the buns and the cheese and everything like off the table.
Like they got that on lockdown. One of the things that's happening right now, actually here in the U S I'm not sure if it's going on for you, um, is a lot of these, you know, kind of fast food restaurants and fast casual restaurants and even. Local shops and things are not open all the time or they're having reduced hours or something like that because people aren't working right now, right.
There were like unemployment benefits and, you know, COVID and all this other stuff. And so, um, so if you don't have the people. To do the job, then that's going to, that's going to be a limiting factor on your skill. Right, right, right. Um, if you, uh, if you have a product business and you can't get the inventory, that's going to be a limiting factor on your skill.
And that's not the only limiting factor. Right. That's like, how do we deliver the thing? But then the other question, if we go back to the five, five pillars, right? Marketing sales delivery. Operations and finance. [00:19:00] Well, what about operationally? Like how, how are all the pieces being coordinated? And if we just add a bunch of stress on top of the system, what's going to break first.
Right. And I think that's, that's the way that I look at, um, you know, being able to, uh, being able to grow and scale is. How likely are we to break? If we add 50% more, a hundred percent more double it, triple it. Right. And one of the reasons that, um, you know, like software companies are able to scale once they get their, their core thing in place is because adding more people to a certain extent does not necessarily mean we have to do more work.
Right. We're just like, right. It's the technology side. So, so I don't know. I don't know what your thoughts are on that, but I definitely think that doesn't matter what kind of business you're in. You have to say, well, what is the delivery of the thing that people are paying us for? Right. [00:20:00] And where's the limiting factor on that.
And how do we address that? Yeah, no, no. I love that. And I think, you know, one of the things that sort of coming out of that for me, cause I, I think it's funny, like sometimes people are thinking about scaling and they probably really aren't yet ready and not because they're not actually ready as in, they don't have a proven offer.
I would imagine there's some people that probably aren't fully clear on that entire process of selling and delivering and you know, everything involved in what they do to produce the result. I think some people are going to have in order to assess this and go through what we're talking about. I think some people are going to have to take a step back almost to get really, really clear on a, to be on the whole journey of what they do as a business, whatever business people are in, you know, being very, very clear on the steps of, of everything that takes place.
Because I think from, from what you're saying here, Like I'm, uh, I'm one of those people I like to run through. [00:21:00] If I was doing this sort of process and thinking about, am I ready to scale? I'm the kind of person that goes through, like examples scenarios in my head, like theoretical scenarios. As in, you know, in my mind, if I wanted to scale, I'd be thinking, okay, if I'm doing a hundred sales a day right now, If we were making 500 sales a day, how might that look so that I haven't got to go out and do it to find out what breaks, if I'm clear on what I do to, to sell a hundred products a day.
If I were to just magically say, okay, five X, everything. What, what, what would go wrong? Where would, where would the pains and problems become? But I think I can only do that because I'm very clear on what I'm doing to currently sell a hundred products a day. Does that make sense? So what, what would your thoughts be on that kind of process?
Does that sound dangerous to you? That I would, you know, that's how I would do it, or is that, you know, a way that you would recommend just kind of theoretically saying, okay, I'm at a hundred sales a day, let's five X, it all, theoretically. And just see what might that look like? Is that, is that an approach you'd recommend or absolutely.
I think [00:22:00] that's, I think that's a great way to look at it and I would just look at it across the five dimensions of the business. Right, right. You know what, okay. If I were going to do this, what's required for marketing in order to make that happen. Is it anything or is it just like. Uptake in our ad spend.
Can we scale our ad spend? Right? Because that's, that's an issue and a challenge sometimes too. Um, is there anything differently that we're going to have to do on a sales side? It, you know, if I'm, if I'm going to go from, you know, a hundred whatevers to 500, do I have to, uh, Hire another sales person or reselling over the phone, like, how are we selling this?
Like what's our sales conversion mechanism. And can that sales, conversion mechanism handle more throughput? You know what I mean? Then on the delivery side, we kind of talked about that already. Right? Great. Is it, you know, more products to, can we get, is the inventory available? Is the supply chain strong?
Do we have redundancy in the supply chain? Like we're, you know, we're, uh, just to on a side note, [00:23:00] we're dealing with an incredibly. And potentially business fatal thing on the rose business right now, because our supply chain was completely knocked out because there's massive political instability in Columbia where we have our farm.
And, uh, like we can't even get workers out to the farm right now without them like legitimately like potentially being in a life-threatening situation. And yeah. And so it's like, okay, this is highlighted for me at least. Well, great. Like where's our redundancy there, you know, if one of our, you know, suppliers, you know, sort of.
Ditches or is unavailable like we're experiencing right now. And so then, you know, operationally, like what else, how easy is it for us to onboard employees or contractors or the help that we're going to need in order to keep things going? And then the, you know, the finance side really is oversight, but the point that you're making is yes.
What would this look like if it were, you know, 10 X, 20 X, 30 X, whatever. [00:24:00] Great, but then look at that across those five different dimensions. And, uh, and then it becomes your, the questions that you're asking become more specific. Right. You know? Um, so that's, that's definitely the way I would look at it with like, you know, kind of giving it a little bit more specificity.
Yeah, no, no, no. That's perfect. I think, um, to me, what's, what's, what's coming out of this again, just as another side thought, is people, depending on what they're doing, everybody's business model is going to be different listening to this, but it sounds like ultimately that before people do go ahead and scale, they want to really have.
All their ducks in a row, as it were with the level that they're currently at. Right. You know, if you're in a, a product business, do you, do you have a stable, secure manufacturing and product, you know, development line, you know, you know, cause I think a lot of times, again, People fixate so much on just growing the money, but the idea of scale, I don't think a lot of [00:25:00] times people will often think about the things that you're talking about here.
I don't think people, you know, it's just like, oh yeah, let's just grow this thing. Okay. What about the strain on this area? The strain on this, like nobody's, I don't think I've been a lot of conversations about scale and not a lot of. Like a lot of the focus just seems to be in that money area. Doesn't it?
I think. Yeah. And that's the exciting part and that's why you're doing it right. Because you want your business to grow, but you also, you know, scaling a business prematurely could completely, you know, bankrupt, you, it could take the business down. Like there could be major problems if you scale prematurely too.
And I, and I don't necessarily think like everything has to be in place. I think we need to have a healthy amount of it in place, but you also have to be going through this critical thinking. To ask yourself what's likely going to happen so that we could start preparing for it right now. Just because if I go from, you know, a hundred units a day to 500 units today, and I'm know I'm going to need more salespeople, for example, doesn't mean I just go out and hire all [00:26:00] the salespeople first, but it means that I need to have at least a degree of confidence, where are they going to be coming from?
How am I going to make sure that they're being trained? All these other things so that as we're growing, we're like we're growing into the plans that we've created. Um, not just like, oh man, I can't believe all this stuff is falling apart now. Right. You know? And that's, and that's the thing where I think people get tripped up is they're like, oh man, like everything's falling apart.
I'm like, what? Like, did you not think about this for two minutes beforehand? What happens if we're successful? Right, right. Which is a question that I don't think a lot of people ask, right. People are always like, worried, like what happens if we fail? What happens if we fail? Okay. Deal with that. You should have a plan for that.
Just as much you should have planned for what happens if we succeed. Yes. Good thing. You're right. So many people are like, okay, we'll look. [00:27:00] Let's really try this and if it doesn't work, it's okay. Cause we'll just scale back here. We'll do this, we'll do this. And it's like, okay. I feel comfortable growing now.
Cause if all goes wrong, I know what I'm going to do. But like you're right. There's another side to this. Like what if it does work out? What if it does go the way that you're hoping you're going into this, because you want to grow, you think you're ready to scale. You've done everything to the best of your ability.
Like, why haven't you thought about the impact of it going well? Hey, what if you, what if you underestimated. Your ability to scale when you take the steps, you're about to step, take a different side to failing isn't there. It can be like, Ooh, there's another rate scale. Yeah. It's because people think, uh, there's a, there's a tendency for people to think that success comes without problems.
Success is solving one problem, but creating another one. Like that's really what happens. You're just like, oh, here's a new problem. You're like, ah, I didn't know that was going to happen. Right. And so nobody's planning for success [00:28:00] because they're not anticipating the fact that there are problems that are likely to happen when they are successful.
Um, but there are, you know, there's, there's always going to be other challenges and things. And so, um, you know, you and I, I w I won't mention him, but you and I both know somebody. Um, who was growing a business and things took off and the marketing side, the sales side started scaling, but the, the other dimensions of the business couldn't keep up with it.
And, uh, they wound up going under, they wound up having tens of thousands of customer complaints, uh, lawsuits, like all sorts of things. Right. And if, you know, if you're not stress testing, as you go, then you're going to deal with those problems. And, and I think, you know, I don't know if you've ever heard, uh, people talk about like, choose your hard.
They're like, you know, you can, you can choose to work out every [00:29:00] day and eat healthy, or you're choosing to like, get sick and be unhealthy, or you could choose this and it's like, whatever you do, it's going to be hard. Yeah. So choose your heart. Right. Just be like, man up and pick it. And I think that with, with scaling, people are hoping that it's no longer going to be hard.
And so they don't, they don't do the hard work deliberately. They, but then it just comes and smacks them in the face. And so I'm not trying to scare anybody from scaling here. No, we are be afraid. I am. I am just, I am wanting to make sure that people have a clear. Just like an honest appraisal of what that means.
Yes. You know, and really take stock of whether, whether they're ready. Oh, absolutely. Cause if you're not, like I can tell you, like you can end up growing something that you hate. Like, and not, not only, not only just [00:30:00] like talking about things, breaking here, but if you haven't thought things through about the impact of scale and you go ahead and do it and things work out and things grow and you have the capacity and, you know, Think about, think everything through.
And again, like you say, this isn't to put people off scaling, like we want people's business. This is to grow, you know, there's a lot about what this show's about is helping people's businesses grow, but there's definitely a huge side to this whole component of like, making sure that you've thought things through you're planned, you're clear on the outcomes.
Good and bad. And you, you go into it, you know, it's like, like what do we always talk about? Like going into things. With the understanding of what you're going into, you know, not blindly just diving into stuff is going into stuff with a degree of confidence. So we're not saying you have to be a hundred out of a hundred and have crossed off everything and know everything, but get yourself what, 60, 70, 80% confidence that you've thought things through and is going to be.
On unknowns. You know, if you're, if you're scaling and doing something you've never done, which I think a lot of times people are scaling for the first [00:31:00] time in a, in a business or an industry that they've never scaled into. And there's an element there that you're never going to know it all. But you've got to know some, you know, you've got to be on top of a lot of these things and have at least given it the attention it needs rather than just blindly, like I've done in the past.
Admittedly, just being like, let's scale this thing, we've got something that works, grow, grow, grow, you know, that's a recipe usually for disaster in some way. Yeah. Yeah, absolutely. So, so I think just like getting, getting down to nuts and bolts, um, you know, going across the five dimensions, you know, um, on marketing.
I would say until you have two, two reliable sources of customer acquisition, you're probably not to the point where you're ready to scale. You could scale one source of that, which is great, but how, how are you going to build. Um, on one, one single source, right? Like, you know, I've seen so many times [00:32:00] people get wiped out with their Facebook ads or years ago, everyone got wiped out with their, you know, the stuff they were doing with Google people.
People get wiped out with all these different things all the time. And so it's what is, what is the likelihood that our traffic sources are going to continue to provide us new customers, new prospects, and new customers. And, and, and, you know, you got to figure that out before you're going to say, okay, let's add tons of fuel to the fire, right.
Because here's the risk with this. Let's say that you have one reliable traffic source and, um, and you're all in on that traffic source. Then what you're going to do is you're going to beef up your infrastructure because your sales volume is high because of this one traffic source. Right. And then the traffic source gets shut off.
Or disrupted or changes or something. And then what are you left with? You're left with significant expense and overhead. [00:33:00] That's not supported because you only had one traffic source. Yeah. Right. And that's, and that's the risk. So it's not like, oh man, you know, cause there's going to be people who are listening to this and like, well, you know, we're, you know, we're growing and we're, you know, you can't even keep up with us.
And all we do is run Facebook ads. And that's like, okay, that's great. If you don't have a significant amount of infrastructure and overhead required to support that. But what happens when you place an order for your inventory? That's, you know, a quarter million dollars or half a million dollars or something like that.
And now your traffic source gets shut off and you're sitting there with a quarter or half a million dollars worth of inventory that you can't move. And an, a team of customer service people. And a whole bunch of other things, like that's, that's some serious stress, right. And so I would say at minimum, you know, get, get, it's great that you've got one traffic source get another traffic source.
And I'm not just talking about paid traffic here. [00:34:00] Traffic is like, how do we get people? Right, right. You know, it could, it could be, I have affiliates. Like you teach people how to do it. Could be, you know, I've got partnerships. Integration partners. It could be, you know, I'm really, really awesome at direct mail.
It could be like, whatever, but where are people coming from? And if the only place that people are coming from is one source of which you're not in control. It's not really a matter of if things are going to become a problem for you. It's a matter of when, and it becomes a magnified problem. If you've built an entire infrastructure of your business.
Off of the success that you've had on one traffic source. And that's where, that's where you see people who are like, oh, like, you know, um, uh, I'm cycling as an entrepreneur, right? They're like, oh, I built up that business. And then the bottom just fell out underneath me. It's, it's unlikely that the, you know, that the bottom just falls out of things without you, like having some hand in the [00:35:00] matter.
Right. That's like the thing that amuses me about that is it's almost a reluctance to take personal responsibility for the poor decisions that you made that led you there. Right. But, but that's how, that's how people learn and hopefully you don't do it again. Right. So I think that's like, that's one is you've got to have, um, you know, more, two or more reliable traffic sources in that first dimension of the business in order to really be able to say, okay, we're ready to scale.
Um, I got, I want to go into the other dimensions, but I'm curious what you think about the marketing side. You gotta just commented in the comments. She says Dean's beard looks extra bushy. Today was the ride in on the noble Steed, a little rougher than usual. There was very, very first thing that I said, when I saw him today, I said his facial hair sort of went like this and mine went away.
I could flip this up like this. This is. That sort of tamed, huh? [00:36:00] It's a beast. But, um, but no, just on, on what you've said, I think that's actually perfect. It's funny. It's funny you say this because, uh, that's the situation that we're currently in with our cosmetics business. We literally, you know, we started just with Facebook ads.
And right now we still only have Facebook ads, you know, and you're absolutely right, because this is a conversation I've had in the last couple of weeks, because due to, you know, a few little shaky things going on with Facebook right now, you know, our cosmetics business, we're definitely seeing some negative impact of some of the things going off with Facebook, through our advertising and our costs, uh, of getting customers who've gone up and already with a business that doesn't have a huge profit margin right now.
That's been a real problem for us, you know? And I'm one of the things I've been saying is like, It's a bit of a pain in the ass that we only have this one source right now. Isn't it? You know, because we don't know, is this only Facebook I'm literally flying blind right now because I have no other point of reference to look at from things we're doing.
We've pinned ourselves in right now [00:37:00] with this one source. And it's like, yeah, we've, we've been trying to grow with this one source. So. Not only do I agree with you? I'm living it right now. You're absolutely right. That, that is a dangerous way to going to scaling the business. You know, things happen. And as much as we're told, you know, this whole conversation about a lot of times getting in control and having clarity in there, all this stuff that we're talking about, but you don't control.
Every element. If when you are using third party things as a part of your business, like Facebook or Google or whatever, for your source of traffic, you can't remain forever at a hundred percent in control of that. You are in some degree at the mercy of these platforms. And that's, that's just a component of it.
So if you only have one platform and something untoward happens to go off, it might be, yeah, you get your ad accounts shut down. It might be something wonky goes off. The apple decides to fight Facebook on data and privacy and go into war and you're sat back like, whoa, what did I do wrong? Well, in this case, you did nothing wrong.
Other than you put yourself at the [00:38:00] mercy of this one place that was fueling your business. So yeah. You know, like such an important point. I'm so glad you touched on that. You're absolutely right. Yeah. And, and, and, uh, and at some point you are going to be dependent on one thing right early on, right? Like when you're starting, but the idea of the, from going from the startup phase to the.
The growth is to scale, right? The growth phase is where you should be adding the other sources exactly where you should be creating that redundancy. Um, and that stability so that when you do turn on the gas, when like you kind of like open up a little bit more, you've got, you've got something that's resilient.
Um, and, uh, and so, yeah, you know, that's, that's the idea of the growth phase, but everybody's just like start scale. I'm like, wait a second. Where, where did the missing piece? We're missing pieces in here and that's how come many [00:39:00] businesses, uh, crumble like a house of cards because they D they didn't grow.
They just started in sort of inflated. Yes, and they're hollow. Um, and that doesn't, that doesn't work well over the long-term. Um, so, uh, so yeah, so that, that dimension on marketing then on sales, you know, I think this, uh, this is just as important as like, well, what's, what's your sales conversion mechanism.
Like how, how reliable is that and how likely is it to be able to withstand the pressure of more volume. Coming in from your marketing efforts. Right. You know, if, um, if your sales are strictly dependent on doing in-person events, you know, if anything that anyone should have learned from last year is that maybe you want another sales mechanism in place, right?
Like you have to have more than one sales conversion mechanism, just [00:40:00] like you have to have more than one. You know, uh, lead conversion mechanism. And so, uh, yeah, no, it's, I think that's another thing to say. Okay. Like, are we really ready to scale? Um, because again, you could be putting all of your tracks.
Let's say, let's say you did diversify all your traffic. Great. But all of your traffic is going into a potential actually, uh, limited sales conversion mechanism, right? Overly we're overly dependent on just doing in person events. We've never explored phone sales. We've never explored, you know, online webinars.
We never explored, you know, doing any of these things. The second, any of that stuff gets knocked out. Now you've got plenty of interests, but you've got no way to convert that interest. And then you're still sitting on the pile of expenses on the backside. Um, so it's a similar problem, but for different reasons.
And that's why, you know, having a level of, uh, you know, Least a [00:41:00] couple different ways that we could potentially close people into being customers, um, is, is helpful. You know, like what would you do if all of your websites went down? Like, would you, this, would you still be able to sell stuff? Right. How quickly, how quickly could you develop a call floor that could.
Handle some of that volume or something. And I'm not saying again, that all of these things need to be in place, but these, these were the signs of maturity as you go through the growth phase and you're preparing to scale. Yeah, no, definitely. And I think, you know, just to point out an interesting thing, cause I've, you know, I've definitely, you know, you have so much more experience in these areas than me that I think.
One of the things that I love about this conversation for people is if, for people that this conversation is rightful, you know, meaning the timing is right for people and the right people will know that this conversation, oh, this is just what I needed to hear you don't, you don't understand until you go through and you've tried [00:42:00] to scale something for the first time.
You actually don't understand. How much things can break and these areas, right. It's like, you've just said there about the, the traffic aspect, the marketing aspect. I mean, I can sit here now and be like, oh yeah, you're so right. That's such a great piece of advice. Six months ago. I'd been like, oh, that sounds interesting.
I've not thought about that. You know, and it's only because I'm going through it now. So I think, you know, people, uh, hopefully the, you know, they're, like I say, the right people are really, uh, taking, taking some of this on board. Cause it's not, again, I, I appreciate some of this can sound like, oh, this is sounds quite scary.
You're trying to put me off scaling. It's not, it's, it's preparing you in the right way. You know, I think that's such an important thing for people to take on board. Yeah, absolutely. And again, it's just like, how do we. How do we go into this with our eyes open? Yes. Right. Here's what potentially could go wrong.
Here's what could potentially stop this from working? How do we improve the odds of success? Right. And then be prepared for that [00:43:00] success and not let it catch us, catch us off guard. Um, you know, third dimension delivery delivery. We kind of talked about already, but you know, if you don't have a clear way of.
Um, you know, let's say you're in the service business, finding, finding people, sourcing people who are going to help plugging them into a system that works for them to be productive and effective, then you know, you're not ready. Right. So similarly, if all of your inventory is dependent on one supplier, you're going to have problems.
You know, you should have a couple of suppliers, like who, who else could help, who could be on, you know, who could be on, you know, the second string ready to be tapped on the shoulder, if something goes wrong with our primary supplier, um, you know, and, and that sort of thing. And I think, you know, there's a, there's a theme here that, that is suggesting that redundancy or the, uh, the plan for [00:44:00] redundancy.
Will help create a more sustainable scaling process so that you can get where you want. But the other thing that we really haven't touched on yet, uh, which I think is just as important and we'll kind of get into the other two dimensions if we want to, but is simplicity. Yeah. The more simple your model is, and the more simple it is to create that redundancy, the easier it's going to be to scale.
Yes. You know, I think we spoke a lot. Haven't we about the, the beauty, the, what is it? Simplicity is the ultimate complexity. Oh no. Did I say that wrong around? Yeah. I somehow messed that up, so I, uh, I think maybe that's not it. Exactly. Um, I think simplicity is the ultimate sophistication. Perhaps, maybe simplicity equals complexity.
Everyone's like, Hmm. I have to think about that a little bit, but no, [00:45:00] like. There is in my, in my experience, there is always a tendency for people to over-complicate and it's not like anybody sets out like, oh, let's really complicate this thing. Let's really make it a mess, but it just seems to naturally happen.
It seems to be searched. The common path is that when we start adding all these. No, we start adding extra things in where we are adding extra levels of potential complexity. It's like, you know, I look at, with our cosmetic side, I think it almost seems like every time we plan out the next product or a new product, it's not just adding like one extra thing.
Like, oh, it's a product it's now adding like, okay, the packaging for this thing, this thing, this thing, it's like so many levels of extra stuff involved from adding one more thing. You know, and so I think, you know, there is, there is going to be that element to this. And I think to me, I like to keep, keep it simple at the forefront of my mind.
Not only am I going to do this thing, but how do I make it as simple as is possible thing is really important part of it. [00:46:00] Yeah, absolutely. Um, simplicity equals scalability. Like, there we go. I think that's why I said wasn't it, something like that. Yeah. Yeah. I'm sure I said that. Yeah, absolutely. Um, so yeah, so I think, you know, that those are, this is like the conversation I'm so happy that we had this conversation because one, I don't feel like people really talking about this and it's just on the billboard of business success.
It's all like, here's how exciting it's going to be. And the fine print is all the stuff that is biting people in the ass every single day. And, uh, and it's, it's not that this can't be done. Like the last thing in the world I'm here to do is to discourage people from trying to scale their companies. Um, I'm just trying to make sure that people are being thoughtful about it so that their companies last.
And so that they have companies and they don't want to [00:47:00] yeah. Run themselves over with their own car because they hate their lives so much, you know? And, um, you know, Einstein said intellectual solved problems, but geniuses prevent them. And I think that's, there's a lot of, there's a lot of wisdom in that statement.
Right? How do we prevent the problems that we know are coming. And it's hard to prevent those problems that you, if you don't know that they're coming. Right. And I think that was, you know, that was sort of the other motivation for having this conversation today is say like, yeah, like make it through the growth phase.
Right. And the growth phase is about really narrowing in on that, that model that, you know, getting the different sources of the customers, converting them to, you know, to be paying customers and, uh, you know, all those things. And, and there's going to be new things that are popping up that are informing that model.
And then scaling is about like, okay, we're, we're really clear. We're really deliberate what we're doing here. And we have some of these redundancies [00:48:00] put in place, like let's, let's really like, let's really drive this thing now. And, and even culturally, you know, we didn't touch on that a whole lot, but culturally scaling is different than growing.
Growing is, uh, I think for many entrepreneurs, the most exciting part, because you're, you know, you're. You're brainstorming with your team. You're collaborating with people. You're like figuring things out. There's just like this feeling of like, you know, let's get it done. Right. You know, and, and scaling is, uh, is, is exciting too, but it's in a different way.
It's less about, okay. Now we're like solving all these new problems and we're figuring things out. It's more like, all right, how do we double down? Right. What's working. How do we, you know, continue to put emphasis on the things that are making the difference, and that will require more systems and process.
And, and many people are like, oh my God, like, I don't want to deal with process. Like [00:49:00] process scares me. And it's like, Cole James. Yeah, you could call me for sure. Um, cause that's really what my middle initial is. Right. Process. That's we can't figure out yet. I think we've figured it out. I think you're just one of the holdouts that doesn't know.
Um, but, but it's, uh, it's going to change things, right? Right. In order to scale, you are going to have more systems and process in place. And if you're resisting systems and process, then you should bring somebody else in. Who can take the Baton and run with it because you got it through the growth phase, which is hugely, uh, you know, challenging and very exciting that anybody makes it through that growth phase.
Right. There's nothing to be like, oh, like I, you know, I I've, I've gone into so many companies where it's like, time for them to scale. And they're having challenges. And so, because they're not bringing a scaling mindset with them, they're bringing the growth mindset. And the scaling [00:50:00] mindset is like, okay, we need to like strip out inefficiencies.
We need to create more process. We need to make sure there's more systems in place. And those people like, Aw, man, it's not fun anymore. Like, it feels like work. It just feels like, you know, blah, blah, blah. And it's like, it might feel a lot fun to you, but for somebody else that is they're fun. So like bring, you know, bring those people in.
So I think there's definitely a big cultural impact on scaling as well. And not every team is ready for it. And certainly not every founder. Is ready for that either. They're like part of the problem. In many cases, they're like, I want to go back to like shooting from my hip and flying by the seat of my pants.
And it's like, okay, cool. Like gracefully exit this, get somebody else in his. Right. And take it to the next level because you build something of value and then go work on another project and take it through the growth phase. Like if that's what your specialty is and that's what you love and do that.
Yeah, Nope. Nobody says you have to be the person not doing, doing the whole thing and running the [00:51:00] company. Its entire life cycle. Yeah, no, no. I love that. I love that a lot. And I think, um, you know, in my experience just thinking about it or the limited amounts of experience I've had, but a few times I would go as far to say, I don't know if you agree with this.
I could just trash the whole episode now in saying this, but I believe. That most businesses that reach or are going through that growth phase and that, you know, the idea of scaling is exciting them. I don't think I haven't seen any businesses work at scale in the way they have been working at that stage.
Like it literally, like so many things are going to break. Like so many things are going to go wrong in the scale phase a night. That again, it's not to scare people, but this whole conversation that we've been having, like, you have to take some of this on board, everybody listening, if you're at that point, because I just like, I haven't been able to take a business that was working amazingly well, profitably, [00:52:00] everything's running nice, like streamlined.
Everything's great. And then started scaling it and it's continued to work in that same way. You know, I've had, I've had one of my businesses. Everything's worked other than the fact that, oh, it's now no longer profits at scale. Like literally everything's working well, we're delivering the whole operation looks smooth.
But we're not making any money anymore. Right. You know, and like that, that's just been, my experience is things are going to break at scale and you probably not, not going to be able to predict everything until you get that, but you can be prepared. You can go into it as you've said, James, with your eyes wide open, but go into it, understanding that like what we felt probably.
Isn't going to work in this same way when we try and push things forward. Is that something that you would agree with or am I kind of, yeah, absolutely. It's, it's, uh, it's a different ball of wax and, uh, you know, I, I talk to people a lot, you know, in those five dimensions of, you know, whether they're at red, yellow, or green, and when [00:53:00] you're, when you're scaling, what used to be green.
You know, where you had systems that were working, producing consistent results and all that. And you start growing past that certain stage. It's not going to be green anymore. It's going to be like, it's going to drop down. And that systems are gonna need to be recalibrated and updated and people and roles and things might need to change.
And so there's like, there's so many moving pieces and parts that to think that things aren't going to break as you scale, I think is really, really naive. Um, and, uh, yeah, it's just, you know, It's not a bad thing, you know? Right. That fact that there are things that need to be addressed as you're growing and scaling is, as it's supposed to be like, you're not doing anything wrong because things are breaking.
You're doing things wrong by not paying attention to them. If you know, you're doing things wrong by not thinking about what's going to break, but the things that are breaking is like, yeah. Wasn't built for scale. [00:54:00] This was built for growth to refine our model. Now we have to build something for scale.
Yeah, no, I love it. And I, um, you know, just, I know we've not got long left before we round up, but, uh, I've, I've recently read, um, this book by Mark Randolph, the guy that co founded or started Netflix, and he's got a great book it's called, that'll never work. And, and he talks about this, you know, he talks about how they first began Netflix and how he was saying, you know, what they first created.
They knew very early on, like, what we've built is never going to work if we try and grow this, but they wanted to prove that concept the concept of the business, uh, ahead of time. Um, yeah. Well, we're going to wrap up right now. Yeah, go ahead. Dean's got to take a call. He's been waiting on for days. Uh, so we're going to wrap up right now.
You guys thank you so much for, uh, for joining us today. Really appreciate you being here. Um, if this was useful, uh, or you've got any questions, just drop them in the comments here on the, uh, the YouTube channel that we have. And, uh, [00:55:00] we appreciate you guys. We will talk with you guys next time. See everybody.
Thanks for tuning in to just the tips where we believe business should be profitable and fun for show notes, links, and other information on our guests. Visit just the tips. show.com for more information on how to connect with Dean Holland, visit Dean holland.com. And if you'd like to go from being a hustling entrepreneur to an effective CEO, capable of running your company without being stuck in the day to day, visit me for free training and resources.
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