Lessons From Scaling an £80 Million Business

There are so many lessons in scaling a business to this size. Let’s start out with the picture – we started out relatively small at £8million (for context this was a buisness selling programs of work so at this size only had one client) and then over a 5 year period we scaled it up over £80million.

Here are some of the biggest things we learned along the way:

1. Doing Too Much Will Hurt Your Growth

It’s the common thing – as a business owner or senior leader, you wear all the hats, you do all of things. You hustle harder, work more hours, squeeze more into the day and take on all the tasks. You essentially take it all on.

When you’re a start up, you have no choice. You likely don’t have any staff and you most certainly won’t have the resources to bring in all of the people needed. The challenge is, often as businesses move out of start up and into scale up the owners, or leaders, fail to change their mindset about this juggle.

As you scale into the multi-millions this mentality will hurt you. At this level you have got to create room to give yourself headspace, time to think, to strategise and to look at things from a 1000ft viewpoint.

The key to this is to figure out your behavioural strengths and genius zones as the leader. What are you uniquely talented at? What do you bring to the table that no-one else in your business does? Where do you get your energy from and make the greatest amount of impact? If you can focus your time on these things, working 80% of your time there while delegating the rest, you will be a lot closer to making the impact you need to seriously grow.

2. Your Revenue Will Need To Be Layered To Be Truly Diversified

A lack of diversification is what kills businesses during difficult times. As a rule of thumb, no one client should hold more than 10% of your revenue, and no one niche, market or specialism should hold more than 30%.

This doesn’t mean that you have to have hundreds of products and services, in fact, you should have one core product (remember – if Arm & Hammer can scale a £20M plus business just selling baking soda you can sell just one product and achieve serious scale), and then revolve upsells and downsells around this.

With diversification it is less about products or services and more about who you are serving. If you have 60% of your revenue with one big customer and something happens to them, you’re in serious trouble. Equally if you just serve the retail market and retail tanks, you’re going to take a hit.

As we grew to £80M a HUGE part of our strategy was diversification. At £8M we had one main customer and it was exteremely risky, so we focussed on bringing in new accounts, opening up new markets, varying our scope of work.

As markets change and economies fluctuate, to be truly strong as a bigger business, you have to have enough flex in your sales & customer base to move alongside.

Ideally, a diversification of both service & product income, across multiple sectors and industries, will serve you best.

3. Focus On Chasing Profit Not Revenue

We see it all the time – the big business that on the outside looks like they have scaled super quickly, but beneth the service they aren’t even profitable.

The game changed for us when we realised that the vanity metric of running a big business wasn’t the goal we should be focussed on. In all of the businesses we’re involved in, we focus on profit first.

What is the point in adding £5M in new business, if your costs to service it are also going to be £5M? It’s simply a vanity exercise and likely one that will add a huge amount of stress, and distraction to your plate. If you include the distraction on your strategy, it is likely that it is even costing you money.

We were committed that as we scaled 10x – we would maintain our same profit margin within 5% – so we had a firm lower limit, if new business didn’t fall into that, we didn’t take it. If our costs rose, we were quick to align in other areas – that profit number remained front and central.

As you scale, it is so important to cross check big client projects with the margins they will equate to – if you aren’t adding profit but are simply adding revenue and more work – why are you even doing it?

The £1M business with 50% margins can be earning more than the £5M business with 8% margins, or the £30M business barely breaking even.

Create Your Strategy For Scale

There have been so many other lessons on this scale journey, some we will share in a future post, but for now, if you are looking to 10x the size of your business, you can start with reflection and ask yourself some of the below questions:

  • What is your ultimate goal?
  • What is your profit margin now? How would it change at 10x?
  • What systems would still work if you got 10x more customers? What would need to change?
  • What would your team look like? Would you 10x your staff or find efficiencies elsewhere?
  • What would a 10x business do for you personally? Where may you need to make changes to account for work life balance with a business of that size?
  • What would need to change in your sales & marketing efforts?
  • Could you continue managing your finances how you do at 10x? What might need to be adjusted?
  • What visibility of core KPIs do you have? If you were further away at 10x, what would you need to see to be confident?

Work methodically through the different areas of your business, then create a list of all the actions you need to take. Some will be now, some may not be for 3 years, but you will have much clearer visibility of what you need to do to scale. Another great resource is our Scale Up Audit you can access here.