How to Handle Scale
There are levels to everything.
When I was running the real estate organization, we noticed there were levels inside of the business.
At 4 houses per month, there was profit. At 8 houses a month, there wasn’t. At 10 houses a month, there was profit again. Business systems usually operate with proportionality — that means, you hire in proportion to your current revenue and trajectory.
The smart ones, usually hire just a bit beyond their current level. If you’re hiring for scale while you’re already at scale, you’re a bit behind. I’ve taught this to clients as the Law of the Step.
When you’re in the red X territory, you’re staffed & resourced for a place you are going, but haven’t quite gotten to yet. Your profits are going to dwindle because you are preparing & scaling. When you are at the green check mark (the top of the step) you are staffed for exactly where you are — which means profits are good and teams feel great.
The only risk, at the top of the step, is you can’t really grow.
Because you don’t have the staff or systems for it — to grow again, you have to staff & resource allocate for the next step. This will put you back in the red X zone, until your revenues jump up.
This is a normal part of doing business, and every business experiences it.
Yesterday on a call with a client, we were talking about this. She’s growing by leaps and bounds — and is feeling a familiar tug of war between “grow more & build the revenues,” and “slow for a bit and take care of clients.”
This is usually a false dichotomy.
You should never, and I mean never, ignore the client experience just to get more clients. However, usually when a business is getting trapped in the red X territory, it has to do with one of these 3 things:
- Client selection
Let’s hit them briefly.