Scaling a business: Why you must fix the leaks first
A couple of years back, I landed a new client. He had grown a significant business in under two years (over seven figures) and had hit a turning point.
How his teams and systems were set-up, meant there was a maximum number of clients he could serve before he had to repeat the team and systems to scale.
We are sat down, debating the “stick or twist dilemma!”
His very nature was one of ambitious growth and despite the fact that results were fantastic, I felt he would kick on for more – twist. He decided to stick.
When we discussed why, his client service levels weren’t the very best it could be (they were still above 95%). He decided against scaling a business and duplicating the inefficiencies and under (his) target service levels. He wanted to repair the leaks before kicking on.
Hitting the £1M turnover mark is a huge milestone for any business. It signifies that you’ve built something valuable, with demand for your product or service. However, unlike the case above, many entrepreneurs make a critical mistake at this stage – scaling a business before they’ve resolved their inefficiencies.
If your business has operational, financial, or structural weaknesses at £1M, those issues will only magnify as you scale. More revenue doesn’t fix inefficiencies – it amplifies them.
Here’s why tackling them now is essential:
- Operational bottlenecks will multiply
At £1M, you might be ‘managing’ workflow issues, supply chain delays, or inefficient processes. If these aren’t addressed, scaling means increasing the workload, increasing the delays, and increasing the frustration. Your team will be stretched thin, customer experience will suffer, and profitability could take a hit.
- Cash-flow problems will worsen
A business with poor cash-flow management at £1M will struggle even more at scale. Growth requires investment in stock, staffing, marketing, and infrastructure. If cash-flow isn’t controlled now, scaling will lead to increased pressure on your finances, risking liquidity issues.
- Customer service will decline
If you’re barely keeping up with customer inquiries, product quality, or service delivery now, adding more customers without fixing the system will cause cracks to widen. Negative reviews and lost trust can slow growth faster than any inefficiency. For most businesses, customer service is your only differentiator – you don’t want to be risking decreasing it.
- Profit margins will shrink
Scaling without efficiency means higher relative costs. Waste, duplication, and inefficiencies that seem small at £1M can erode profitability at scale. You need systems that ensure that revenue growth translates into profit increased. For most businesses, if you double or treble turnover, you can expect overheads not to double or treble, translating into increased profit and cash.
The business in question, once the efficiency leaks had been resolved, has gone on to scale and become a market leader in terms of growth rate and service levels. A wise decision to stick for a while.
Fix first, scale second.
Before pushing on from £1M turnover; optimise processes, streamline cash-flow, invest in automation, and build scalable systems. Growth should be built on efficiency, not chaos because scaling a broken system only makes it worse.
Systems run the business, people run the systems. Figure out when to stick, review, repair and then twist and you will reap the rewards.
Are you ready to stop dithering and unlock your full potential? Curious about how I can help? Book a complimentary discovery 30 minute call now and let’s explore your goals together.
