When to Start Stabilizing and Prepare Your Business for Scalable Growth

When to Start Stabilizing and Prepare Your Business for Scalable Growth

On today’s episode, we are pulling from 40-year-old research from the Harvard Business Review, published in 1983 by Churchill and Lewis. We’re walking through the various stages of business so that you can get a good understanding of where you are, what your problems might be, what mistakes you might be making, and, really, what you can look forward to. We’re going to get clear on when to start stabilizing and how to prepare your business to scale.

Last week, we talked about startups and growth. I said that most business owners are stuck in growth. They go on to have this mom-and-pop type business, or they’ve just created themselves a job, or worse, they have really stunted any ability to go beyond where they are. It’s a place where people languish.

This is where they go out of business, and this is where they decide to go back and get a job and work for someone else, which is normal, but it doesn’t have to be that way. There’s actually a better place for everybody to be headed.

That is what we are talking about today. We’re going to go over the last three stages of business, one of which is the most overlooked stage and also happens to be my favorite. 

When to Start Stabilizing Your Business

The most overlooked phase of business is stabilize. People think that they can go right from growth into scale. That’s a big, big, ugly myth if you ask me because you usually can’t take something from a point of chaos and then throw a little more chaos on top of it, honestly. That scaling can feel unhinged in itself. Most people are like, “Well, I can’t possibly scale this because I’m already at capacity. I can’t even take on more sales.”

That’s how you know that you need to enter a phase of stabilization. That’s really where you start to plant the seeds of sustainability. That happens in that stabilization phase because that’s where things really start to slow down.

The business arena is marked by its relentless pace and unforgiving demands. It’s a journey with crests and troughs, calling for resilience and adaptability. Understanding the stabilization phase is akin to finding your footing after a relentless sprint. It’s where you aim to make the business more profitable, streamline services into marketable products, and facilitate a smoother operation for both you and your team.

What strikes a chord for many leaders is pinpointing ‘how long?’ How long to reach stability? How long until the business is ready for scaling? These questions mirror a search for assurance in the uncertain waters of business ownership.

A great goal for stabilization is to think about it this way: 

  • How can I keep my revenue the same but increase my profitability? 
  • How can I keep my revenue the same but make it easier to deliver the work? 
  • How can I start to create leverage? 

It’s incredibly hard during that growth phase, but you’re essentially moving toward that in the stabilization phase so that you can scale the business without adding an outsized amount of expenses.

The greatest challenge at this place is that your company is out of capacity, and so is the business owner. What winds up happening is just naturally energetically, sales start not to come in as fast, or they completely stop because you’re not really able to handle the volume. You’re unable to handle more work, so you start to really find yourself struggling because you might have some clients who drop out, but you don’t have anything in the pipeline.

The business is way too reliant on one person, and that one person is likely you. There is also sometimes a reluctance to change at this point. You’ve been at it a while, and you’re probably tired. I say this all the time: You’re tired, you’re fatigued, you’re exhausted, but that is just really the truth. When we’re in a place of fatigue, it’s really hard to muster the energy required to evolve and put in that next level of work.

The Metrics That Matter As You Stabilize Your Business

Recently, we made the conscious shift to hone in on metrics that truly gauge our progress: revenue, profitability, hours worked, team engagement, and strategic thinking. These metrics are the beacons that steer the ship during the stabilization phase.

Operationalizing this approach meant getting hands-on with system enhancements, increasing efficiency by empowering our team, and ensuring engaged strategic thinking. This strategy is layered with the objective of amplifying profitability while maintaining—and even improving—revenue streams with less hands-on time from the business owner.

Now, as I said, this is a phase of business that I really like. I like hanging out here. I like not having so much pressure on myself to continuously increase revenue but being able to pull those other levers in my business to make it more profitable.

I like to think about how to work once and deliver many times. I like to think about how I could productize my services so that they’re not always custom but they could definitely be tailored to different clients. How can I make work easier on myself? How can I make work easier on my team?

I’m perfectly fine hanging out in this stabilization area, where things are really organized and dialed in, where I’m hitting the profitability that I need, and where I’m growing marginally—5% to 10% year over year.

Now, this is also good for me because I’ve made a decision at this point, and this is the decision that you likely need to make. You need to decide what purpose this business fits in your life. For me, this business is about cash generation. We’re just generating cash profit, which I’m taking, and I’m investing it in other cash-generating assets outside of my business.

I’m not running my business to be sold. However, my husband owns a manufacturing business, and we are building that business to be an asset. We’re building that business to be sold.

How to Prepare Your Business to Scale

Succession is that celebratory phase when you sense the ripeness for growth. Yet, it’s also when you grapple with decisions that could redefine your venture. Scaling—oh, what a word it carries—connotations of grandeur and promise. It’s about adding revenue without proportionately increasing expenses, having the foresight for strategic hires, and relatively distancing yourself from the day-to-day.

However, it also means stepping into a higher risk zone; it might require considering mergers or acquisitions to accelerate growth. This is when your risk tolerance gets really tested and where clear company structures become quintessential.

But by then, you need to have some pretty high-caliber heavy hitters coming in. The beauty of how more and more people are working today is that you don’t even have to hire them as full-time people, FTEs, or full-time equivalents. 

You could be hiring them fractionally. That’s a lot of the work, and a lot of the way that I make my money these days is that I am a fractional COO to companies that are about the two million mark or over and are looking to really scale their capability. Still, they might not have the financial ability to go and hire a multiple six-figure position, like a COO would probably be a minimum, at this point, $250,000, closer to $300,000, depending on the size of the business. You can do that fractionally now, where you’re buying a portion of somebody’s time, and they have other clients.

Looking Ahead to Legacy or Succession

I’m not going to spend a lot of time on this phase because the reality is most of you listening to this podcast just aren’t here yet. I didn’t say you aren’t here or you’ll never be here. I said you’re not here yet. This is what you’re building toward.

At this phase, you’ve likely been through all of the stages of business, maybe even multiple times. Depending on your decisions, you might have to go back and go through the stages again. I think I’m a really great example of this right now. As I closed down The Bold Profit Academy last year and started to shift how I work with people and my offers, I’ve really gone back to startup, and now I’m in growth.

I’m experiencing growth for probably the third time in the last ten years, and I’m stabilizing as best I can. I’m certainly going through this much differently, with a different perspective and more experience under my belt. If you’re at that legacy phase in your business or that succession phase, you’ve likely been through these stages multiple times, and you know what I’m talking about. 

Your compensation structure might actually start to look a little different if you have to free up capital to hire a president or a CEO. If you have successfully implemented and built a sustainable business that can run without you and is where you can take time off, you can pursue other ventures, and then the opportunities will be far more plentiful for you when you get to this point.

What Stage Is Your Business In, And How Do You Move Foward

I want you to consider where you are. What stage are you in? Are you in startup? Are you in growth? How long have you been in growth?

Is it time to really get serious about putting in that organization and that stabilization, really going deeper on your process and systems, really creating some workflows that allow you to leverage your time, to start buying you out of your time, to start training your team and putting processes in place that allow your team to work independently of you, to allow you to extract yourself?

That only happens when you have a process. You need a plan for delegation. You need a plan and process to help you get your employees working at a different level. 

If you’re really hungry and you want to scale, and I meet a lot of people who are really hungry and want more, more, and more, they’re just like that kind of person; they’re just excited by what they’re creating, and they want more, you can’t have that until you go through that stabilization phase and succession where, I don’t know, 20% of you are going to want to be where you sell this asset, you will absolutely need to be planning for that. You need to be planning for that now.

We need to have an exit strategy. Whatever your exit strategy is, whether it’s closing up shop because you’ve put your money into other cash-generating assets like real estate, dividends, the stock market, maybe you’re being hired as a consultant, maybe you’re being hired to be on somebody’s board of directors, that needs a specific strategy that we need to work backward from.

If you want to sell a business, we need to work backward from that. We have to start with that end in mind, not necessarily in the startup phase but definitely, while you’re in the growth phase. What are you building to, toward, and why?

Starting soon, I’ll have a new offer that supports companies in growth that want to stabilize so they can scale. These are companies that want to free up their time, organize how they work, and free themselves from the grind. This offer will be about six weeks. It’s going to be in an intensive format where we focus on one area that can free up the most operational and mental capacity for you.This is you working on the business and getting quick results. Six weeks is the perfect amount of time to make that quick fix and gain the traction that you want. You can sign up for the wait list now.