It feels like it refers to the same thing – after all, both growth and scale refer to an increasing in size.
However, to entrepreneurs, there’s a key difference between growth and scale. The key difference is the ratio between revenue and expenses.
Growing has a tightly constrained ratio between revenue and expenses. That means as revenues rise, expenses rise in tandem.
Growth Companies: That’s how you get really big companies doing $10m in revenue but having $8m in expenses too, leaving them with just $2m in gross profits.
In growth companies, revenue is a fancy metric, because when you look at their bottom line, there is comparatively little profit to show.
Scaling breaks this ratio between revenue and expenses. With scale, you see an increase in revenues but a much reduced increase in expenses, if any.
Scale Companies: Another company who has also scaled up to $10m in revenue might only have $4m in expenses. That means the company has a gross profit of $6m.
In this example, both companies have revenues of $10m, but their gross profits are vastly different. That’s the difference between a business in growth mode and a business in scale mode.
To be really free of your business so that you can be working on it, instead of working in it, you have to be focused on scaling up your business instead of remaining stuck in growth mode.
Evolving Over Time
It’s not necessarily the case that growth is bad. It’s just that it’s a necessary stage that all businesses need to go through. While being in scaling mode is optimal, it’s not something that you can do immediately on day 1 (or day 500 even).
There are other more important areas that you will need to handle as an entrepreneur. Sometimes all that you need to do when your business is in its infancy is to survive!
The following table shows the constraints and focus areas of a business as it progresses over time and through the stages.
The Methodology To Scaling Up
I have personally went through the process of bringing my business from $0 to $30m. However, my journey was not a straight line between $0 and $30m. In fact, it was a lot of ups and downs and sometimes I was completely off-track.
Imagine if you wanted to go from your home to your local McDonald’s. It should be fairly easy and straightforward for you. Your local McDonald’s might even be next door! But that’s not how things are like when you are trying to scale up your business.
A better analogy is to imagine that you are trying to get to a McDonald’s, but now you are in a completely foreign land. Oh, and you are also without a phone, GPS, map, compass, or any other tool. That’s pretty much how it felt like trying to scale up a business myself.
I was wasting years making expensive mistakes before I realised how to get unstuck. Eventually, I found my way, and only then was I finally able to scale up my business properly.
I’ll show you exactly how I’ve managed to Super Scale my business, and how you can Super Scale your own business too. I call this Super Scaling methodology the 5E Scale Engine, and it’s made up of 5 pillars: Evolve, Envision, Empower, Engage, Execute.
The 5E Scale Engine covers everything from the mindset that you require to the operational systems that you need in order to break free from your daily grind so that you can start systemising and scaling up your business.
Get the free 5E playbook now.