Scale up your business by handing over control
UK plc is missing tens of billions in sales because business owners struggle to scale. Read how one British legend achieved it and how you can copy his example.
Entrepreneurs struggle to scale their because they don't know how to involve, train and trust the people they bring in to take over the running. The will may be there but the systems aren't.
A company grows quickest and most sustainably when there is a team of like-minded individuals working in unison with a shared focus and the necessary skills.
I'm Rob Williams, an experienced business growth expert, and in this article, I'll be sharing with you:
- The story of one of Britain's best and most (in)famous entrepreneurs
- How this man scaled up from one location to 35 while becoming a celebrity
- The funk I find many new clients in when I first meet them and what led to it
- The awful truth about owner-driven growth
- The four ways to scale up your business the right way
- How I helped one New York fashionista succeed when she was in a bad place.
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One of Britain's most famous business owners and his journey
When you eat at Royal Hospital Road, Chelsea’s 3-star Michelin restaurant, Gordon Ramsey won't be cooking your 11-course tasting menu. It's not him who greets you when you arrive, shows you to your table, or takes your order. He’s not even the specialised water waiter they have.
He’s actually probably off filming in America somewhere sharing his restaurant success secrets with owners of some of the USA’s pokiest restaurants. And if you are a restauranteur, he has plenty of secrets to pass on.
Following gruelling training under Marco Pierre White, Gordon eventually opened his Chelsea restaurant in 1998 and got his third Michelin star in 2001. On its own, this is a remarkable achievement as there are 8 restaurants in the UK holding three stars.
At the same time, he was developing his celebrity career, eventually breaking through in 2004 with the F Word and the UK version of Kitchen Nightmares. The latter was a smash hit and both he and the format were sold to Fox in America. Not only was he a start here at home but he became a star in the world's largest media market.
Business leaders like Gordon knew how to scale up
What’s more remarkable to me as a business growth expert is that Gordon managed to keep his 3-star status at Royal Hospital Road for 21 years straight. That's despite the fact that, most of the time, he was in absentia.
Think about this last point for a second.
When the restaurant first opened, he worked day and night with his team consisting of much less experienced members of staff. He took them and turned them, under his constant supervision, into world-class kitchen crew members.
But he did more than that. He developed his "bench" (the next level of senior management coming through that could run the restaurant to the same standard without him being present). His team bought into him and his methods and they managed to faithfully recreate not only world-class plates of food but his way of managing the restaurant.
To me, this turns Gordon from a very talented restauranteur into a rare and renowned entrepreneur, the like of which only surfaces occasionally.
This approach led to sustained business success for Gordon. So why don't more entrepreneurs follow this model?
Have day-to-day operations taken over your life?
When I meet many of my clients who first approach me wanting fast growth for their business, they're doing most of the important work themselves. That's even if they have a team of employees on their payroll.
They spend every precious second of the day is spent on keeping the ship sailing smoothly to the exception of nearly everything else. Apologies for the cliche but this approach means that they're working for your business and not on their business.
After a gruelling 12-hour day, this business owner will finally plonk themselves down in front of the TV late at night having missed the kids' bedtime (again). They may raise a wry smile because they have more money in the bank than if they were an employee but that smile is only fleeting.
Their only real joy at work, a fleeting moment of delirium, is when a massive order comes in. Quickly, reality intrudes again and they realise that this is not what they wanted and it's all a bit "shit".
The truth about owner-driven growth
Let me be clear. It is possible to grow a business with you running yourself into the ground like this.
But this comes with four significant costs:
- Physical and emotional exhaustion (56% of small business owners are struggling with their mental health but don't know where they can get help from)
- You lack the time and head space to improve the performance of your business in its current state
- You know that you can only stretch yourself so far and that limits the growth your business is capable of
- Your investment of time, money and sweat over the years won't lead to a big payout at the end because your company will be practically unsellable.
Please believe me when I tell you that, if what I've been describing so far is your own business, you are wasting your life chasing a target you'll never achieve and you'll only make yourself miserable and bitter in the long run.
Even if you're profitable now, your business is more likely to fail. One in five new businesses doesn't make it past 24 months. Only one in four businesses make it past 15 years.
Even if you do make it past 15 years and you dream of exiting, who's going to want to pay you millions of pounds or dollars to buy your job from you? Would you buy your job and lifestyle from yourself for 6 years' profit?
Growing businesses is a predictable, repeatable formula and it looks something like what I describe below.
Scale up your business the right way
Let me share how my 4-step process to creating valuable businesses for my clients.
I work with really talented marketers, builders, fashionistas and management consultants and, when I meet them at the start of our engagement, they're exhausted.
Every day is a struggle:
- Posting on LinkedIn to generate leads because they have no reps in place to do it
- Planning their marketing strategy for the next three months while never really having the time to see if their campaigns are successful.
- Going the extra mile for customers to protect recurring revenue because business owners believe only they can do it right.
- Struggling with mundane admin tasks that add no extra value which could be passed to a colleague or virtual assistant.
- Getting behind on company projects like product development and automating workflows to cut costs and make the business more efficient.
Their business model is wrong. So what is the best way to accelerate growth and keep your sanity at the same time?
1. What is your ideal end destination?
"A wo/man without target hits nothing".
At the moment, simply balancing the books and making a small profit might be your goal.
If you've left the comfortable world of employment with its pay packet at the end of every month and 4 weeks' holiday for this, it's not enough.
What's at the end of this journey for you?
Is it retiring in your 40s or retiring to Spain? Is it to have something to pass on to the kids? Is it to become rich beyond your wildest dreams?
Whatever it is, be sure of the following two things:
- The desired end state (selling the company, passing it when it's reached £10m T/O, and so on)
- What date will this happen by?
2. What can you build on and what should you jettison?
You're not starting from a base of zero, like many. However imperfect it is, you have a presence in an industry and a market you can build on.
This is a big positive. Another positive is that there's plenty you're already doing right. You're making sales and making money. Never punish yourself for that.
Make a list of what you're doing well and how you can squeeze further wins out of them.
Now, make a list of where current performance is stopping you from effectively scaling your business. Typical pain points my clients face are:
- Leadership. You're leading on too many little things and not enough big things. You need to train a layer of management up to take these decisions and make sure things get done.
- Your time management. You have little to no time during the day to assess how the business is doing in specific areas as well as a whole except for checking turnover and profit levels.
- Training gaps. You're stepping in too much to help employees because they haven't been given the knowledge they need. This makes you trust them less to do it well so you're always hovering around them rather than spending that time training and encouraging them instead.
- Employee responsibilities. Every time it looks like an employee might just do something of their own accord, you stop them because you don't really trust them to do it well and it's not in their job description.
- Sales growth. Turnover seems directly correlated to the hours you put in, the phone calls you make and the clients you visit. If it wasn't for you, nothing would get done at all.
- Profit levels. Profit's OK but you know that economies of scale would mean that your profit levels might double or treble if your company was larger.
- Marketing effectiveness. It's difficult to measure how well your marketing is doing because either you're not a trained marketer or you don't get the person responsible for lead generation (if there is one) to explain to you what they're doing.
- Closing sales. No one taught you sales - you sort of just fell into it. But you've never worked in a sales team before so you don't know what to look for if you wanted to get someone else to do it for you and you wouldn't know how to train them.
- New customers. Getting every new customer is such a struggle and you're not entirely sure always of how clients find you and why they choose (or don't choose) you as their supplier.
- Returning customers. You know there's a goldmine in your customer database but you don't know how to approach them or what to approach them with.
3. Improve and build something that you can recreate time and time again.
Returning to Gordon Ramsey at Royal Hospital Road, he picked out the decor, selected the produce, designed the menu, created the values of the business and set customer experience targets.
He understood the importance of process management - he knew what he wanted to achieve and he assembled the people with the potential, taught them a skill set and gave them the systems capable of delivering it in his absence following training.
At his first restaurant, he made sure that there were direct lines of communication to him from his employees and that his employees talked to each other so they could get things done independently.
They shared his vision and, importantly, he gave them space to succeed and to learn from their failures. He didn't do what so many small business owners do - give someone a new responsibility only to snatch it back from them if they didn't get it right first time.
Now Gordon Ramsey has 35 restaurants all around the world.
The genius of his system is not only the fact it's replicable and scalable. His 35 restaurants serve different audiences but the system he created is adaptable enough so that a different blueprint can be overlaid on them.
His restaurants vary but underlying the success of them all is Gordon's vision, his ability to get others to buy into that vision, and his mastery of process and detail.
The combined valuation of Gordon's restaurant empire runs into tens of millions of pounds because he asked the right strategic questions at the start, came up with a plan and followed through with it.
Be like Gordon. You're ready for the next step when:
- You've trained your staff and transferred a significant amount of responsibilities to them.
- You're getting consistent results from a motivated team who share your vision.
- You have the space, time and software to monitor how well your business is doing across a wide range of metrics.
- You like yourself again and feel very happy that you've achieved the first major step in your journey, even if you took a circumlocutious route.
- You get time to spend with your friends and family and not every idle thought is about work.
- You get home in time to kiss the kids and your spouse/civil partner good night.
4. Go forth and multiply
If you haven't already, it's now time to think about bringing in outside help. Yes, that includes me but I'll leave my pitch towards the end because I want you to focus on funding from investors and surrounding yourself with people who have resources currently out of reach to you
Every business develops in its own way. The key to rapid growth varies but, across all the valuable businesses I've helped create, they share a number of factors in common.
First, you need a plan
I recently wrote an article about investor appetite for low-mid market opportunities for Acquisition Aficionado magazine.
While I would always recommend growing organically, the quickest way to get to the goal I asked you to describe at the start of this article is through acquisition.
Buying companies with £0.5-£3m EBITDA delivers some of the greatest returns I have seen for business owners. Not only do you get a presence in a different market but you can subsume the very best of your takeover target's business processes and assets into your own business.
The amount of money buyers pay for profitable companies with turnovers of £10m or more is much greater than for smaller businesses. You could reach that size within three or four purchases with a "Scale to Sale" approach.
You might have thought of doing this before and approached the bank only to be either knocked back or approved but you have to offer your property and lifetime earnings of your first-born to be approved.
Banks aren't the answer. There are investors and financial institutions out there who will back a business owner with a track record of success at their original location to grow organically and by acquisition.
They're keen to speak to people like you if, and this leads onto the second condition...
Second, you need a growth team
When you scale up your business, you're swapping one set of operational challenges for another. Or more accurately, you're adding new operational challenges on top of existing ones.
You need to surround yourself with a team.
You'll need a bench, like Gordon, of developed managerial talent you can send out to open new locations and help integrate new acquisitions.
You'll also need a professional team comprising commercial solicitors and accountants who help you in acquiring new businesses. For organic growth, you'll certainly need your accountants (and not the ones who charge £100 a month all in).
A part-time financial director and a fractional CMO to provide their marketing expertise will almost certainly be necessary.
Your team is of crucial importance but the deciding factor is your leadership and the willingness and ability to work your team to hit the targets you've set out. For that, you'll likely need a mentor yourself because these will be unchartered waters for you.
Find out how I can help at the end of this article.
Scale up your business - stories from the front line
The amazing Tracie
Tracie is a fashion business owner we started working with who'd always survived because of her amazing Brooklyn hustle. She dreamt of a life in the Turks and Caicos as the owner of a $50m company but she got stuck at $1m.
Work was everything. She had little to no personal life to speak of. She'd have to meet designers and manage returns rather than spend time with her beautiful daughter. She would spend her evenings and weekends spent writing ad copy and making videos for Tik Tok and Instagram.
She was not great at bookkeeping and her debt had become unmanageable. She didn't know how much she owed or what her monthly outgoings were.
When she approached us, she was not in the ideal shape but I liked her. We quickly worked out what the key value drivers of her business were.
We put in systems to monitor and optimise inventory, brand partnerships, returns management, cash flow management and her all-important website (especially metrics like volume, conversion rates and abandoned carts).
We mapped out the most efficient processes and automated her online front end. We hired a conversion agency to increase sales per visitor. An ops director and virtual assistants now oversee fulfilment and customer services. Her financial records are up-to-date thanks to her new bookkeeping partners. A fractional CFO is now helping her forecast and keep cash flow on track.
Revenue has grown by 900%+ inside 18 months with expenses marginally higher by $100,000 per month.
The more the business improves, the less Tracie does on tasks that she is not an expert in or someone on a lower pay grade is able to do.
It gives her the chance to put systems in place so it makes it easy to hire people that meet her values. They work to the process she has set out and her COO is accountable to her for making sure all the systems are performing at the right levels.
Sustainable business growth for the small business owner - useful tips
Owners of small businesses - ask yourself the following if you are struggling to grow.
Who else in your business is adding value? If you were on holiday now, who would be able to do what you do?
Building your team is the seed of sustainable growth that will lead you to the goal I asked you to set for yourself earlier in this article. Doing nothing will substantially increase the likelihood of burnout, bankruptcy and never achieving the life you want for yourself and your family.
As an experienced business growth expert, my partner Nick Bradley and I have worked with entrepreneurs from startups to companies with 25 years' history behind them.
We help owners realise their visions turning what are often frustrating searches for revenue and profitability growth. To find out more, click on the "Contact Me" button in the footer and let me know about where you are now and where you'd like to be.
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