A Scalable New Business System

Something that’s scalable can create additional output without a matching amount of input, and your new business plan needs to be scalable. Scalable can mean many things, of course, but I’m specifically referring to the ratio of labor to results, and not money or some network effect to results. In the smallish firms that we advise, labor is constrained and incredibly valuable, and so I want to talk about how important it is to utilize your labor carefully and not in a way that requires more of it for better sales results.

Having a scalable new business plan is important for two reasons:

1. It allows you to grow in a more controllable manner.
2. It increases your likelihood of a successful exit.

Scalable = Successful

Let’s start with the first one. Relying on referrals and word of mouth isn’t a system at all. It’s one step above having the intern stand out front with a sandwich board sign, but not a big step above that.

Doing outbound phone calls or emails is a system, but it’s not an easily scalable one, because there’s only so much of “you” to go around. You want double the results? Spend double the time or enlist some help.

But writing a book or having a well-honed digital ad strategy is a scalable system. With the one, you just do a better job of book distribution, and with the other, you just pour more money into the ad spend.

Here are some more examples of scalable new business systems:

• A webinar that you prepare and present to 100 or 1,000—the effort is the same, but maybe you borrow someone else’s platform to broaden the audience.
• Hiring a booking agency to get you on podcasts—get on bigger podcasts and juice up the distribution of the podcasts that you’ve already appeared on.
• An SEM spend, which probably only makes sense on LinkedIn or AdWords—just tweak it so that it’s optimized, and then go from $1,500 to $3,000 each month.
• Take your speaking career from being one of three members on a panel…to a breakout…and then a keynote. It’s about the same prep, but to a larger audience.
• Cultivate a strong network of mutually beneficial referrals. It costs you nothing to send prospective clients to the right fit (when you aren’t the right fit), and to have other people essentially on your informal new business team is golden.

Here are some examples of new business activities that might still be smart to do, but are not scalable:

• Networking. There’s a 1-to-1 labor match and it doesn’t scale.
• Cold outreach, whether by phone or email. I think there are really solid reasons to do both, but scalability is not one of those reasons.
• Hiring a salesperson, expensive or not. Unless, of course, they’re instituting scalable processes! If it’s just one more person to smile and dial, or if it represents adding yet another Rolodex to the prospect pool, it’s giving you temporary progress without building a long-term moat around your business. They move on…and sometimes they take their (as in “your”) clients with them.

We can always work on our skills for a better result, but that doesn’t make it scalable. That just makes it more efficient.

Scalable = Sellable

But what about the second point, where a scalable new business plan might facilitate a better exit? I think this matters, even if you never intend to sell your firm, because it’ll be so much less annoying to run it if you can nail the new business challenge. I’ve often believed this:

If you can nail new business, everything else can be fixed. Conversely, nothing else really matters unless you have nailed new business.

This is also one of the biggest concerns a buyer will have: “will the results continue once she is gone? Is there a system in place that we can keep feeding, or is it all based on personal connections and unignorable charm?

The Big Picture

I think most principals are actually better at new business than they think. Their struggle isn’t skill or aptitude, but rather:

• A positioning that’s non-existent or not conducive to building a marketing plan or just lacking an addressable market.
• Insufficient marketing to generate enough deal flow. More specifically, each opportunity, because they are so few, is precious, and so it requires exceptional sales skills or too much compromise.
• Time. The principal is tied up with client management or whatever.

The best new business plans closely involve at least one principal, are built on a narrow positioning, are supported with marketing, and are scalable.

If your sales pipeline is secure, everything else can be fixed. And if it’s scalable, even better.