Every week one specific business trend examined and explained in compact and detail. In this special CEO Q&A session, Manuel and Daniel talking about how to scale a business.
Today we are delighted to present you the first session of our new CEO Q&A series, here at the Virtual Frontier. Every week I’m going to talk with our CEO Manuel Pistner about one specific topic that showed to be important to our community and listeners. Today's topic... “How to scale a Business”. We are going to learn what scaling means, how to scale systematically and what are the first practical steps when thinking about scaling a business.
QUESTIONS AND VIEWS HIGHLIGHTED IN THIS EPISODE:
[00:00] Intro
[01:44] What is meant by team scaling?
[03:22] What do I need to know as a business owner so I can scale with my business?
[07:47] What is the perfect client and how can I get them?
[10:15] First solve your problems, then think about scaling
[13:00] Scaling up vs scaling down
Flash Hub provides tools, workflows, and skills to hire freelance experts and set up your first team in a matter of days. Develop virtual leadership skills, solve the digital agency hamster-wheel issue, and build freelance teams with ease. We have selected best practices and the most helpful skills you need to work smart, less, and grow a digital business that is easy to sustain you can work on from virtually anywhere. Visit FLASH HUB to get free access to the virtual business builder training. Learn how to build, grow, and scale your business with virtual teams and global freelancers in this free training.
For our English-speaking community. This is a English episode and you can find the transcript of this conversation now in more than 20 languages, on our Blog, at HappyScribe Public, or watch the video with subtitles for this episode on our YouTube Channel. You'll find all the links in the show notes below.
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Daniel Guaper
Hello and welcome to the Virtual Frontier, the Podcast about Virtual Teams created by a virtual Team. Disclaimer, all of our interviews are conducted virtually. I am Daniel your host and I'm part of a team here at the Virtual Frontier. Today we are delighted to present you the first season of our new CEO Q&A series here at the Virtual Frontier. Every week, I'm going to talk with our CEO, Manuel Pistner, about one specific topic that should be important to our community and listeners. Today's topic, how to scale a business? We are going to learn what scaling means, how to systematically and what are the first practical steps when thinking about scaling a business. If you like to show, subscribe on YouTube, review it on Apple Podcast, follow us on Spotify, Stitcher, Amazon Music or any other platform you like, for podcasting. All the links you can find below in the description. So without further ado, let's dive into the first CEO Q&A session at the Virtual Frontier. Enjoy the conversation.
Daniel Guaper
Hello Manuel, I thank you very much for joining us today. We have decided to do a little new series on the Podcast a Q&A session where we will discuss and discover new topics and questions that might come up in different business scenarios and cases. Today, we have picked up the topic of scaling business. And I would like to dive into the topic and start with the first question. Can you explain to me what is the meaning of the term scaling a business?
Manuel Pistner
That's a good question, because I think that's a widely spread buzz word that many people use. But I assume that most people have a different understanding, at least of what that means. So what it means for me is to expand the business, which means to... I mean, if you look at the business, the main purpose is to solve problems for clients. And if you want to scale a business, that means you need to, on the one side, attract more clients and on the other side, increase your operations to serve more clients. And to be able to do that, it means you need to make implicit things that somehow happen in your culture that somehow help to solve problems of your clients. But they are not like explicitly available in the system. You need to make this information and these habits and these processes and procedures and routines explicitly available so that everyone can understand and have a clear set, set expectations about what they need to do in order to serve the clients and also what the marketing and sales team need to do in order to attract more clients. Basically, when the business scales, the main idea is to put more money into the sales funnel that helps you win more clients. And on the other side, you can also increase the operations like Cloud technology that's scaling. Right, because you can easily ramp up the operations and serve more clients without distractions, without changing things, without increasing failure.
Daniel Guaper
And what do I need to know as a business owner, probably when I want to scale with my business and what are like important steps towards.
Manuel Pistner
So let's focus on I mean, there are two main different types of businesses, the ones the product based business. That's a different kind of thing. But in a service business, I have most experience and I think I can explain from my experience what what you need there. So the main part is to win clients with ease. Many service businesses struggle with winning clients because it's hard for them to understand how selling works. Selling works not in the way that you tell everyone what you do. You need to communicate what clients get, or more explicitly, you need to communicate how your business solves problems for clients. That's just the main reason why clients buy into your business. There is, yeah, that's the purpose of your business. If you want to increase, that's what you need to do first is to define your business strategy, wh ich is explicitly defining your persona of your perfect target client. That's like your avatar. And from the persona derived, you create offers that help your perfect client solve problems. OK, that's your business strategy, the persona of your perfect client and your offers that solve problems of your clients. And then I'm sure you most service businesses have different offers. You line them up into sequences. That means your client purchases one offer, then the other offer, then the next offer. And every offer solves the specific problem. That's your buyer's yourney. Once you have that well defined, the expectations for your clients are very well set because they know, based on your offers, what exactly they get for your marketing team. It's well defined because they know which client they need to target and which offers to market. Not by telling everyone, by my staff, by my staff, but by communicating value to clients and how these offers solve problems of clients. So that's the client acquisition side. The other side is to make explicitly available with a quality standard how your team needs to deliver the services your clients ordered explicitly. I prefer templates and checklists because then everyone knows what they have to do in order to deliver the services your clients want at a quality standard, and not just depending on the performance and on how people in your business think they should do it, but how your business really wants to do it so that the expectations are clearly set on both sides for your clients and for your team. And that's when the business starts to scale.
Daniel Guaper
You were just mentioning in the beginning the perfect clone, I guess some people or some companies are happy with just any client. How can I the perfect client.
Manuel Pistner
Yeah, that's a good question. I mean, I see that often. And that's when you have a business that is in reacting mode. That means you communicate what you do. And then some people, some clients, they accidentally come to you and accidentally they place an order and then you have a client. But way too often it happens that this is not the kind of people you really want to work with. They might pay the bills, they might pay money. But still, it causes a lot of stress because expectations are not set well and maybe the culture doesn't fit very well. Et cetera. So the perfect client really is the client that you love to work with. So when you sit down and define which kind or types of clients you really want and really write that down, and I'm sure everyone can come up with some ideas how the perfect client looks for you. OK, if it is like if it's a private person or a business person, if it is a marketing manager or a technical guy, if it is a person with a long term experience or a beginner, if it is a person in a corporation or in an agency. So at least these attributes you should know and then you can communicate with messages to attract people that resonate with these messages. And these are your perfect clients because they like or love what you communicate and what you talk about. And most importantly, they see and trust you that you, with your offers, can solve their problems.
Daniel Guaper
As we have already like experience in scaling with your own businesses. Are there any pitfalls and how to confront it on the way while scaling your own businesses, and could you share maybe some of those so our listeners could avoid them in the first place?
Manuel Pistner
Yeah, of course. I can only recommend, especially when you lead a service based business, do not grow it and scale it until you're systemised. First, you structured and systemized your customer acquisition and your operations, because if you don't have that, then it's just desperately trying to find clients and desperately trying to win talent that somehow serve your clients, but without well managed expectations, without your business providing leadership for both your clients and your team. You just throw your problems, if you grow your business. You might see all these problems right now, expectations are not well said. You don't have the right talent at the right time. You don't find clients. So if you just grow, you create problems and problems means you might have a new client. Then you hire new people, you hire them maybe full time. That increases your fixed cost. Then a client quits. You have high fixed costs, but no revenue anymore. That creates a lot of stress. And on the other side, you might win a new client, but you don't have enough talent. Your client expects you to start tomorrow or maybe even yesterday, but simply you don't have enough talent. You hire juniors because you don't have any other alternative or you overutilize existing people that need to work over hours doing things they don't like and doing things they don't really have an experience with. And that causes a lot of stress on all entries and corners. If you grow that, it means just you grow your problems. So I would definitely sit down and first structure and systemize both customer acquisition and operations and then make it bigger. Thats what I just captured that preparation is an essential part in this. So if you have like already like a lot of problems or things that are not working really well, you should get away them first and then start with the structured analyses in preparation for the sclaing process.
Manuel Pistner
Yeah, absolutely. I mean, building a business is all about building a system that is optimized for solving specific problems. And just this sentence contains many things you need to do. You need to understand your problems you want to solve. You need to understand how the system works independently from you, because typically the business owner is the most experienced person. But that's why this person is involved in all kinds of operations in every part of the business, telling people what to do. And without the business owner telling people what to do, nothing gets done. So you need to make your knowledge as a business owner explicit, supported by structured Workflows and help and support other people so that they can use the system you've built. And solve problems for clients with a quality standard that you've created.
Daniel Guaper
Let's assume I have already done the preparation part, things are done well, can I scale it any time with my business or are there any is anything else I need to take care of before?
Manuel Pistner
You can scale any part, any time, but what I really recommend is analyzing what is your current biggest bottleneck for your business to grow in scale. Often its customer acquisition. So if you didn't find a reliable, systematic way to win new clients, online, of course, because offline is dead, then I would just focus on that. That's your biggest problem. You can grow and scale your operations, but if you have no reliable way to bring new clients to your business, you don't need to care about scalable global operations. If your problem is I mean, OK, if you solve that problem and you win clients systematically, you have enough clients and you can spend more money on advertising to attract your clients and you don't have enough talent or your profitability of delivering services to your clients is too low or you have too high workload, too much stress, not it's not the right quality or you can't find talent fast enough, then focus on improving and systemizing and digitizing your operations, because if they are structured, systemized, digitized, the next level is scale. And scaling means you can hire people from everywhere in the world like you are in Mexico, Daniel, we just met once and it works because you get.. You joined an organization and Flash Hub where you see which expectations we have. What you need to do. You have you structure the Podcast so things are well organized. And if things are well organized, you can even onboard talent like almost automatically or a self-service if there are video Onboarding, for example. So I would always focus on identifying your problem and then specifically solve this problem either in the operations or on the side of the customer acquisition.
Daniel Guaper
Now we are having uncertain times, are we living in uncertain times, is the only scaling up or can I also down?
Manuel Pistner
Yeah, the definition of scaling from my perspective is scaling up and down, because, as you said, sometimes you have times of hyper growth and then the economy is up and everyone wants to innovate and buy. That means winning clients is easy, but winning the right talent at the right time is hard. OK, so there is only the way up. But in times of crisis, like when we had the lockdown during Corona and many businesses lost like 50 percent or more of their revenue, you definitely also need to scale down somehow in order to let the business survive which is in the interest of clients and also people working with the business. So there is also scaling down. Yes. You cannot just or I recommend not just growing the business with growing fixed costs because that means you grow your risk with every growth step.
Daniel Guaper
Got you. Now that I know a little bit more about what scaling is and what scaling means, what would be the first practical steps when I go through this scaling process with my business and what I need to take care of? I think you mentioned already some of the steps, but we can repeat some of the first steps or a business owner has a clear idea about what you can take on rather than wait to get started with this process.
Daniel Guaper
Hmm. So, I mean, you want to do that because you want to solve some problems. Either you want more profitability, less stress, lower workloads, or win more clients to increase your revenues. So find out what it is first and then you will realize that typically the fish smells from the head. I don't mean you as a business owner. I mean your offers. The offers are the main thing that need to be well defined in the business because they set expectations for your clients and for your team. So defining offers, and if you need a service business, you can think of your offers as kind of productize offers. So clearly, bundled clearly specified offers like a marketing strategy that is clearly specified, what the client gets and how that solves the problem of the client. So really, write down what your specific offers are and how they stack up to become the buyer's journey. And from there, that that is really the first step. And then you can say, OK, I want to win new clients. So based on your offers, you'll build your customer acquisition funnel, attracting your perfect client based on your persona and offering them your services by communicating value and how you solve the problems. If you want to have higher profitability in your business or reduce your workload, then you take your offers and define things that I call assembly lines, which are really I mean, you can you can see that like a Trello board with well-defined steps, how these offers will be executed so that the client get the results they want....... If you if you are talking about a software development team, the assembly line process is scrum. OK, you have a Sprint plan and you have daily meetings, you have a Sprint review, you have a retrospective and you start again. You have your Sprint planning et cetera. If you want to develop, for example, a marketing strategy or set up a campaign, a marketing campaign for your client, you also have well-defined steps. OK, these are your work items processing a Workflow, that's your assembly line. And then at like checklists that people can follow when it comes to what you need to do to start with this work item, what you need to do when you execute it, and what do you need to ensure it's done so that it's really done. That's your definition of ready definition of execution and definition of that. And then things become systemized, well structured, and everyone can execute it because it can even create videos and explain how it works. And then you can provide Onboarding as a self-service and then things start to scale. So start with your offers and then decide what's your biggest problem and then solve that.
Daniel Guaper
Well, that was really insightful. Thank you very much for that information about scaling your business when people would like to find out more about this topic. Can they get in touch with you what you would recommend taking the next step into practice or what would be helpful?
Manuel Pistner
Yeah, you can connect with me on on LinkedIN. You can subscribe to our Flash Hub YouTube channel. You can go to Flash Hub.io/training. There is a complete free virtual business builder training that helps you to understand the exact Opportunities of growing and scaling a business with Virtual Teams, even with global freelancers to build an On-Demand scalable workforce. I think that gives you a good starting point to understand the opportunity behind Virtual Teams and how to scale your business with these.
Daniel Guaper
Sure, that we will do and all the links you can find in the show notes below later on. Manuel, thank you very much for having this conversation with me today. I think we're going to repeat it now, just every week to get some answers out to burning questions for four business owners. And just thank you again for taking the time. Yeah.
Manuel Pistner
And thank you very much for having me here. If you guys that listen to this Podcast have some questions or ideas, just leave a comment below this video. If you see the video or below the audio if you see that on our blog and I'm happy to catch up on this question and answer it in the next episode.
Daniel Guaper
Cool, bye bye.
Daniel Guaper
I want to thank Manuel for joining us today on this episode. Now we have a better idea about how scaling works and what are important steps to consider. If you want to learn more about how to scale your business at any time and make work better. Visit FlashHub.io/start to get free access to the Virtuell business builder training. Learn in this free training, how you can build, grow and scale your business with Virtual Teams and Global Freelancers. You can subscribe to the Virtual Frontier on Podcast Google Play, Spotify YouTube, or wherever podcast can be found. And while you're there you can leave us a review. Please support us on Patrón so we can keep improving the show and your experience. On behalf of the team here at Virtual Frontier, I want to thank you for listening. So until next episode, keep exploring new frontiers.