The SCALE method is how we make sure your company is ready to grow.
There are several things that can get in the way of a startup’s growth, and most of them have to do with internal processes, not outside factors that are beyond your control. Our goal is to get you in position to scale successfully and improve your bottom line. Our method to do this includes 5 major areas:
1. Streamline Processes
Hiring, project management, order fulfillment, and even document storage, are just some of the areas that must be streamlined and running like a well-oiled machine in order for your startup to be able to focus on growth and scaling.
2. Cash Flow Management
One of the top reason most startups fail is running through cash too quickly, usually through expenses and poor buying decisions. We help you figure out the best, most cost-effective ways to complete tasks and projects, so you don’t run out of money.
3. Activate Support
Connecting with investors, board members, and mentors is crucial to giving you the financial and operational support you need to succeed. But so is conducting due diligence on these folks. We help you figure out the support you need, and then make sure that your candidates are the right fit.
4. Learn the Pain Points
Identifying the need of your target market is crucial so that you are solving a problem caused by these pain points. However, you also need to determine proof of concept by making sure that this is a pain point that your market wants solved.
5. Empower Your Team
A corporate culture where everyone is working toward the same goal is imperative. Developing a strong mix of autonomy and collaboration, as well as allowing everyone to work in their genius, helps productivity skyrocket and keeps your team happy.
Want to understand how we work? Here are a few case studies to help.
Christina and Matt inherited the family extract company from Matt’s great uncle. At the time, it was a one-barrel-at-a-time operation, a far cry from its heyday decades earlier of a dozen barrels at a time. They were interested in modernizing, expanding capacity, and growing the business. Their question to me was how to go about doing this. However, my first question was “Are you sure there is a demand?”
Matt and Christina had a huge advantage because they already had customers who love TFC products—so TFC’s reputation was an asset. Plus the company itself had been around for a long time and was based in New England, like its customers.
The challenges Matt and Christina faced ranged from not understanding the industry to not understanding the manufacturing process. However, the most pressing issue was determining demand, including identifying its primary market, whether clients and potential clients wanted natural or imitation extracts, what flavors they wanted, and whether TFC could produce product at a price point that met the needs of their primary market.
If we could solve the issue of determining demand and identifying the key products, the manufacturing process was easily determined.
ACTION—HOW WE HELPED
We helped Matt and Christina identify and research the extract industry, which turned out to be worth $25B a year and growing. We also identified the big players, who actually buys extract, and whether the market is better for natural, imitation, or both.
Next, we needed to determine what competitive advantages that TFC had over other brands, besides the one we’d already identified. One way we did this was to compare the family recipe to its competition, setting up taste tests. We also interviewed current and former customers to find out why they preferred TFC extracts to the competition. We took advantage of those interviews to also get input on what kind of other extracts and flavorings they’d like, besides the current offerings. We then built a composite customer profile, based on experience, to find regional prospects. We used this prospecting list to interview them about their use of extracts, to find out how attached they were to their current supplier, and to offer them a sample to try TFC.
Finally, we knew that all of TFC’s customers were wholesale—bakeries and similar that used the product in what they made, rather than retail. We researched margins, markets and demand to help us here.
Matt and Christina are now able to grow The Flavoring Company with confidence. They have pinpointed their target market, and they know what makes TFC extracts special. They can charge a slightly higher price because of this, and as more businesses become aware of TFC, demand continues to grow. They also know exactly how much to spend to make the product and be profitable. They’ve negotiated an agreement with a distributor, which overcomes one key challenge they had. Finally, as they expand manufacturing, they are also planning new extracts based on demand.
Kyle and Marcus have been friends since high school, and together started a social good marketing agency. As their company grew, they hired between 30-40 employees and contract workers. However, retention was inconsistent—some people lasted a while, others not that long. They’ve recently expanded their business beyond their current capacity, and realized they needed to add members to their team. They also needed to figure out why certain departments had high turnover rates when others did not.
Kyle and Marcus are well matched because they complement each other’s skills, and they were able to contract out what they couldn’t do themselves. Before hiring any new people—management or otherwise—we needed to first determine what the current corporate culture looked like and what Kyle and Marcus wanted it to be. If the corporate culture was toxic for any reason, this needed to be addressed ASAP. Given the high turnover of their employees and contract workers, a toxic work culture may have been playing a role.
Second, we needed to clearly identify the needed skill sets in the C-Suite that effectively fill in the skill gaps that Kyle and Marcus have. It’s also important that any new member of the management team had a personality and style that gelled effectively with Kyle and Marcus.
ACTION—HOW WE HELPED
After interviewing current and former employees, we learned that they felt that they were adequately compensated for what they did—pay was not an issue. Employees and workers were attracted to the agency because they believed in its mission and they liked the clients and projects, but they didn’t feel like the agency itself was making the world a better place. For example, Koala didn’t do anything that promoted the social good; the company didn’t even recycle! This was exacerbated by a nascent “bro culture” that Kyle and Marcus were either unaware of or allowing to happen, and it mostly involved the earliest employees, who were all men. They would make misogynistic comments, regaling each other with sexual conquests, and they felt entitled to not put in as much effort because they’d been around so long. Finally, Kyle and Marcus were liked by their employees, but employees were often not sure about what was happening next, nor did they know if they were appreciated by management.
Another major issue here is one of corporate culture, of moving from the “scrappy startup” phase to leveling up to staid dependability, and communication. Kyle and Marcus needed some leadership training—Kyle’s language could be easily misinterpreted, and Marcus could seem standoffish. They both needed to learn to see from their employees’ perspectives. As for communication, they needed to reaffirm the agency’s social good message, and to squelch the developing culture that excludes and demeans. This was also improved by diversifying their management team, bringing in women and others who don’t look or think like them.
After working with Kyle and Marcus for about 8 months to fix their internal culture, teaching them how to hire the right people, and establishing effective internal communication processes, turnover went down from 50% in the target departments to 5%. The expanded management team, which included women, made a point to acknowledge high performers and reward based on meritocracy, which meant that great workers got to work on the best projects. As a result, the staff were working better together and required less meticulous oversight by Kyle and Marcus. They often delivered solutions to problems even before they arose and felt confident enough to come up with creative ideas on their own, knowing their voices would be heard.
PPG sold complex products and services. The company’s offerings were proven—it had been in business for years—and once someone used PPG’s offerings, they usually became a die-hard fan. Unfortunately, employee turnover is high among PPG’s clients, and replacement employees don’t necessarily understand the benefit of PPG’s offerings. As a result, there was a constant need to keep the pipeline full with new clients, and oftentimes, only the CEO could effectively sell.
The founder, Grace, had a vision for expansion, one that required capital. Eventually, an angel investor agreed to invest $3M, disbursed over 18 months, for an equity share in the company and a seat on the board. Shares were distributed to the C-suite team, in exchange for discounted pay. Grace maintained majority stake at 51% and board support. Unfortunately, things went down from there.
Grace and her partners did not do sufficient due diligence on the angel investor. It was later revealed that the investor’s intent was to “push out” Grace and her partners and take over the company, something the investor had apparently done before.
Next, because Grace trusted the “expertise” of the investor, she handed over shares of the company without ever establishing a vesting clause that would require the new shareholders to meet certain milestones (time and accomplishments) to keep their shares. Because of this, when she had to fire her COO after about 15 months, he got to keep his shares.
Salaries were also unbalanced. Everyone in the C-suite received a 6-figure salary, including those who weren’t working full-time, and the IT guy also received substantial consulting compensation—to the tune of an additional several hundred thousand dollars in one year. At the insistence of the COO and investor, sales team members were paid a base salary of $150,000/year, plus commission, despite the fact that sales staff had originally agreed to a base half of that (in line with industry average), and most of the sales folks were not proven in the industry. Unsurprisingly, none of them performed successfully and at least one didn’t even bother pretending to work. When the founder finally fired one for non-performance, he successfully sued her because his contract did not include a trial period or a performance clause.
Scaling before demand wastes precious resources. In the case of PPG, the C-Suite team was so sure of its (aggressive) projections and expansion that it substantially scaled capacity long before demand existed. The expansion included another office out of state, and high-end, volume-capable products and services.
PPG enthusiasm to expand resulted in expensive contracts with vendors offering duplicate services. Lack of organization, accountability and understanding of services needed all played a role in this. PPG also failed to seek out multiple proposals or to aggressively negotiate best pricing, especially with their service-based vendors. Finally, PPG was married to its expensive legacy systems that cost several thousand dollars each month.
ACTION--HOW WE HELPED
At the point we were called in, the biggest issues were cash bleeding and team morale.
To stop the cash bleeding, we focused on where PPG could save money. We helped Grace and her partners determine the top salaried positions needed and matched them with appropriate compensation packages. Where necessary, we reassigned jobs and released people who didn’t want to stay. We also helped PPG implement an employee performance system and regular internal communication channels to keep everyone focused on company growth, including weekly team calls. Having a positive and inspiring culture, not just requirements, is also key to attracting top talent. So we helped them develop corporate culture plan as well, which helped with team morale.
Next, we reviewed their vendor needs and conducted market research on the best matches. We also upgraded all of their legacy systems to more efficient and cost effective SaaS products. At our recommendation, PPG found a sublet for their second space and informed their landlord that they were willing to give up their lease.
To help PPG grow, we established a process so that PPG’s client employee turnover didn’t mean that PPG would lose business every time its contacts left. We also made sure that PPG kept in touch with its contacts, so as they moved to a new company, they would keep using PPG services. Next, we helped Grace and her team zero in on the market need for their service to ensure they were addressing a burning pain point and thus increase demand for their services, and we documented the sales process so that it was consistent and effective. We also implemented an expansion plan with milestones and metrics that triggered certain actions for growth. For example, “when we sell this much, we bring in another employee. When we hit this volume, we need to begin looking for another office”.
Finally, we had PPG partnership agreements analyzed to include safety clauses to protect them from exploitation in the future. We also helped them set up an efficient process for vetting angel investors.
After working with Grace and her team over the course of about 14 months, the prospects for PPG were better than ever. By fixing PPG’s internal culture and communications, team morale improved dramatically. While the company was forced to buy out a couple employees and at least one shareholder to avoid protracted legal fights, the right people were finally in the right job.
By releasing unnecessary real estate holdings and addressing its vendor issues, as well as right-sizing salaries, PPG freed up substantial cash that allowed it to support the development of its proprietary systems and growth efforts and to avoid relying on disbursements that the investor withheld anyway.
PPG’s focus and reputation on client intimacy proved key to the company’s growth. Contacts nearly always let PPG know when they were moving onto a new job, and PPG’s new processes meant that PPG not only keeps that former contact’s position, but it would sometimes open up new opportunities. Indeed, PPG met its first growth milestones and expanded its customer service base about 8 months after we were brought on, and again a few months later. The home office is getting crowded, but PPG is growing its cash reserves, which means that when they move to a larger office, they’ll be able to pay their bills instead of relying on credit.