How to Scale the Business.

Trainer Anil Maurya 

Credit goes to BADA BUSINESS 

Section 1: Burning Problem Solved in the Video

What is Business Scaling?

Difference between Business growth and Business Scaling

Are you ready for Business Scaling?

Section 2: Summary of the Video

Business growth means an increase in revenue with a corresponding investment in the resource.

Business scaling means an exponential growth in revenue with only a few resources.

The three different types of scales are user growth, customer growth and B2B.

You should keep asking yourself whether this is actually the right time to scale your business.

You should define your goals before scaling up your business.

Business scaling helps in acquiring new customers.

Section 3: Main Content of the Video

Many businesses sink because:

They don’t understand the difference between growth and scaling

They aren’t ready, they suddenly start scaling, and the whole business goes straight down

The easiest way to understand business scaling is to answer these three questions:

1. Where are you right now?

2. Where do you want to go?

3. How will you reach there?

Whatever your answer to these questions, this will tell you what your vision and goals are.

If your goal is to expand your business very fast and you don’t have much time to do so, then you should think about scaling.

Golden Statement:

I would rather earn 1% of 100 people’s efforts than 100% of my own efforts.

This is an example of thinking in scale.

Key Note #1: Growth V/S Scale

For example:

In this month, you added Rs. 50,000 revenue in your company.

To make this revenue, you hired someone whose salary is Rs. 20,000.

Therefore, you spent Rs. 20,000 to generate a revenue of Rs. 50,000 minus CTC (for the company).

This is an example of business growth.

Growth or business growth means that with an increase in revenue, there is also a corresponding investment in the resource.

On the contrary, scaling is completely different from growth. In scaling, you add revenue exponentially and not in a linear way.

Here, we are talking about exponential growth, which is also called J-curve by Dr Vivek Bindra.

However, there are only a few resources that you have to add to bring about this exponential growth.

For example: 

1. Revenue of 10 Lakhs

You made a revenue of Rs. 10 lakhs.

For this, you hired 2 employees or just 1 person who implemented technology and system.

2. PayUmoney

Paritosh Sharma gives his own example while he was working with PayUmoney, which is an online payment gateway.

In this company, there was a sales team of 300+ people.

The cost of this sales team includes their salary, office, and infrastructure expenses.

PayUmoney was a free product.

It has huge sales because any small businessman who wants to do online payments will prefer this free product.

Apart from PayUmoney, the company also has a paid product, PayUbiz. However, people prefer PayUmoney.

With so many sales employees and the cost of so much infrastructure with only a few conversions into paid members, how it was possible to justify having such a large team of employees.

Finally, they made the whole process online.

Today, PayU’s website is completely different.

Now, you can visit the PayU website on your own.

If you are a merchant and want to introduce a payment gateway to your business, then you can put your details on the website and immediately, you will be onboard.

  As a result of this change, PayUmoney got:

Achieve scale very fast

Cost of the sales team became less

Now, they have hired only Account Managers who:

Provide customer support

Upsell

The job of the account managers is to multiply the revenue from customers like increasing revenue from Rs. 5,000 to Rs. 1 lakh to Rs. 10 lakhs or any other figure.

It is very important to understand through this example that as soon as you start working on scale, your revenue will increase a lot.

PayUmoney did this by increasing the efficiency in the customer onboard process.

Key Note #2: Types of Scales

There are 3 different types of scales:

1. User Growth

This type of growth is seen in Internet businesses like:

WhatsApp

Hike Messenger

PayUmoney

In the Internet-related businesses like these, as more users are added, the valuation of the company increases.

2. Customer Growth

This type of growth is seen in the following types of businesses:

• FMCG Businesses – Eg. Patanjali

• Services Businesses – Eg. Website design agency/marketing agency

These businesses work when you actually buy the product or service from the store or any related website.

3. B2B 

This includes both user growth and customer growth.

You can map your business according to these three types of scales.

Key Note #3: Identify the Right Time to Scale Your Business

Now, introspect and ask yourself the following question:

Where do you want to go (i.e. your business goals)?

Write down your business Goal for the next 12 months.

Your answer to this question will become the foundation for the next question, which is:

Do you even have to scale?

Keep asking yourself whether this is actually the right time to scale. 

For example: 

You may have read examples in newspapers about certain businesses expanding or getting more funding and got inspired by these to do the same for your business. 

You don't need to copy those companies right now.

There are many Ed-tech companies in India today out of which Bada Business is one of them.

All of these other Ed-tech companies (who are playing big valuation games) are venture capital-funded and investor funded. They are not customer-funded.

The day the investor doesn’t want to continue putting in money is the day their business will close down and the learning will end.

However, Bada Business has the advantages of not asking for any bank loan and nor is its venture capital-funded.

Bada Business is flourishing on its own money and the customer's money only! Bada Business relies on being customer-funded and will continue to provide world-class content to help expand your business.

Key Note #4: Business Goals for Scaling Up

In the above-mentioned question, i.e.:

Where do you want to go (i.e. your business goals)?

Here, Mr. Paritosh Sharma is taking examples of different businesses and their goals that will help you in defining your own goal of scaling. Your goal can be:

1. Increase 100X Users on App

• Currently, 1 User has downloaded your app

• 100 Users target for the next 1 month

2. 5X Walk-In Customers to Your Shop in Every Month

• Currently 10 Customers

• Target - 50 Customers Per Day

3. 100X new customers on an E-Commerce portal

4. Open 3 New Offices in New Markets

• Current Office in Delhi

• Target Market – Kolkatta/Ahmedabad/Mumbai

• Current office in India

• Target Market – USA, Germany and Canada

So, the scale can be of any type. The scale of your business can be mapped around these four answers. If you have a new answer, then you can note that down as well.

Key Note #5: Advantages of Business Scaling 

Ultimately, one pattern is clear. Through scaling, you will:

• Acquire New Customers - Pays Directly

• Acquire New Users - Converts into customers, if you solve their burning problems

For example:

In the Bada Business app, there are lots of people who watch our free content. 

Following this, there are lots of people who watch our free content and are so impressed (they get the clear value), that they immediately make a payment and purchase the everything about entrepreneurship and problem-solving courses.

This is because they know that if they invest in themselves today, they are not going to get a better return of investment than this, in the future.

For now, you have understood what exactly is the scale and how is it different from growth. Now, it is time to understand the story behind the scale.

Key Note #6: Story Behind the Scale

Until now, you were watching the Bollywood movie of the story in front. Now, let us explore what happens behind the scenes. Why do some companies grow so fast? What is so special about them?

The scale is like the movie which is very interesting to watch as it is like watching a business rocket ship!

What is actually behind this?

Every system has processes and technology.

Process and technology lead to efficient operations. The more efficient your operations are, the more efficient your systems will be and the faster your business will scale.

For example:

Amazon.com. You place your order and in two days the goods are delivered to you at your doorstep.

Every moment you get to know everything about your product delivery.

Where is your order, how long will it take to reach you, when was it dispatched, etc?

All of this information is provided on the Amazon app.

This is all happening due to technology at scale.

But behind all this, are their efficient operations.

Before we get ready to know whether you are ready for scale, please understand this:

Golden Statement:

The other name for Scale is Speed.

Scale means that you will expand your business very fast.

You have decided that even if your car gets damaged or if you encounter potholes or speed breakers, you’re going to continue moving with fast speed. When moving with speed, there is the possibility of an accident with slight injuries.

However, if your operations are strong and you have brought efficiency into them by using technology, then these setbacks will be less and less. You will be able to reach your goals much faster and your competitors will be left far behind.

The only place where entrepreneurs get bogged down is when they cannot manage the scale and speed together. You have to be careful that you are ready to scale, and that is when you can go at a fast speed.

The best example of this is Starbucks.

For example:

Starbucks is the world’s favourite coffee chain. It is present all over the world including in India.

In 2007, CEO Howard Schultz sent an internal memo or letter to all his employees.

He said that, because of the commodification of our products, we have lost our way.

He stated that, when Starbucks was a smaller business, then all the customers would get the smell of fresh coffee in their cafes because all the coffee was manually ground.

To achieve scale, we started using powdered coffee and the love from the customer decreased after this.

The customer felt that the coffee had definitely decreased in quality.

There is a hidden command in all of this. Sometimes to achieve scale, you have to do those things for some time, which cannot be scaled. 

Grinding coffee is done with a lot of love and patience. You can build machines to grind coffee if you want to. 

However, by building machines to grind the coffee, you just will not get the same taste, love and feeling from the coffee that is ground by hand. 

Therefore, this is an example of something which should not be scaled.

So, in 2008, Howard Schultz decided to bring back the grinding of coffee in all Starbucks outlets and to gradually scale the business by doing it the right way.

Paul Graham, the founder of the world’s most famous and successful start-up accelerator, Y-Combinator said in 2013, “Do things that don’t scale.” You will learn about this in a later video.

Requirements for Business Scaling

To scale, you require three important things:

1. Clear Goal

2. Speed of Execution

3. System

Defined Processes 

Technology

Key Note #7: How will you scale a process?

Golden Statement:

When the process repeats, it will generate more speed.

For example: 

For all the Delhi based people, all of you must have tried Giani’s ice cream.

For every franchise store of Giani’s ice cream, the ice cream comes from a central kitchen.

The ice cream is made in a central kitchen, not the store.

At the store, there is just one employee who serves the customer.

To make every ice cream, there is one same method.

How many scoops are used, how much chocolate, packaging and which cutlery with which product, everything is defined.

This is the best example of a process and you can repeat this wherever you want to.

Hire a worker for this franchisee and repeat these 4-5 steps (copy-paste it wherever you want to).

An Important Tip:

When you think about increasing your scale, most of the business owners think that they can hire more sales executives and increase their sales. This is absolutely the wrong decision.

The scale doesn't mean that you start hiring more people in your sales team. 

If you are not ready for scaling and you have started increasing your sales team, then you will land up on the wrong path. You will have to fire people; your costs will increase and you might go through a reverse J-curve. 

Key Note #8: Ready for Scale? 

If you want to know whether you are ready for scaling or not, you have to ask the following questions and answer them to yourself.

1. Do I understand my customer?

Are you understanding your customer very well or not?

2. Does the customer understand the product/ solution?

You have to think according to the customers perspective.

Take feedback from your customers. See whether the customers’ problem is actually solved or not.

3. Have I improved the product after getting negative feedback?

Whether you have improved your system after getting the negative feedback or you have ignored it completely.

If you ignore negative feedback of your customer and do not improve your system, then you are not ready for scaling.

4. Is my team ready for a new business?

If your team is not ready and cribbing all the time you won't be able to scale properly.

5. Have I achieved previous goals? 

As a founder or owner of the company, you must ask yourself that whatever goals you have decided, whether they are achieved or not or whether you are running late on them.

6. Repeatable sales process?

Keep in mind that Dr Vivek Bindra has previously said that, "The process should be repeatable."

The process is successful if it is repeatable.

If you cannot repeat the process that means the process is not made for you actually and when you will scale your business, your business will collapse.

7. Right infrastructure?

For example:

You own a saree shop or you are doing an E-commerce business for which you require a lot of inventory.

If you think you are going to concentrate only on the scale and get a place on rent for keeping your inventory, then this will not work for you.

You have to make sure that for keeping your inventory, you have proper infrastructure and have maintained all the logistical details.

8. Resources for fundraising

Bank Overdraft

CIBIL Score

Loan

NBFC Loan

Angel Funding

Crowdfunding

A loan from Family and Friends

9. Do you know all the risks in your business?

Make a list of risks in your business. If you don't know about the risks, then you shouldn't be scaling your business.

10. Do you know how your competitors are moving?

Learn from competitor's mistakes

Learn from your own mistakes 

Massive Action Plan

You have to be ready with the answers to all the 10 questions listed above.

The most important tip is that scale doesn't mean that you start increasing your sales team strength.

If you make a wrong decision, maybe you will move forward at a very high speed, but in the wrong direction.

Section 4: Key Outcomes of the Video

Be clear on where do you want to go before scaling your business

Make sure that your process and technology is at the optimum level before you scale your business,

Ask yourself 10 key questions and answer them properly before scaling

Ensure that you have a clear goal, speed of execution, and system to scale efficiently