Scaling a company is an exhilarating yet complex journey. It begins with a vision, a great product or service, and a core team passionate about making a mark. However, as the business starts to grow, so do the challenges. Processes need to be standardized, roles need to be defined, and the company culture needs to be preserved. How can leaders strike the right balance between growth and operational effectiveness to ensure a successful and sustainable scaling process?
Recently in the Best Places To Lead show, David Walens, CEO of Exploring Digital, shares his hard-fought lessons while scaling his company over the last forty years. With a ton of experience, David has successfully scaled his company from a small startup to a thriving 8-figure business. His insights on understanding profitability, the nuances of acquisitions, and the importance of aligning personal and business goals provide actionable guidance for business owners looking to scale.
Here are the top 3 of the many lessons I learned from David during our time together:
- Prioritizing profitability over pure revenue growth.
- Navigating the complexities of acquisitions.
- Planning your scaling strategy and aligning personal and business goals.
Lesson 1: Prioritizing profitability over pure revenue growth.
David’s early years as an entrepreneur were driven by the desire to grow. However, he realized that revenue is not the sole indicator of success. A bitter-sweet lesson came from his CPA, who praised his revenue generation capabilities but pointed out his struggle to retain the money. It took David 15 years to fully understand the importance of profitability and its role in business decisions.
He emphasizes the need to not just be profitable but to set clear targets and base decisions on profitability rather than mere growth. His experience reminds us that profitability, not revenue, ultimately determines a company’s survival and success. Or, revenue is vanity; profits are sanity.
Lesson 2: Navigating the Complexities of Acquisitions
For a scaling company, acquisitions can be a double-edged sword. David shares his approach and learnings from several acquisitions. In the early days, he would move forward with an opportunity as long as the downside was tolerable. Now, he considers a wider set of factors, including financial viability, structural and cultural compatibility.
He stresses that a poor acquisition can undermine all the work put into building the company. However, failures can be converted into successes if dealt with correctly. Despite some challenging acquisitions, David and his team turned these into positives, emphasizing that we learn more from failures than successes.
Lesson 3: Planning your scaling strategy and aligning personal and business goals.
David shares three crucial pieces of advice for businesses looking to scale from the 5-10 million to the 25-50 million range. First, he recommends having an exit plan from the get-go. Second, align your personal goals with your business goals, creating a focused roadmap to your desired future. Lastly, investing in a good HR manager can be a game-changer.
An HR manager provides a safe space for employees to voice their concerns, which they might hesitate to express to the owner directly. It’s a key step towards preserving and nurturing the company culture during a period of rapid growth. Moreover, David advises entrepreneurs to hire not just for experience but for talent and mindset, as it’s these qualities that will help accelerate progress toward your goals.
For a more comprehensive understanding of these lessons and how to apply them to your business journey, play the full episode of my interview with David here.
About Best Places to Lead
Your company has the potential to be great. The leader’s responsibility is to unlock that potential – or doom it to mediocrity.
On the LIVE Best Places to Lead show, you’ll learn the hard-fought lessons from the front lines earned by business leaders who have already had their teeth bashed in and lived to tell about it. We’ll share the tips, tricks, mindsets, and frameworks that allow great leaders to lead differently.
Leave a Reply