Read Time: 7 min

The first essential eight things you must have in place before you can even consider scaling your business.

And none of them has to do with marketing or sales.

Most businesses I see in a phase they call scaling are not ready to scale.

We weren't prepared either with my last company.

Everyone told me I needed to scale my business.

We need to grow.
We need more revenue, customers, people, and everything.

Scaling is essential,

to achieve our life goals.
to help more people.
to live an extraordinary life with all we wish for.

This is true, but it will blow up in your face if you're not ready for it.

I see a lot of advice on how to scale your business by scaling your marketing and sales.

How to make more money by reaching more people.

When these people talk about building a team, it only focuses on reaching more people.

While this can bring you more money, it is only a short-term solution.

It might give you a brief boost, but soon everything will fall apart.

You hired the wrong people.
You become the bottleneck and need to micro-manage everyone.
You need to hustle more to keep all the balls in the air.
You worry more because this company you built seems to be breaking apart at any moment.
If you stamp out one fire, the next one pops up.

Yes, people might be replaceable.

And everyone should be replaceable.

Still, we should aim for a low employee churn and a healthy work environment.

This way, we can create more value, easily and sustainably, with fun for us and our customers.

I strongly believe that passionate people:

Doing what they love,
Creating value for people who appreciate it,
Will never need to worry about money or not having enough customers.

I found 14 essential factors founders need to discuss to scale their business.

If you scale without checking off all points on this list, your business will break apart.

You may encounter problems that will be much more expensive to solve than the month it costs you to get ready now.

As talking about all 14 points is too much for one issue, I will share the first eight with you today and the rest next week.

Number 5 alone would have saved my last company 1.5m EUR in costs.

Eight Things You Need Before Even Thinking About Scaling

For a sneak peek, you can find the complete checklist ready to duplicate in the link below.

>>> Complete Ready to Scale Checklist for Entrepreneurs.

1. Everyone Knows Your W3, Vision, and Core Values

You and everyone you work with know the W3, the greater Vision, and your company's core values.

You can only make a plan and contribute to it constructively when you know where you want to go.

So, you should at least know:

Who is your ideal customer?
What outcome are they buying from you?
Why do they need that outcome?

Then, you should know which greater Vision of the world this product contributes to.

This is your company's why.

And third, everyone must be clear about the values that shape how you will achieve this vision.

It is essential that everyone involved knows all these.

You and your team because you can't build it together otherwise.
Your leads, so you attract the right customers.
Your shareholders so that they can support you in the right way.
Your contractors, who are just team members in another color.

Every time things get “political” in a company, it is because not everyone aligns on the W3, Vision and Core Values.

2. You Know Your Direction and Values

It is not just your company that needs clarity about its future.

You need it, too.

You have a clear picture of your future Life, your why or purpose in life, and your core values.

Again, the same reasoning applies: if you don't know where you want to go, you can't take a step in the right direction.

The best way to clarify this for yourself and others is to write it down.

Take it out of your head into the physical world.

This helps you also to share it with others.

If others know about it, they can support you on your journey.

3. Aligning Personal and Business Life

You can assess if you align when you clarify the two points above.

Is the role you're playing in the company contributing to the company's goals and vision?
Do you uphold the company's values when executing your role?
Is this role contributing to your personal goals and vision?
Are you holding your own values up when you execute your role?

Alignment is essential for sustaining a happy and healthy life.

How can you reach your own goals if you spend 8 hours a day on something that doesn't contribute to them?

How can you stay motivated for this "job” if it goes against our values?

Control the 5Ws of your life to live your best life.

Who you work with.
What you work on.
When you work.
Where you work.
Why you work on it.

4. Monthly Financial Reports

Now we know where we want to go.

Next, we need to know where we are right now.

One of your company's stats is its financial health.

You have the three most important financial reports ready at the start of each new month.

Income Statement
Balance Sheet
Cash Flow Statement

These three financial reports give you all the numbers you will ever need.

With these, you can calculate your business's financial health metrics.

Nothing ruins a party more than the bill that you can't pay.

You can simplify these sheets to fit your needs initially to track what matters.

At a minimum, I recommend knowing your net profit and total cash each month.

Most young businesses I see don't even have these.

But they talk about growing their company and hiring more people.

Failure by design.

5. 12-Month Financial Model

You know where you are and where you want to go.

Now, you're ready to make a plan that bridges the gap.

Start to make assumptions and experiment with actions to reach your goals.

On the financial side, this means you have a financial model projected 12 months into the future.

With this model, you can play and see which actions impact your business in which way.

How many customers do we need to reach our revenue goals?
How will a new hire impact our cash flow?
Can we afford to hike Kilimanjaro with the whole team this year? — true story.

You could flip a coin if you don't know how a decision will impact your company financially.

As I said in the intro, having a sound financial model could have saved us roughly 1.5m EUR.

We could have seen these costs and avoided them with one simple decision.

One year ahead of time.

To get started, you don't need the most sophisticated model with a million numbers to tweak.

You can start by projecting your net profit and total cash into the future.

Then, draw your runway health line with it.

If this health bar dips to 0 or below at any point, you lose the game.

6. Tracking Your Time

I don't track time for payment or performance purposes.

I track time to control my 5Ws.

It is one thing to have an impression of this and another to know it in black and white.

As a business leader, you must know precisely how much time you spend on what.

How else do you know where someone new could support you?

Everyone else you work with should know their own time spending, too.

If anyone spends too much time on something they shouldn't, this must be changed.

I use the 4D model to categorize my tasks.

Every task is one of these four categories:

Doing — You execute a task.
Deciding — You decide which task someone does next.
Delegating — You delegate the responsibility for an outcome to someone else.
Designing — You design the future path of the business.

Ideally, as the business leader, you want a 4D distribution of +80% design and possibly no doing.

If you want to continue working on your product as a business leader, someone else needs to do the design.

7. Necessary, Clean, Documented, and Automated Processes

Most businesses I see don't need to hire anyone to grow at first.

Cleaning up their processes frees so much time that they can scale without more hands.

Apply the AED method to all your processes.

Automate everything that a machine can do.
Eliminate everything that is not essential.
Delegate everything that someone else can do.

Don't automate anything that should be eliminated.

Don't delegate anything that should be automated.

Document every process and system in your company to make delegation effortless.

Doing this step enables immense scaling power.

From this point forward:

You will only do things that have the potential to move the needle.
You will only do things that create value.
You're able to work with others efficiently.

As a bonus, this step makes number 10 on this list a no-brainer later on.

8. Paying Yourself a Full Salary

As a founder, I try to save money at all corners.

And I was often okay with going without or having a meagre salary.

I didn't see that this saving would reduce our company's sustainability.

As the founder, I'm the most valuable asset my company has.

Why don't I treat this asset accordingly?

If you don't pay yourself a full salary, you either live from your savings or worry about the next month.

Both take away the capacity to make solid decisions for your business.

Both shorten the runway of your business.

The business doesn't just die when its runway runs out.

It also dies when the founders themselves run out of runway.

Be it financially, mentally, or emotionally.

Do your company a favour and pay yourself a full salary.

You can find the complete checklist again, ready to duplicate, in the link below.

>>> Complete Ready to Scale Checklist for Entrepreneurs.

To Be Continued…

These were the first eight of 14 essential factors you need to be ready to scale.

You need these first eight before even thinking about scaling.

It doesn't make sense to add more people to your dumpster fire.

It will just burn brighter, but it will burn down.

I had my share of failures, ignoring these.

They could have saved me a million Euros.

Don't repeat my mistakes.

I encourage you to assess yourself with this checklist.

Where are you in your journey to scaling your business?

Are you ready for the second part of this checklist?

Implementing these points will cost you only a month of work.

But they will save you years of pain and countless Euros.

Which of the points on this checklist are you struggling with right now?

Tell me in the comments below.

WANT TO LEVEL UP YOUR BUSINESS GAME?

Read all articles one week early.

Get my newsletter

Are You Ready to Scale Your Business? — Ultimate Checklist (Part 1)