Lesson # 1 from Scaling and Selling Your Business for a High Valuation: Ensuring Your Business Model Can Rapidly Scale Without Breaking

Scaling a business is exhilarating—until your systems, people, or processes start to crack under the pressure. Doubling a telemedicine company in two years and selling it to Walmart taught me firsthand that rapid growth is only possible if your foundation is rock-solid.  Here’s how to ensure your business model is built for scale, with the top three common mistakes to avoid and the top three best practices to follow.

Top Three Common Mistakes

1.        Overlooking Process Standardization – Many CEOs focus on growth without standardizing critical processes, often due to moving too fast or thinking “we will get to that later when we have time and/or resources.”   This thinking, while understandable, will bite them back at the most inopportune times.  Inconsistency, inefficiency, and confusion multiplies as the company grows due to a lack of standardization on what matters most.

2.        Underinvesting in Technology and Automation – Manual processes might work at the start, but they quickly become bottlenecks. I’ve seen companies wait too long to automate processes or update applications, resulting in overwhelmed teams and missed opportunities. I made this mistake at MeMD due to limited resources – our front-line care coordinators were more inefficient due to working in an application that needed an overhaul – this made scaling this function more about adding people as we grew which ended up being more costly in the long run.

3.        Ignoring Scalability in Hiring – Hiring for immediate needs rather than future scale can backfire. Bringing in people who can’t adapt or lead through change slows growth and creates churn.  I have learned over time to hire for the people/capabilities I need 1-2 years from now, not for what I need today.  It is more costly in the short-term since often you are paying more for a higher level of talent and capabilities, but in the long run it not only costs less but it helps accelerate your growth.

Top Three Best Practices

1.        Design for Scale – From day one or from where you are right now – There is never a better time than now to pause and think about scalability before you take the next step.  Often, we want to get a product to market fast or quickly band-aid a busted part of the organization, but when we do that we often create more complexity that will hamper our growth in the future.  Invest the energy to standardize core processes, document workflows, invest in scalable technology and map out your people plan.  Make this a focal point of every quarterly full day executive leadership meeting – challenge yourself and your team to pressure test what you are doing and what you are planning to do for scalability.

2.        Automate Key Functions – Automate everything that can be automated – today more than ever given the advances in AI and technology, a hyper-focus on automating whatever you can will drive higher valuations in the future.  Customer onboarding, billing, reporting, and more can be automated to varying extents depending on your industry.  The important thing is to build a core competency in your leadership team about regularly discovering where and how automation can occur.  Why?   Automation not only reduces errors but also frees your team to focus on growth and innovation, and that is exactly where you need your team spending more of their time – “on” the business.

3.        Hire and Develop Leaders and Move Out Culture Vultures – We all understand that we need A players to drive our growth, reinforce our culture, and be the leaders of our organization.  And while many organizations are good at recruiting people who thrive in fast-growing environments and can take on greater responsibility, they underinvest in leadership development. You have invested a lot to bring these people onboard; now ensure you regularly focus in building their competency so that your team can handle and thrive during a time of rapid expansion.  On the other end, make sure you address “culture vultures”, those highly productive but highly toxic employees.  Move them up or out fast – if you don’t, your company culture and your company’s performance will suffer in the long run.  We erroneously wait too long on culture vultures due to their outsized productivity, but your organization can’t scale around people who don’t live your values.  In the end, if don’t move these people out you will severely hamper your growth and, frankly, the health of your business.

A scalable business model is the foundation of high value exits. Avoid the common pitfalls, invest in automation and leadership, and design your business for growth from the beginning. Your future self—and your eventual acquirer—will thank you.

For additional questions, resources, or to learn more about how we help CEOs and their organizations scale more rapidly, visit Growth Optimized.