of February Events
ECN Meeting :"The Challenges of Operational
Scaling" (Review by Charles
Gervasi) At our Feb 4th meeting of the Entrepreneurs and
Consultants Network, Kevin Kaufman spoke to us about the
challenges of scaling up a business (his presentation slides are
available at this link).
Kaufman says it’s important to put structures in place early,
before the business is ready to scale up. It’s easier to
set out to have a positive company culture than to fix it if an
unhealthy one grows over time. Being clear about Vision,
Mission, and Core Values is important to keep everyone
together. It gives you the clarity to say no to ideas that
would distract you from your core business. Kaufman
emphasizes the dangers of becoming distracted from the
It’s common for business owners to keep 85% of their net worth
in their business. According to Kaufman, 70% of business
owners are not prepared to sell even if they think they
are. As baby boomers retire, there may be more
people selling businesses, causing lower valuations.
Kaufman separates “value drivers” of a business into market
factors and operational factors. Market factors are
related to the business’s primary activities. Operational
factors are things like HR, accounting, and all the things
needed to keep the business operating. It’s important for
the person running a business to be at least somewhat involved
in managing operational factors.
Kaufman says he often gets three objects as reasons why this
does not apply to a particular business.
We’re unique. – It feels like this, but Kaufman says it’s
not true. Your business has commonalities with other
businesses. Founders need to interact with other business
founders. The issues they face are not unique. We’re too
busy - This is a time when businesses need to focus on scaling
up. Small businesses usually either feel too busy or that
they do not have enough business. Both are reasons for
founders to put off business planning.
Church meetings often start with a prayer. Kaufman says
the prayer makes it less likely the meeting will turn
sour. He once worked at a business that began meetings by
stating their six principles before every meeting, as a similar
reminder to remember the broader mission of the organization.