When Marnus Broodryk launched The Beancounter, he had a very clear strategy: He didn’t want to be the biggest company; he didn’t want to brag about top-line revenue. What he wanted was to be the most profitable company.
To achieve this, from the very beginning he looked at pricing and product and said that if they could sign up ten customers and be highly profitable then they could sign up 1 000 customers and be even more profitable.
It’s Marnus’ belief that in terms of scale, the problem many businesses face from the outset is a flawed business model.
It’s all fine and well to have a great product, but if you can’t monetise it, you don’t have a great business.
Too many companies focus on getting users onboard, burning through investment capital, and then two years down the line realise they don’t know how to monetise what they’ve got.
You need to be able to add each new customer at a reasonable cost. It doesn’t help if you add large costs as you add users. It needs to be the other way around. You need that solid foundation that you can add numbers to in such a way that your margins increase, not decrease. That’s how you scale.
Here are Marnus’s lessons in scale from a Shark Tank investor, high-impact entrepreneur and the founder of sme.africa, which is focused on helping other businesses achieve their growth potential.
Q: In what way is a scalable business essentially different from a business that cannot be scaled?
There’s this idea that every business can be scaled once you implement the right systems and have the right team. That’s not true. Some businesses simply can’t be scaled. It mostly boils down to whether you can automate the end product and the processes involved.
Businesses that depend heavily on people and professional services are in most cases not made to scale because it simply can’t be automated.
Q: In your own business, what fundamentals needed to be in place before you could scale?
A fully documented manual of everything was the first key to scaling successfully. Thereafter it was to automate those individual processes so that they depend less on people and more on technology. People are unpredictable, technology is not.
Q: What was the biggest challenge you faced while scaling your business?
Making the time to get these processes and manuals in place. We are often so busy running our businesses that we seldom make time to work on our businesses. And once implemented, you need to keep them updated and train new staff coming in.
Q: What was the biggest lesson you learnt, and how has it impacted your business model, or how the business is run operationally?
As a business owner, you need to remove yourself from everything operational and you need to get competent people to run it for you; trust them and let go. You can never grow or scale by continuously being involved in day-to-day operations – there’s simply no end to it.
Q: How important is the mindset of the CEO in relation to a business’s ability to scale? What did you personally need to develop in order to have the ability to achieve scale in your organisation?
100% important. As above, you need to let people do it for you and let go. If you can’t do that, you will never scale. Personally, I’ve always held onto something, believing that no one can do it as well as I do. That’s BS.