To scale or not to scale? A quick guide in scaling your social enterprise

By Jessica van Thiel

cook ethos team photo.JPG
http://www.cookethos.com

“Nearly every problem has been solved by someone, somewhere. The challenge of the 21st century is to find out what works and scale it up.” -Former US President, Bill Clinton

In the past few decades, social entrepreneurship has gotten a lot of attention. From academia to business, people are recognizing the importance of social entrepreneurs and the invaluable work they do. Social enterprises are like any other business; they must have a strategy for growth and to scale once they are out of the startup stage.

Many business owners fall into the trap of wanting to scale before they are ready. They want their business to grow so they scale up their processes to inspire that growth. Unfortunately, this can actually result in stalling the development of a business. Scale too quickly or recklessly, and you’ll create a lot of organizational problems that will be hard to undo. Scaling before you’re ready may even cause your business to fail. Scale too slowly, however, and you may miss out on key opportunities that come with greater resources and revenue[1]. So how do you go about doing any of this? First, it’s crucial to know what you’re scaling to begin with.

Measuring impact?

While every business has to consider its customers, social enterprises have a particularly important task; they need to consider social impact and how to measure it. Measuring social impact is often one of the most difficult things to do as it’s not tangible. From education to gender equality and environmental impact, these issues often take years before one can see results and even then, how can an entrepreneur really know if they are using the right indicator or measurement? You’re not selling t-shirts after all, so how do you know you’ve done well?

The key might lie in the research. You need to really understand what your service is, and what your goals are. Once you’ve identified it all, and it may take months or even years to define, you can then start to look at what works and what doesn’t. By eliminating what doesn’t work you can adjust and refine the way you approach solving the issue.

Additionally, assigning appropriate measurements is critical. Although social in nature, you should find a way to measure your impact in numbers. If the goal is to provide access to education for children in India for example, then the first unit of measurement can be the number of children your social enterprise has put through the school system. The number enrolled, attended and completed. Why is it so important to be able to measure impact, almost from the start? Because, if you don’t know how you’re doing, you won’t know when it’s time for the next stage – i.e. time to scale.

Scaling can be a daunting task for any small business, let alone a social enterprise. With the objective of understanding the process further, PATHFINDER spoke with cook ethos, a startup social enterprise with the mission of connecting people through food, to learn about what strategies, if any, they had in scaling their enterprise. Cook ethos is “a fun and fresh approach to learn how to cook new dishes and gives you the chance to learn about cuisines and meet people from all corners of the globe – in the region of London” (think Airbnb meets cooking lesson). The startup was launched this year by three young female entrepreneurs.

While they are very much in the startup phase, they’re already considering how to scale their company. And for them, it needs to happen quickly if they want to make an impact in their community, be successful and eventually turn a profit. Although they have many ideas and potential business avenues they could explore, at the core, their service is to connect hosts and guests for a unique cooking experience. So the way they’ll measure impact is simple: it’s in the numbers. Guests provide testimonial for their experience, and with an overwhelming percentage of testimonials being positive, it is safe to say in their case, that the more people who book their service, the more impact they’ll have on the community. This, they explained, was a relatively easy question to answer. The next question, how to scale is more complicated.

Do they scale regionally or internationally? Do they expand their product to offer different services or do they focus on the bookings?

Charlotte Morrison, COO and Co-Founder of cook ethos explained,

In order to get things right, we’re now trying to focus on just one area to scale but in doing so, we don’t want to neglect the hosts in other areas because they are still very valuable to us. We don’t want to lose sight of them. So the question is how do we find a balance. That would probably be our biggest challenge regarding scaling at the moment.

These are the kinds of questions that every entrepreneur faces. How to keep the integrity and goals of the business intact while scaling? In the beginning you might not have the luxury of being selective. When you’re desperate for cash, it’s easy to cut corners, compromise your values and deliver a subpar product or service. But the businesses that manage to weather their growing pains and stick to their guns are the ones that last longest and shine brightest[2].

So what’s the solution if you want to scale successfully? In short, maintain your focus. As entrepreneurs, we tend to want to seize every opportunity that comes our way. And although it’s good to pursue some, it’s alright to keep your focus narrow in the beginning and expand once you’ve gotten it (whatever it may be) right.

Once you’ve achieved product-market fit and started scaling up based on that main offering, don’t go crazy trying to add features or related products. Make sure you can do one thing better than anyone before you start building new stuff” Chelsea Segal of Cox BLUE points out.

Cook ethos is doing just that, keeping focused. And it’s working.

To scale or not to scale

Knowing when to scale is important. Knowing how to scale is essential. Because making money doesn’t always equate success, especially if you are a mission driven enterprise. Charlotte Morrison explains,

When it comes to scaling, one thing we anticipate that will be difficult, is keeping our integrity and respecting our mission. If we expand internationally, for example, different countries will almost certainly have their own way of doing and managing things. We operate like a family business and we don’t ever want to lose that, no matter how big we get”.

This is a tricky one. On the one hand as a startup, it’s difficult to turn down work, especially when clients aren’t exactly knocking on your door. On the other hand, without consistency of the product or service, an enterprise can quickly lose its brand integrity.

The trick is in the balance. When a company scales too quickly and doesn’t have the structure to support the growth, failure rates will increase[3]. You need to expand to operate and this should be a natural, cyclical process. Chelsea Segal of Cox BLUE highlights the biggest mistakes a business can make when scaling is over hiring, over spending, and over building. She explains, “You need to stay lean during the scaling process. Don’t hire too many people (especially middle managers or specialists). These take away from your core competencies and leave you prone to trying to scale other areas too quickly” and “there’s a tendency for startups to get loose with their money once they’ve raised a lot during the fundraising stage. Keep all of your spending focused on growing the business”.

Balancing act

Balance is crucial here. Check back in with your values and mission regularly. Think quality not quantity. Eventually, if you do a good job, more work will come your way. And when it does, get it done. You don’t want to compromise the quality of the work; however, you don’t want to say no to new clients (especially if they’re the kind of clients you’ve been seeking). So even if you don’t have the infrastructure in place to complete the work or project, you make it happen anyway. It’s a tricky thing to get right, but in the beginning like all successful startups, you’ve got to work your butt off.

Cook ethos has considered this very scenario,

We’ve considered a situation where we might have more work than we can handle. Ultimately we would never say no to clients and we would just work it out. Although we don’t foresee this happening in the next year, if it were to happen before we had the infrastructure in place, we would adapt. We’d probably get all of friends and family on board. We’d do whatever it takes to make it happen!”

This is a good problem to have for any business. And the difference between a successful business and a non-successful one is all in the approach and attitude. In short: adapt to the research, know your product or service better than anyone, and check back in to find your balance.

[1] https://www.coxblue.com/5-important-tips-for-scaling-your-startup/

[2] https://www.entrepreneur.com/article/299214

[3] – Jeanna McGinnisReResumeMe®

 

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s