Lauren: You’re a high octane business owner. You got a team. On paper, it looks like you’re rolling in success. But there’s a voice inside of you, whisper-screaming “This isn’t sustainable, something feels off, and I’m going to lose it all.

Sound familiar? That’s where I come in.

My name is Lauren Goldstein and I’m the CEO at golden key partnership. I help top level executives like you avoid burning out and burning down as you’re scaling up. How by harnessing your superpowers, finding and hiring your ideal. And then simplifying the heck out of your business operation. It’s my mission and the mission of this podcast to help you see operations in a whole new light to help you diagnose the real root cause of your company challenges and to bring your business back to a healthy flow.

And they call me the business doctor. And this is The Biz Doctor Podcast.

Welcome back to the show. In today’s episode, I’m going to talk about the hidden threat and scaling that most people don’t talk about. Step costs, AKA, how much is scaling really going to cost you at the next level of your business? So in case you’re not familiar with this term step costs to the cost of the business will absorb when it’s.

These can be something that seem as insignificant as another email or slack subscription per month to something that’s bigger, like a new hundred thousand dollars salary. But when you don’t proactively project, what those costs are in relation to how your revenue is growing and the impact on profitability, you could easily go from a rocket ship to a submarine and the blink.

So when you scale ops in your team to slow what this looks like, it’s chaos, overwhelmed, dropped balls and frustration in the team and customers because it’s all hands on deck all the time. I see this happen most often when businesses that are growing too fast and are trying to retroactively put systems and teams in place.

I liken this to building a plane while trying to take off. So a great example of this is one of my clients. They have. A fairly large team, but they had so many customers and business coming in that everybody was maxed out. So things were falling through the cracks team. Members were quitting. The staff at the top was really frustrated and it just was creating this high stress environment.

And what was happening is they were adding people and adding people just to add people without strategically thinking about who they are. So it was actually creating more stress because they were having to onboard new people and trying to deal with the influx of all this business. And in reality, what they needed to do was just take a moment and pause to really look at what is happening in the business.

Where are the breakdowns, where are the friction points and is contrary as it might seem taking that step back and pause. Is really, what’s gonna make the difference. It doesn’t have to be a long pause, but when you take that step back and you can really see where the business is, hemorrhaging time or team, or any other things that are preventing you from scaling efficiently, it’s actually going to help you get farther, faster.

And it’s going to get you back into being proactive instead of reactive. Now on the flip side, growing ops and teams  to fast looks like having a tremendous amount of leverage and time in the business that doesn’t match the revenue coming in. So what this presents that is a low profit margin and high overhead, is this kind of a recipe for disaster.

If I’m being honest, the runway for how long a business can carry on in this state is directly proportional to how much free cash you’ve scrolled. So, if you’re not familiar with what free cash is, it’s money that doesn’t have an earmark or a job revenue that’s come in. That’s, you know, it’s not taxes, it’s not going to team.

It’s not going to anything. It’s just sitting in the bank to be, you’ve got a lot of free cash. Great. Then you can give your business some time to catch up. And when I say business, I mean revenue, because if you have a lot of high costs than not a lot of revenue, To come up from behind your profit margins are shrinking and your expenses are growing while your revenue is going down again, a recipe for disaster.

If you don’t have the free cash to get caught up, then unfortunately you could go tits up very quickly, because if you’re not mindful of your profit margins, what your spend is and make sure that you’re not building for the sake of building cause vanity metrics are the surest way to being a distant memory.

Then you’re going to put your business in a situation that is not sustainable. A great example of this is I had a client who just arbitrarily throughout. I want to hire 20 people. I said why? And he said, well, I don’t know. That just seems like a good number. And the truth is that in this case, they had a little bit of lag in revenue and they had a lot of time, but he thought he should be growing his business.

And so when I say vanity metrics, that’s what I mean, it’s not about the number of team members you have. It’s not about the operational technology that you have. It’s about how are you leveraging those things to make it so your business can scale at a, at a consistent and sustainable pace because growing too slow is a recipe for disaster, but also growing too fast as, as well.

And so when I look at. If you’re growing too fast and you have all of this leverage and not enough revenue, it’s time to go back to what you were doing in the beginning. And as much as I hate this word hustle, to get the revenue up, to match the leverage. Now you’re probably asking yourself, well, what is the perfect time to scale?

And in all honesty, there’s really not a perfect time, but there is what I call a Goldilocks. And that’s when you have the proactive insight into your business to know the inflection points of when something is best timed and the way that you have your inflection points is by having your step costs lined out and having enough months where the revenue is stable and doesn’t fluctuate by big peaks and valleys.

So you have that very. Sustainable historical data of what is actually happening in your business. Because the mistake that I see is entrepreneurs have, let’s say 90 days of really great growth. And so they think that’s the time to scale. It could be the time to scale, but it also would probably be in your best interest to sit on your hands for a little bit longer and make sure that those 90 days weren’t the result of something.

That isn’t going to continue happening. It could be that those 90 days were during, you know, a specific time of year. And they only happen during that time of year, or it could be that this is the new normal, but you need to know if it’s the new normal or if it was a blip, because if you try and scale in a blip, you’re gonna end up upside down.

And so when you think about your inflection points, there are moments in your business when you notice that things are starting to have more friction than. Maybe a client onboarding didn’t go as smoothly. Or the team is sharing that they’re feeling more stressed than usual, or it could be something good.

Maybe you just had like an exorbitant amount of money come in. It doesn’t matter. But when you have a pulse on your business and you start to notice things that aren’t normal or aren’t usual, those are your inflection points or is what I like to call them reflection. Their symptoms in your business.

That will, if you listen, they’re going to show you the stress that is happening in the body of the business. And it’s a gentle nudge to either grow in an area or adapt in an area is something else. I also see a scaling doesn’t just mean growing the team or growing the revenue. It could sometimes mean that you just need to tweak your operations or your team so that it can grow.

Within the container that you’ve already had and fill that. And I kind of liken this to, um, to a garden hose versus a fire hose versus a watering hose. So a watering hose is a hose. If you’re not familiar where it doesn’t matter how high you turn up the water, it’s still gonna spew out. That’s what happens if your business is growing too fast and you don’t have the teams and operations, you’re just spewing revenue everywhere.

Now a garden hose is, you know, it can go to a [00:09:30] certain level, but it’s never really going to be able to expand past what it is. And that’s a little bit like when your business is, you know, highly leveraged. And then a fire hose though. This is what really great scaling looks like because a fire hose comes out obviously at a high velocity, but also if you’ve ever seen a fire hose, they start flat and they inflate with the amount of pressure and water that’s coming through it.

That’s what you want your team and operations to look like when you turn up the spicket and inflates a little bit. When you turn up a little more and inflates, when you need to come back and contract it different. That’s the kind of flexibility you want to have in your business, because if it’s rigid or if it has holes in scaling is going to be really hard for you.

And it’s also going to be frustrating. And so when you have those moments of inflection, you can take that moment to get a 30,000 foot view and see what happened to not only get you there, because it’s really important again, to think about why this is happening. And then you can come and see where you’re going.

So this takes a little bit of insight and forethought. So if that’s not your strong suit, that’s okay. Just make sure you have somebody on your team that you trust that can help you see that so that you can make a strategic and proactive plan. Now I’ll leave you with this as you scale your business and should get more simple, not more complicated.

I know that that sounds. Maybe too symbol or like it’s not possible, but trust me, the most successful businesses on the planet are very, very simple. They might look complicated from the outside, but when you look at the mechanics of teams and operations, they’re very simple. So if you’re struggling with scaling or feeling overwhelmed or not sure what the next step is, or really what stage of scaling you’re in.

Our diagnostic deep dive is guaranteed to get to the real root cause of what’s happening in your team and operation. That’s causing you to play my least favorite game of whack-a-mole so that you can get out from underneath your business and start making more scaling progress. You can learn more@goldenkeypartnership.com slash diagnostic.

I’ll see you on next week.

thanks for listening to the biz doctor podcast. You’re probably wondering what your next steps are. So here’s some options for you.

No matter what, head to the show notes or to my website at golden key partnership dot. That’s where you’ll find links to do a diagnostic deep dive with me and my team. This deep dive will help us identify what is really holding you and your business back for more profitability impact and sustainable growth.

After that register for our next word. I host them often. And it’s a great way to interact with me in a virtual room and get your questions answered. All of that info is on our website goldenkeypartnership.com.

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