Once your business is up and running, what should you do to keep it growing? How do you balance steady growth with aggressive growth? How can you stay alert to challenges?
In his book Your Next Five Moves, Patrick Bet-David discusses seven steps in the business growth process. He explains how you should raise funds, find ways to grow both steadily and aggressively, press employees to grow along with the company, build and maintain momentum, track your growth using metrics, put your knowledge down on paper for posterity, and stay alert as you grow.
Read more to learn how to scale a business effectively.
How to Scale a Business
Bet-David provides practical advice to help you learn how to scale a business the right way.
Part 1: Raise Funds
To grow, first think about how to raise funds, counsels Bet-David. How you do this depends on the degree of control you want to maintain: The more money you raise from outside investors who then gain a stake in your business, the more control you sacrifice. Conversely, funding yourself means maintaining control but risking running out of money. Bet-David believes outside funding gives your company a huge security boost and recommends this route.
(Shortform note: Bet-David asserts that often when you accept outside funding, you cede a degree of control to the investor. To help determine whether to accept an investment from a party that wants control over the company, ask yourself if you’d be okay ceding control if you and the investor agreed on major decisions about the company. If you agree on major points, then giving up some power won’t entirely transform your company in a way you’d dislike. If you still wouldn’t be happy ceding control, ask yourself how urgent the investment is and if you can afford to continue looking for a less controlling investor.)
The best way to gain access to funding is through mentors with connections, claims Bet-David. Explain to them why you must raise money, how you’ll use it, if you want investor input, why you’re worth investing in, and if you plan to eventually sell the business. Knowing this shows them you’re serious and worthy of being connected to investors.
(Shortform note: Even if you provide your mentor with the information Bet-David recommends, they still might not want to connect you to investors unless you give them something in return. In Never Eat Alone, Keith Ferrazzi proposes that in exchange for their help, you can offer your mentor loyal support in the future. For example, if they embark on their own business venture, you can loyally support them by using your social media platforms to promote their work.)
Part 2: Find Ways to Grow Both Steadily and Aggressively
According to Bet-David, use your funds to grow both linearly—through steady progress in areas like supply chains and administrative protocols—and exponentially—by making significant, rapid progress in areas like leadership development and innovative business ideas. Inspect your weaknesses and determine where there’s an opportunity to grow linearly and exponentially.
(Shortform note: Bet-David presses you to find areas of your business you can expand both steadily and aggressively. But in Blitzscaling, Reid Hoffman and Chris Yeh argue that if your company is in an internet technology-based field, you should only focus on rapid expansion. This is because internet companies have the potential to grow much more quickly than traditional companies. If you don’t take big risks to scale as quickly as possible, other internet companies will dominate the market ahead of you.)
Part 3: Press Employees to Grow Along with the Company
The third part of growing your business is to press employees to meet the career goals they’ve set for themselves, says Bet-David. This compels them to rise to the challenge and grow along with the company. Additionally, when you pressure employees to improve, they do the same to each other. This elevates the competency level of the entire organization, leading to sustained growth.
(Shortform note: In The Oz Principle, Roger Connors and Tom Smith agree with Bet-David that employers should hold employees accountable for achieving goals and that employees should hold themselves accountable for achieving those goals. To encourage this kind of accountability, Connors and Smith suggest teaching employees that accountability doesn’t mean blaming themselves for everything that goes wrong. Rather, it means doing whatever is within your power to improve your odds of success.)
Part 4: Build and Maintain Momentum
To grow as a business, you must build and maintain momentum, asserts Bet-David. Here are two methods for doing so without letting the momentum get out of control:
(Shortform note: Bet-David recommends building momentum but doesn’t clearly define what “momentum” means to him. We can conceive of momentum in business as the continually increasing ability to succeed easily in whatever new venture or campaign a company attempts.)
Method #1: Build Internal Trust
Build momentum by fostering trust among employees, writes Bet-David. Trusting employee relationships lead to speedier internal operations, which, in turn, helps sustain momentum.
(Shortform note: Bet-David doesn’t clearly indicate how building trust speeds up internal company processes. A possible explanation is that when employees trust each other, they don’t feel compelled to check others’ work or verify that a coworker completed a task. This makes workflows faster and smoother.)
Method #2: Always Focus on Increasing Speed
According to Bet-David, you can also build momentum by constantly devising new ways to perform faster in every area of your business. To do this, look at different speeds at the company—speed of internal processes and speed of the customer purchase process, for example—and shorten the duration of those processes by removing steps.
(Shortform note: While Bet-David focuses on increasing the speed of internal company processes to maintain business momentum, you could also aid momentum by increasing the speed of your personal processes. In The Effective Executive, Peter Drucker outlines ways to do this, including cutting tasks that don’t yield useful results from your schedule.)
Method #3: Plan to Maintain Momentum in the Future
Finally, maintain momentum by planning for eventual future growth, advises Bet-David. Do this by first thinking about what the business might need or want in the future. Then, take calculated risks that increase the chances of achieving that future. For example, in the future, you’ll need to hire more employees to expand the business. You might thus hire an HR specialist now who can onboard future employees.
(Shortform note: Bet-David argues that you should maintain momentum by planning ahead for future growth points. In The E-Myth Revisited, Michael Gerber outlines potential negative outcomes if you don’t plan ahead for future growth. You might be forced to shrink your business back down to its original size, or you might grow at a pace you can’t control, which exacerbates existing problems in the business.)
Part 5: Track Your Growth Using Metrics
To effectively grow your business, learn how to collect and use the metrics that matter to your company, stresses Bet-David. Metrics eliminate ambiguity or personal bias around how the company is performing, giving you a clear view of your status. This clear view then allows you to identify inefficiencies and correct them. For example, if you own a travel agency, you could start tracking how many customer complaints each of your travel agents receive. This objective statistic can help you determine which of your agents are the most and least effective.
(Shortform note: In The Lean Startup, Eric Ries provides additional information on how to work effectively with the metrics you’ve gathered. He recommends presenting metrics in a way that’s both accessible and easily reviewable. This way, company leaders or employees can understand the metrics without needing a background in data analytics, for example.)
Bet-David adds that as helpful as metrics are in identifying problems, you still need the human capacity to analyze the metrics and a human touch to solve the problem the metrics point out.
(Shortform note: Bet-David’s idea that you need human input to analyze and take action on metrics is evidence in support of the argument that although robots are taking over many workplace tasks formerly performed by humans, humans will still be needed to add critical soft and problem-solving skills to the workforce.)
Part 6: Put Your Knowledge Down on Paper For Posterity
The sixth part of growing your business is to turn your knowledge and experience into a documented system that successors can use, says Bet-David. This ensures the business can grow after you’ve left.
(Shortform note: In Traction, Gino Wickman agrees with Bet-David that every business should document its operating processes. Wickman adds that this not only allows your business to grow after you’ve left, but it also ensures everyone at the company is using the same approach and process right now, which increases consistency and efficiency.)
Part 7: Stay Alert As You Grow
Finally, even when you’re growing steadily, always behave as though a threat could overthrow your business, counsels Bet-David. Stay alert in two ways:
Way #1: Don’t Cede Control to Temptation or Your Ego
Don’t fall prey to temptations like gambling, excessive spending, partying, and so on, warns Bet-David. Stay on the straight and narrow to maintain momentum and growth.
Additionally, stay alert by keeping your ego in check and asking friends to tell you when you’re making poor choices, advises Bet-David. Don’t take things personally and let ego-driven emotions, like resentment or vindictiveness, guide your actions.
(Shortform note: Bet-David advises you to maintain control over your ego and your reactivity to temptation to keep your company momentum up. But he doesn’t specify how you can do these things. One good way to master both temptation and ego is to cultivate mindfulness: a sense of connection to what you’re feeling in a given moment. You thus increase your awareness of when you’re being tempted to behave badly or when your ego’s in control and can then actively work to resist temptation or override your ego.)
Way #2: Obtain the Input of Experienced Business People
Adversity will inevitably strike when you start growing rapidly, warns Bet-David. When this happens, seek the counsel of numerous people with differing perspectives and experiences. Ideally, find people who’ve studied or personally experienced the type of problem you have. They’ll give you the most valuable advice.
(Shortform note: If you don’t have a bench of experienced business friends to whom to turn for advice, consider heeding Robin Sharma’s advice to create a committee of imaginary mentors. These mentors can be renowned thinkers or famous figures you admire and can be living or dead. Simply imagine what advice they’d give you in your situation.)
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