How scalable is your business?

Founders, when investors ask you: "How scalable is your business?" what do you answer?👇

What they are really asking:

Can you execute on your ambition? This is where investors are digging into how the business really works and your roadmap for growth, particularly how you will find and put in place the resources you need to achieve your vision.

A sub-text of this is “what are the things which will slow scaling?” This might mean, for example, can you hire the operations staff you need; are there national laws that may change or hinder you; are there competitors that may take share, etc.

Where you should look for the answer:

As Dwight D. Eisenhower said: “In preparing for battle, I have found that planning is essential, but plans are useless.” You do need a plan to scale, covering the resources and capabilities you need to build, your product/service development schedule, people you need to hire, partnerships you need to make, customers you need to acquire and capital you will require – all translated into financial forecasts.

This plan also needs to account for external factors such as trends impacting your sector – what changes mean you need to speed up/slow down – and the competitive landscape. Ultimately, you can develop this into a roadmap to scale. But let’s be clear, this plan, roadmap and forecasts will be wrong. You know this and early stage investors know this. The question is how wrong and what are the assumptions that need testing.

How to make your answer compelling:

Having a good handle on these assumptions and where there are challenges in your plan and roadmap is critical to being credible in front of investors. All businesses face uncertainty, all businesses need to test their assumptions. If you can clearly identify and have a plan to test the most important and unknown assumptions, this will increase investors’ confidence in your ability to execute on your ambition. Even better, if you have thought through different options to realise your goals if your preferred route does not go as planned, this is a positive. When discussing how you will execute, try not to get bogged down in minor details but keep your focus on the overall potential and milestones.

If you need help with your pitch preparation, feel free to book a FREE chat with our team.