Why Your Business’ Scalability is an Afterthought

Why Your Business’ Scalability is an Afterthought

Where and how can I find angel investors?

There’s a lot actually. I know there’s a website in the Philippines full of angel investors. I just forgot the URL, but I know a couple of angel investors as well. They are still going to ask you what your business is, what you do, how it’s going to make money, and when’s the ROI. They’re still going to ask a lot of questions and you’re going to have to have a pitch deck to present to them.

But I know some angel investors who would shell out, I don’t know, like one or two million maybe, and not expect anything in return, but they’re going to want to know you first. And usually, angel investors here in the Philippines want a good relationship with you first, before they invest anything. So they’re going to want to know who you are, your family, your circle of friends, your team, especially your management team, your leadership team, before they invest in you.

From Niño. If you want to invest or start a business, do you need to have an emergency fund first?

Yes, a hundred percent, because if you don’t have an emergency fund and things go haywire, you’re still going to have to pay for emergencies. If you don’t have an emergency fund, guess what happens? You’re going to loan and ask money from friends and relatives or people you don’t know. And they’re going to want interest. Maybe a hefty interest, maybe higher than you can afford. So you’re going to get penalized just because you don’t have an emergency fund. You’re going to be penalized for a hurtful interest. So I’d say always have an emergency fund.

Even when you have a business and it’s going well, always have a safety net. A safety net is an emergency fund for business. Because if you don’t have a safety net and things go haywire, things go south, you get a labor case, people would want your business gone, you’re going to have to have a war chest. You have to have a war chest. You have to have your safety net. That’s what I tell people who ask me to mentor them in business.

Always have a war chest. Always have your safety net. You’re going to need it. The best generals always have reserves. The best generals always have reserves. Being in business is like being at war. You want your supply line to always be at pace with your frontlines. If your frontlines are too far and you can’t supply them bullets, you can’t supply them food and water, they’re going to die.

So the same in business, you’re going to want your business to go at the base where the supply line is also going with your front lines, and you’re going to want to have a war chest. You’re sure you can fight, you can buy bullets, you can buy supplies for your business to be able to move forward and cover more ground.

From Niño Taboada. I just mentioned your name. I’m so sorry. When starting a business, how much time would you spare for you to know that this business is scalable, or will it just be a waste of time, effort and resources?

For me, scalability is something that you don’t really think about at the starting line. You don’t think about that because you don’t even know if you’re going to succeed. You don’t even know if you can stabilize it. So scaling it up is an afterthought. So yeah, I didn’t think about how I could scale SEO Hacker up when I was starting out.

In fact, I thought about just having like 10 or 13 people and that’s it. But now we’re 50 people. I really didn’t think about scaling up. I thought about how I can stabilize it once it’s so stable, well, not so stable now because there’s a pandemic. But once it is a lot more stable, you think about scaling up. That’s the time you think about scaling up. You don’t usually think about it when you’re starting a business.

When you’re starting a business, all you think about is how you can make it stable, secure, how you can pay my people, how you can make sure cash flow is good, revenue is greater than expenses. So when you’re five years in the industry, I’d say. So you’re no longer a startup because you’re five years in, you’re in that awkward stage of the business where you think, should you make it grow? Should you stay as is? Is it stable? Is it secure? So I think that’s a scale-up stage. That’s the stage where you think about scaling up.

And SEO Hacker, I wouldn’t say it’s a very scalable business because one manpower is like one client. One is to one, so we need to keep on hiring and we need to keep on getting new clients and it’s almost on a one to one ratio. A scalable business is a software business where you only have one server, for example, it’s a cloud server and you’re serving a hundred thousand people at the same time. That is a very scalable business.

All businesses are scalable. That’s a fact. All businesses are scalable. The question is, how fast can you scale it? How fast can you scale it? And how efficiently, in terms of money, in terms of capital and operating expense, how efficiently can you scale it? For a software business or a software as a service business, one server, a hundred thousand people, you can very, very efficiently scale it up.

I mean, your costs could be Php 1.00 and your profit could be Php 100.00. So you could give a 30% discount, it doesn’t matter, because you’re still making a lot more money. But in a services business like SEO, the ratio is not the same. It’s a one is to one ratio if you’re a white hat SEO company like we are. So it’s not that scalable compared to a software company. But if you’re going to compare it to a real estate company for example, then SEO is a lot more scalable than if you’re renting out hotel rooms, or if you’re renting out condo units, because you can’t just keep on buying hotels, keep on buying land and building hotels at a fast rate, I mean, if you’re starting out or if you’re just five years in the industry. So it’s not as scalable.

So it depends on what industry you’re in. It depends on what business you have, but all businesses are scalable. It’s just a matter of how fast you can scale it and how efficiently you can scale it in terms of OPEX and CAPEX.

From Niño. When would be the proper time to scale a business?

I would say somewhere in the fifth year to be safe, all else being equal. From all businesses, I’d say in the fifth year, somewhere there. I scaled up SEO Hacker somewhere in the fifth year as well. So it is safe to say in the fifth year where you have good branding going for you, good momentum, your business has a good reputation, and you have good people in the business. Maybe not all people in your business are good people, but you have some good people in it. You got the ball rolling, I’d say five years might be a good time to scale up the business.

I have my book, 50X Your Business. My book is available on Amazon, leadme.ph/50x, and you’re going to be able to see the book. It’s an eBook. It’s a Kindle book, so you can download it today. I think I’m selling it for $5, somewhere Php 250.00. I put everything there about how I scaled up SEO Hacker from a one man team to a fifty man person right now. So our hiring process, firing process, how I built the company culture is there, how I deal with gossip in the office, how I deal with people posting on social media, posting crap on social media about you as a founder or about your company, they’re just trying to run things down the ground. And yes, I’ve hired people who are like that and I’ve fired them. I wrote it all in the book, how I deal with those things.

So if you want to scale up your business might be a good book for you to pick up and read. I put everything there. Yeah. I didn’t spare any knowledge that I have. I just wrote it all there.