Interview with Bill Haskell
Photo courtesy of Bill Haskell

Bill Haskell, chief executive officer of Innventure, is an expert at scaling technology companies in sectors like renewable energy, health care, and agriculture.

Here he shares his advice for how to grow your small business and help it reach its full potential.

What is Innventure’s process for creating companies that scale?

At Innventure, scaling begins when a company has validated that the product or solution has achieved commercial acceptance—when customers are actively buying. To mitigate the risk, we have serial CEOs who have experience in growing startups, so we avoid the pitfalls often attributed to first-time entrepreneurs. Once we reach critical mass, we then hire a dedicated executive team with domain knowledge to scale the company to the next level.

What should companies that are looking to scale do first?

Before you decide to scale your business, make sure your customers have demonstrated a willingness to buy your services or products. Then develop a business model that shows the potential costs, profit margins, and so forth of scaling. You need to research every angle before you focus on growth—you can’t just start getting new customers and hope it all goes well. For example, before McDonald’s builds a restaurant in a new location, it looks into how many people drive by, how much of their income those individuals spend, and what their socioeconomic status is. The company knows all this before it even digs up its first shovelful of dirt.

How can a company ready itself to scale?

You need to position your organization for growth by hiring the best talent and putting them in the right positions. I’ve seen a lot of companies that start to become successful and then ultimately fail because they can’t accommodate the growth and keep up with demand. If you can’t handle your growth and deliver to your customers in a timely fashion, they may leave for a competitor. To prevent this, you need to grow and improve your workforce, though you don’t have to hire a full-time staff. You can bring in the necessary talent part-time, or you can even outsource.

Is it always necessary to bring in new talent to scale?

It depends a lot on your skills, goals, and type of business. Some owner-operators can carry their business on their own and make it profitable enough to support their needs. There are only a few individuals in history who have taken their companies from just a concept to a very large scale as CEO: Bill Gates, Michael Dell, and Elon Musk, to name a few. Some people are very adept at the conception stage of a business and others at the execution phase, but, in general, few are good at both.

So if you hope to sell millions of dollars’ worth of your product, you should consider bringing in skilled experts instead of working to acquire all the necessary proficiencies yourself. Individuals who try to work on their weaknesses tend to be less successful than those who focus on improving their strengths. For example, Sam Walton, who first started out with a dime store in Arkansas and went on to create Walmart, was able to do so in part because he hired people who had skills he lacked.

What type of talent should a scaling business bring in?

First, assess your own abilities. If you’re primarily good at the beginning stage of running a company, you may want to hire workers skilled at honing your product, determining what your customers want, and tailoring your product to the market.

You should also consider bringing in people who’ve helped scale a business before. Most first-time entrepreneurs don’t have this type of experience, and it can lead to various mistakes and failures. Seeking out experts who understand the nuances of your specific industry is another way to better avoid potential pitfalls.

What are other important considerations when it comes to scaling?

You need to make sure you have access to the capital you’ll need to scale. Growth generally requires a lot of money, so you must be able to convince people to invest in your business. You can also turn to the Small Business Administration and lenders who concentrate on helping small businesses.

Is it possible to scale without significantly increasing expenses?

Yes. There are economies of scale. You have certain fixed costs, such as your rent and your overhead, and you’ll get more profit if you can sell more without increasing those. Your ability to do this and how you go about it depends on the product you sell. For instance, if you own a software business, it may be easier and less expensive to scale—you can do so almost infinitely because the cost of delivering your product may be relatively low, no matter if you sell ten or one hundred copies. Almost every sale can be pure profit.

But if you’re an airline, you’ll have much higher costs, such as for fuel, pilots, and flight attendants, that you’ll have to pay whether there is just one or three hundred passengers on a flight. You’ll also have lots of contingencies to manage in order to scale successfully. If you add routes, for example, you’ll make more money if you can keep your planes full; it’ll also be very important to fly where the demand is high.

When is it best to start scaling?

Only after you’ve proven that you have customers who want to buy what you have to sell. You don’t want to spend a lot of money and put infrastructure in place only to find out that your product isn’t as appealing as you thought. Once you’ve shown that your business model works and that people will pay the price you need to charge for your products or services so you can make a profit, that’s when scaling begins.

What else should influence a decision to scale?

Every company should have KPIs, including gross margins, the number of customer increases over time, sales-price changes, and cash needs. You’ll want to track any factors that may affect the health of your business, such as in an Excel spreadsheet, and monitor them so you can spot problems early enough to fix them. For example, Walmart, which has tens of thousands of stores and trucks on the road around the world, balances its books every day. The financials from every single Walmart store flow into a central database, so the company knows exactly how much profit it makes each and every day. Its metrics are unbelievable.

For more info, visit innventure.com

TAKE ACTION:
Before looking to scale your business, examine its well-being and take steps to make any necessary fixes or improvements.