Corporate Scaling

 Creating Exponential Growth in Corporate Value

The Fine Art of Corporate Scaling

What is the difference in Business Growth vs. Business Scaling?


When companies grow, they are increasing their revenue almost equally as fast as they are adding resources to enable that increase. This is usually referred to as “organic growth”. Hire more salespersons, increase output to match the new sales, have more profit and assuming the profit as a percent of revenue remains the same, value increases. The percent profit remains generally the same or less due to added strains on the existing production unit, but the actual profit in dollars grows. But the company has not increased efficiency in its growth, only provided linear increase of each metric from year to year.

Organic growth from a single unit is relatively straightforward and easily manageable, but quite slow. Further, at some point that growth parabolizes as markets and market share hit the limits. At that point further growth requires more creative tools such as acquisitions, cloning/seeding, geographic tuck ins, and other components such as repackaging to create new products and services.

Scaling a business employs the use of those same elements including acquisitions, "fold ins", cloning, repackaging and organic growth, put together in the right amounts at the right time, much like making a cake. But unlike baking a cake, a workable and manageable scaling plan requires a professional financial model/roadmap to follow.

Most All Companies are Scalable

But, naturally, some are more easily scaled than others. Scaling is the art of making a plan to take a starting value of X to an end value of some multiple of X. That might be to increase the value by 5 times in 5 years, or  to increase the value by 35 times in that same period. Both are usually doable, but one takes fewer resources, whereas the latter takes more. There is no right or wrong answer to "what value do you want for your company in five years?" It is what you want coupled with what is realistically doable, the degree of debt and investment you feel comfortable with and other resources you have to contribute.

See What your Company Could be Worth in Five Years with an E|Enginuity Scaling Plan.

What Value Do You want in 5 years?

Are you satisfied with your company's current size, profit and value? If so, scaling is not for you. Are you at a stage in both your and your company's life where you have worked hard to grow it by 5-7% annually, but now it is still worth only a bit more than it was 5 years ago? This is a typical scenario. Perhaps a scaling plan is what you need.

Growth and scaling rates are not the same. We would consider 5-10% annual growth to be normal and healthy. But, when a company embarks on a scaling plan the growth rate in "value' increases at a much higher rate than simple organic growth. And "Value" is what it is all about.

A very conservative scaling rate involves "growth rates" of 12-25% annually But with a value growth of some 40% annually. Individual growth rates of each component are modest, but when one overlays each rate the compounding effect allows you to achiever values that grow exponentially. Growth rate and scaling rate numbers are apples to oranges. Why?  Because a creative scaling plan does not add mass of people, facilities and overhead as an organic growth only rate would require. It increases value though leveraging, layering and financial balancing.

Scaling employs many ingredients carefully measured and put in at the right time. And it costs a lot less than you would think, as we design it to minimize cash outlay and maximize leverage.

Take a look at the model to the left. If you want to see what a professionally designed, executed and managed scaling program can do for your company and for your value, just plug in the numbers of your company and the scaling rate you want and see what is possible if you are ready for the value increase.

The E|Enginuity Approach to Corporate Scaling

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We at E|Enginuity don’t just talk based on theories and models (of course models do go into the scaling plan). We have scaled companies with value increases much higher than even the liberal example above. We have done this many times. This is our specialty.

Our first company was Hall Kimbrell Environmental Services. It grew at 327% compounded annual growth rate (CAGR) for seven (7) years. It produced $268,000 in revenue the first year, $3 million in year 2 and almost $100 million in the seventh (7th) year. That growth garnered the company the Inc 500’s #9 position, i.e. the 9th fastest growing private firm in the U.S. in that decade. Then Scanning America at 240% CAGR, Oread at 332% CAGR and Florida Environmental at 197% CAGR. The founder was awarded the U.S. Entrepreneur of the Year award by the President of the U.S. for the innovative growth design of HK. And we have been doing the same for three (3) decades since.

The Enginuity Group knows scaling and with that expertise, a comprehensive scaling plan can be developed for your company by the same people who designed and rode the growth addressed above. We can take a $5 million per year company worth $3 million and turn it into a company worth $9 million in 5 years with an ultra-conservative scaling plan with ultra-low risk and stress on the system. Or we can take that same $5mm per year company and turn it into a company worth over $90 million in 5 years, which entails a very liberal scaling model, obviously somewhat higher risk and stress on the system and dedicated attention to managing the growth. Or we can develop a scaling plan that is not driven my arbitrary growth metrics but based on our client’s objective for the end company value.

Five (5) Steps in a Scaling Program

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