Brian Scudamore talks about when entrepreneurs should consider expanding their business.
Knowing when it is time to take your business to the next level is one of the more difficult questions entrepreneurs face. Rushing the process could spell doom for your company, while not moving ahead at the right time can result in lost revenue.
As the founder and CEO of 1-800-GOT-JUNK, Brian Scudamore knows all about how to grow and scale businesses. Scudamore launched 1-800-GOT-JUNK in 1989 at the age of 18. In the nearly three decades since, the business has grown to nearly 200 locations in three countries. In addition, Scudamore has expanded his brand by launching three new businesses in the last eight years – Shack Shine, You Move Me and WOW 1 DAY PAINTING.
We recently spoke with Scudamore about the best ways to expand and scale your business, and how to find the right people to help you do it.
Q. What is the difference between scaling and expanding a business?
A. Expanding is when your business starts to pick up speed; customers are flowing in, the flywheel is kicking into high gear, and you need to grow your team just to keep up. Scaling levels it up: It's about operational efficiency and creating replicable systems that can be applied on a massive scale. This is especially important in a franchise system like ours, with hundreds of decentralized businesses in three countries.
When 1-800-GOT-JUNK? first started to grow, we were adding franchises one by one – that's growth. When we started to scale, we were able to add franchises exponentially. We developed tried-and-true systems for everything: sales, operations, marketing, etc. They're easy to teach so we can just as quickly train 10 new franchise partners as we can train one.
This process has been so successful that we've since applied it to three more brands. We'll continue to leverage our systems as we add more brands to our family of home services.
Q. How do you know when you are ready to scale and/or expand?
A. For me, it was a gut feeling. I believed that 1-800-GOT-JUNK? could be scaled, so I took the risk … even though every franchising expert told me not to. It was easier with our next brands, since we had already developed repeatable best practices. Our COO has a more practical approach, though – never scale until you're confident in your revenue model.
Both of these things are important, but first you need to have confidence in your people. With the right team in place, you can achieve incredible things. You need to take the time to recruit and invest in people who are totally aligned with your vision, values and culture.
Q. What steps should you be taking to ensure your business is prepared when the time does come to start growing?
A. Systematize everything. Establishing systems is the main reason we've been able to scale to the magnitude we're at today, and how we'll continue to scale in the future. We've got our sights set on our first billion-dollar year in 2020. This goes beyond operations; if you want to scale, you need systems for hiring, firing, marketing, sales, finances, training – everything. This way, everyone will be set up for success.
As a franchisor, having systems means anyone can run one of our businesses. A new franchise partner who joins our family is stepping into a turnkey operation. We've created replicable best practices so that our franchise partners can get up and running in no time. Our businesses aren't really about painting or hauling junk; it's about giving people access to a proven framework and a network to help them grow a successful business.
Q. When you do start to expand or scale, how do you know if you are growing too fast?
A. The quickest way to tell if you're growing too fast is to look at your culture. A big pitfall of growth is that you need to expand your team quickly to keep up with demand. Sometimes, you end up loosening your hiring practices, which allows the wrong people to slip into your organization.
In the early days of 1-800-GOT-JUNK?, we dealt with this all the time. I literally needed bodies in trucks to serve our growing customer base. I was less concerned with cultural fit and my criteria for new hires was, "Can you lift at least 50 pounds?" If the answer was yes, that was good enough for me.
This helped us grow, but it wasn't scalable in the long term and our culture started to suffer. It forced me to reassess my vision for the future and create a system for how we hire. Now, our franchise partners' and employees' cultural fit with the organization is top priority.
Q. As the leader of a growing company, should you keep all the responsibility of running and driving the company forward or should you bring on others to share in those responsibilities? How do you know when the right time is to bring someone else on board?
A. Strong leaders know how to let go. They also know how to admit when they need help. I used to try to do everything myself – I was the sales guy, the operations guy, and the PR guy, all rolled into one. It was too much for one person to handle alone. I had to face the fact that there are certain things I'm simply not good at. I needed a COO who would complement my strengths to share the responsibility of running the company.
For me, it took a harsh reality check to make me realize I needed help. On top of the emotional stress, our franchise partners started questioning if I was the right person to lead the company. I learned that if you're the smartest person in the room, you're in the wrong room. Being doubted as a leader forced me into deep self-reflection that changed the future of our business.
Q. If you are hiring a second-in-command, what type of traits should you be looking for?
A. The answer will be different for everyone. It's not really about finding a specific type of person – it's about finding the person who's right for you. My strengths are vision and culture. When I was looking for a COO, I wanted an implementer with the know-how to scale. Finding the perfect No. 2 entirely depends on your self-awareness and acceptance of your weaknesses.
Q. You started your first business at such a young age, just 18 years old, what advice can you share with other young budding entrepreneurs who think they are ready to launch their own business?
A. Just do it, honestly. There's no right time to start a business, and if you keep waiting, you'll never try. Entrepreneurs need to be willing to fail and to be comfortable in the unknown. It's scary at first, but there's no better way to learn about business than by running one yourself.