I do have some businesses that do not fit into these last two categories but have been very stable businesses that have scaled well. My wife and I started purchasing rental properties many years ago. We bought our first fourplex at a fire sale after the owners went bankrupt. We put enough money down that the cash started flowing from the moment we bought it. As we obtained more cash, we paid off this property. Through trial and error, we have been through the learning curve to know how to manage these rentals. With the money we made from that first rental, we bought another rental property. We added resources by hiring a repairman and other people to help manage the properties. We hired our sons to work on these rentals, as this was a great way to teach them how to work hard. (I’d hire my daughters, but we don’t have any.) One by one, we purchased rental properties that got us to cash, paid them off, and then purchased more. The great thing about these properties is that they are income-producing assets. Even as the housing market took a nosedive, our rentals remained full. Those people who no longer qualified for mortgages needed places to live and were happy to live in our rentals.
When my partners and I started CastleWave, we first got our initial SEO contracts to drive us to profitability, and then we hired the engineers we needed to build our resources. Then it was time to add scale. The scale component in CastleWave was our link-building component—the ability to get other authoritative web sites to direct traffic to the sites for which we were consulting. Our expertise in this area was our number-one value asset. We put together a pragmatic system—aset of processes and approaches that were bundles—that we could then have our employees replicate and follow, allowing my partners and me to focus on other issues.
If done properly, scale allows you to develop a system and train other people in how to use that system. Put together an entire system and process using all your rules of engagement, and then flip the switch and start cranking out the cookies. A cookie-cutter system is what will get you to scale.
Microsoft Windows is a great example of scale. How many times did Microsoft build Windows? Yes, Bill Gates and company have released updates and improvements (well, most of the time), but they really only built the program once! And they have been able to sell it millions and millions of times over. Virtually every PC sold has Microsoft Windows already installed, and Microsoft gets a royalty each time a person opens their box. Now that is scale—and the reason why Bill Gates is one of the richest men in the world!