7 Lessons From Scaling (How We Grew Afrocenchix to 6 Figures & What We Learnt Along The Way)
A year and a half ago I shared the story of our pre-seed raise of over $650k. I did this to demystify fundraising. The problem is, it was a little sensational. Most investment rounds won’t include pitching to celebrity judges including Diddy, Ashton Kutcher and Gary Vee.
But then most investment rounds don’t lead to funding for Black founders. In fact only 38 Black founders (and 8 Black women) have received VC funding in the UK in the last decade. For people like us who are underestimated and pursue huge ambitions anyway, raising capital is often just the first hurdle.
This article is for founders scaling their businesses. Whether you’re bootstrapping, venture backed or scaling through bank loans, there will be something applicable for you. Or if you’re simply curious about entrepreneurship, join us! We’re hiring for a few roles and we’re always looking for entrepreneurial, ethically minded people to be a part of building our huge vision.
Back to business.
With our pre seed investment capital, we expected to hire 4 new people and work with those same 4 people to scale. We thought we’d grow quickly through executing our marketing strategy plus partnering with a manufacturing factory to outsource some of our production without a hitch. The universe laughed.
Instead, we built our team to 7, but hired 10 people and fired all but 4. In the last 18 months we’d dealt with death threats, rogue builders and bank fraud. It was tough before the pandemic hit and that scuppered our plans.
But it’s not all bad. We’ve learnt, we’ve grown, we’ve scaled.
Before the raise we sold around 300 bottles a month. Now we do that in a couple of days. When we started fundraising we could fill a classroom with loyal customers, after the raise we could fill a cinema and now we could fill a small stadium. That growth has been a grind, it’s been different from bootstrapping but just as hard.
The most tricky thing is learning on the job. When you raise you’ve had little experience in hiring, cash flow, management, systems, processes & operations, yet you have to do all these things well to survive, let alone to grow. What got us here wasn’t enough to get us there. We had a lot to learn.
The aim of this article is to help you skip some of the mistakes we made as you scale up your business. First, a question… Are people buying your products/software/services and coming back? Before you consider scaling ensure you have something worth growing. If not, go back to research and creation and solve the problem you started to solve. In startup land this is known as finding product market fit. At Afrocenchix, we’re confident we have the best products because we have over 1000 of 5* reviews, our customers will email or call just to tell us they love our products, we’ve won multiple awards and our community get genuinely upset if we run out of stock of anything (if you’re one of the hundreds of people asking, I promise you we are doing everything we can to get The Travel Set back in stock and you can sign up for updates on our site!)
When scaling you’ve already solved a problem and shown that people care. The next question is can I grow and sustain this? Scaling is about setting yourself up for long term wins.
We’ve been asked lots of questions over the last year or so including:
- How do you build a team and keep them motivated?
- What’s the best way to manage cash flow?
- How do you grow a community and keep everyone engaged?
- How do you handle your mindset and emotions when things don’t go to plan?
- When should you outsource work?
- What does a good sales funnel look like?
- How do you approach content marketing?
- When do you cut your losses and pull out of an investment into a new tool?
I synthesised these into general areas which I’ll explore below. First, a word on self care for founders. You are your most valuable asset. Do not skip this section.
Start With You
Whilst scaling your business, you will get tired. You’ll constantly be improving the products, fighting fires and focusing on issues to the point where sometimes problems are all you can see. A shift to working on rather than in the business means a focus on management, processes, financial structure and operations. Scaling means less of the fun creative and immediately rewarding work and more strategic and operational heavy lifting. Whilst doing this work you’ll be head down and busier than ever. People may get upset that you don’t have time for them as your priorities change. It’s a marathon, not a sprint but nobody tells you how to train so it’s not only exhausting, it’s also likely you’ll get injured.
You will feel pressures that are unique to you. As a mother of young children I feel the constant pressure to make sure I’m giving my kids enough of my time and energy for them to form healthy attachments and never question how much they mean to me. As wives, Joycelyn and I acutely appreciate the sacrifices our husband’s make and we’re determined that the late nights, early starts and heavy lifting (we mean this literally, in a product based business it’s often all hands on deck for spouses and loved ones!). As Black women we are part of the 0.003% of people like us that have managed to raise investment and there’s a sense that we have to succeed. It feels that the future of so many others is riding on our success. Maybe you can relate. Maybe you face different challenges. In any case, scaling a startup is hard and before I go into the business lessons, I’ll share my 7 top tips for staying sane for long enough to see your hard work pay off!
- Give yourself an 8 hour sleep window. A refreshed mind is a sharp mind. Remember that sleep restrictions are a known torture method.
- Eat a healthy, balanced and varied diet. You are worth the time it takes. Let your food be medicine and never let your medicine be food, as they say.
- Exercise. A healthy body begets a healthy mind.
- Family and friends first. if your business goes down it is sad but someone will take your place eventually. To your loved ones, you are indispensable. Show them they mean the same to you.
- Stick to your hours unless it’s an emergency. Boundaries are everything. Respect yourself enough to honour them.
- Remember your vision. The path you’ve chosen for yourself is far harder than most other things you could be doing, remember why you’ve taken this road.
- Expose yourself to your impact. Read customer reviews, speak to those you’re helping, get your hands dirty and remember you started to help people, and you’re doing more than you could have imagined. Taking photos and writing down your experiences along the way will help you look back and see how far you’ve come, and also motivate you at the low points when business gets tough. We have a joke in our team for whenever something goes wrong, someone will ask for “pics for the book” it reminds us all that hard times will pass and the process makes a great story!
Lessons From Scaling
1. Hiring And Team
Scaling is all about people: your customers, your team, your investors. Product is key, but good product fits into looking after your customers. I truly believe that if you make it your business to look after your people, your people will look after your business.
When building a team the advice, “hire slow, fire fast,” is essential. I used to find it cringeworthy and a little mean, but we learnt the hard way that hiring decisions should never be taken lightly and when you see a red flag you will run into trouble if you don’t deal with it. The first thing you need to do is to plot out the roles needed to get you to your next major milestone. For product based businesses like Afrocenchix, the main areas of expertise you’ll need are: operations, logistics and supply chain; product and R&D; creative; marketing (especially the technical side); and data. These are the areas where excellence will set you apart. You can’t build a business on branding and vibes. The engine that drives you forward needs to be well oiled and you do that by building on best practices in every area. If you don’t have the expertise on the team or from your advisors, hire experienced people.
We hire by posting a Job Description on our site & other online job boards and calling for tailored CVs and cover letters. When we shortlist we give people a chance and overlook less than perfect academic performance or gaps on CVs as we know that structural inequalities, mental health challenges and family considerations can be held against people and cause yet more injustice. We generally do telephone interviews, panel interviews and a task before making an offer and we then start a 3–6 month probationary period with clear milestones, quality training and consistent, transparent communication to ensure that we do everything we can to see a person win.
I hate firing people, it makes me sick to my stomach and I’ve hated it every time I’ve done it. If you avoid firing people when they are not a good fit for the organisation then you do them and your business an injustice and you need to fix up. By all means use performance improvement plans and other tools to help people improve their performance, but if someone clearly has different goals to the rest of the team or if it becomes clear that someone is confident above their competence and not willing to learn and grow, then the best thing for everyone is to terminate the contract. A long probation period where expectations are clear is a good way to avoid drama and keep everyone happy.
Once team members pass probation and you’re happy that they are willing and able to do their role well, make sure you don’t neglect their development. For teams to be happy and effective, you need to lead them with constant consideration for their wellbeing and motivation. To motivate your team, think about autonomy, purpose & mastery (Drive by Daniel Pink is a great read on this.)
I could write thousands of words on community building and I absolutely love the Afrocenchix Community… but I’ll keep it brief! Keep people super engaged by solving their problems; share your struggles and wins so they can join you on the journey and be proud of being part of something bigger; and connect people with each other in meaningful ways. We’ve continued to engage with our community online and on phone calls and emails. We speak to customers every day, we run webinars to meet their needs and we start every project with the question: how does this help our customers and community? When you are clear on your stakeholders and you deliver value, your community will grow.
The one thing guaranteed when scaling is that things won’t go to plan. Whether on a minor level, a Brexit level or a Global pandemic level, we don’t know what tomorrow has in store. What we do know is that each day has enough trouble of its own. So keep first things first and focus on things you can change.
The questions I get largely fall into: how to keep your head when you’re failing by your own standards and how to keep your head when failing in comparison to others. Those who ask these questions are usually doing very well objectively, but our brains can do strange things when not kept in check!
On comparisons to others, I’ll keep it brief. Don’t compare yourself to others — you’re likely at different stages + you don’t see what’s beneath the surface. But to be honest, even comparing yourself to yourself can cause problems…
I know what it’s like to feel like you’re working your hardest and you still suck. Let me give an example. Since April we’ve consistently sold around 100 bottles a day as well as accessories. On the first Black Pound Day we sold over 1000 bottles. Since then we’ve sold around 300 bottles each Black Pound Day, which is still great but it *feels* like a failure. See what I mean about the brain doing strange things? This is partly to do with the psychological phenomenon of anchoring, where we create an anchor of value that seems like the norm and anything above this feels high and anything below this seems low, regardless of the actual value and context. (You can read more about this in Mindware or Thinking Fast & Slow.)
Or take Black Friday… Last year when we were selling around 10 bottles a day, we sold 200 bottles on Black Friday and celebrated. So this year selling over 500 units should have been a celebration? Except it wasn’t. I had to give our team a pep talk and manage my own disappointment. We’d worked hard to set up wonderful funnels on Facebook, and then Facebook had a glitch and shut down ads for thousands of small business owners, including us. They did get us back up and running that evening, at which point the ads did great… but every sale from those ads felt like salt in a wound. Success in the last few hours confirmed what we had lost because they were off all day… Another logical fallacy: we counted our eggs before they’d hatched and so a successful day led to disappointment.
It’s not just for major events. Some months we do great and smash our goals, other months we miss the target and I have to give a pep talk to remind my team (who are driven and obsessive) to focus on the big picture. I have to remind myself that it’s a huge accomplishment that every single day without fail we have at least 10–20 new customers and 10–20 returning customers. Sometimes it’s 100 new and 100 returning. Every single day customers are telling us they like us enough to return and new people are telling us that based on what we’ve shown them, they’re willing to give us a try. Two years ago this was a pipe dream. We’re doing just fine. We’re doing better than fine. I’m proud of Afrocenchix and I need to analyse our accomplishments and progress to keep myself and the team motivated. Once that’s done, it’s back to improvements!
4. Operations, Finances & Logistics
The product can always be improved, waste reduced processes made more efficient, copy clearer and more compelling, customers given a better experience, teams more cared for and cash flow better managed.
Revenue is vanity, profit is sanity and cash is king. In the digital age of shouting about turnover, it’s easy to get caught up in the hype and gear your metrics towards things you can show off. World leading businesses are not built in a day and if you want to survive the marathon, you need to think long term.
In the long term, cash flow is one of the most important areas for you to focus. Track, track, track it.
Collect data on what your biggest costs are and do your best to (ethically) drive them down. Obsess over waste reduction as it will eat away at your margins if it’s not kept in check and always be looking for ways to increase efficiency. Remember assumptions are dangerous, if you assume there is money in the bank and invoices are being paid, you’ll run out of cash fast. Schedule time to check your finances and make sure you (and your accountant) know them inside out.
5. Sales & Marketing
When it comes to marketing we take the approach that if you solve problems for your customers, they will spread the word for you. In fact, 75% of our sales come from word of mouth and direct or organic traffic to our website. People usually read a few of our blog posts or watch a few of our YouTube videos before buying.
When it comes to paid advertising, everything is about ROAS — return on ad spend. We track the CAC (customer acquisition cost) and CPC (cost per click) but the main thing we aim for is a 1:3 return on our investment. For every £10 we spend on ads, we expect to make at least £30. Ads that don’t deliver this are cut. It took a long time to get this right and it’s super hard to achieve this whilst scaling as things that worked when you were spending a few hundreds on ads will not necessarily translate when spending thousands.
One huge tip I wish I knew a year ago is: don’t spook the algorithm with big changes. If you want to increase your budget, change the copy or tweak the images or audience, change no more than 10% at a time. If you need to change more than this then duplicate the ad and make the changes or start from scratch. The algorithms behind google, facebook, bing and youtube ads take a while to learn and they do this based on a range of factors and data points. If you change too many of these then the learnings cease to apply and you lose the positive traction the algorithm has gained. (See why I recommended that you hire a technically minded marketing professional?)
If you don’t yet have a process folder and an employee handbook, get to work on them now. Lay a strong foundation by determining how you will run your company and sticking to it (whilst making needed tweaks and adjustments along the way.) For managing the team as a whole, we recommend OKRs and I wrote a guide on OKRs to help you out. To scale your business you need to create strategies and frameworks which will form the basis for execution, then step out of the way and focus on giving your team the resources they need to shine.
7. Other general lessons from experience and books I may or may not elaborate on in future:
- Everything takes longer than expected.
- Hire carefully, fire cautiously (team is everything, morale is fragile, be fair and be shrewd.)
- Growth is gradual when it is sustainable, this is a good thing even though it doesn’t feel that way.
- What you fail to measure, you’ll fail to change. (Good intentions do not get stuff done. Careful attention gets stuff done.)
- What you permit, you promote so sweat the small stuff (this will prevent it becoming big stuff.)
- Perseverance is 80% of what you need. (There will be days you feel like you don’t want to work and it’s hard to get empathy when any show of weakness could threaten your company. Take a break then firm it. Rest and continue.)
- Give credit. Take responsibility.