Jake Setterlun says the real problem with scaling is margins collapse. Revenue grows but profit drops from 50% to 15-20%, making bigger sales less rewarding. The fix: horizontal scaling into new industries instead of squeezing one offer forever.
The biggest challenge that anybody is going to have as far as scaling any kind of business, that could be in person, that could be online, it really could be any of them. The biggest challenge is profit margins. As you grow and as you scale, profit margins shrink, and that can be really demotivating for a business owner that is used to a 50% profit margin, and then they scale and they maybe 2x, 3x, 4x, and now they're at a 20% profit margin or 15% profit margin. They end up making the same if not less, at a bigger revenue point than at when it was just, you know, $100K a month business making a 50% profit margin versus doing $300K, $400K, $500K, $1 million a month. But your profit margin's $100K. If you're running ads, that sucks. The profit margin, your ROAS, your return on ad spend, it shrinks as you scale as well. So that is definitely the biggest struggle. And I would really, really, really challenge people to focus on scaling horizontally, which means if you have a good offer, take that offer into another industry. Don't just try to scale one offer into infinity in one agency because that again, you are gonna hit a ceiling.
