The Biggest Challenges When Scaling a Business (and How to Overcome Them)
Welcome to ValuationPodcast.com—your go-to resource for navigating the world of business growth and valuation. I’m Melissa Gragg, a financial mediator and business valuation expert in St. Louis, Missouri. In today’s episode, I’m joined by Mark Howley, financial strategist, CEO, and podcast host of The Mark Howley Show.
Mark built, scaled, and sold his company and now shares candid insights on the real challenges of scaling, preparing for sale, and building businesses with lasting value. Whether you’re growing past the $1M mark, aiming for $10M+, or planning your exit, this conversation offers practical lessons every business owner needs.
Key Takeaways
Profit over Growth Hype – Scaling isn’t just about getting bigger; it’s about sustaining profitability and making calculated moves.
Focus Over Diversification – Owners often get distracted by chasing too many markets; success comes from doubling down on core strengths.
Build a Team That Replaces You – A business dependent on the owner has little transferable value; scalability requires strong middle management.
Prepare for Due Diligence Early – Clean books, accurate inventory, and separation of personal vs. business expenses are non-negotiable for a successful sale.
Timing Your Exit Is Critical – The best time to sell is when growth is strong, systems are in place, and the future looks promising to buyers.
Q&As
Q1: What is the biggest mistake business owners make when scaling?
A: Many chase growth at all costs, spreading into too many markets. The smarter path is focusing on profitable niches and building operational systems before expanding.
Q2: Why should owners prepare their business for sale even if they’re not selling?
A: Buyers want businesses that run without the owner. Pre-sale preparation—like clean financials, a strong team, and documented processes—makes a company more valuable and easier to run.
Q3: How can small business owners use debt wisely?
A: Debt is useful when tied to revenue-generating investments (like marketing or production capacity). It’s dangerous when used for overhead, perks, or non-essentials.
Q4: What surprises owners most during due diligence?
A: The depth of scrutiny. Buyers dig into financials, inventory, tax returns, and operations. Personal expenses hidden in the business often reduce value dramatically.
Q5: How do you know if it’s time to sell your business?
A: Compare the lump sum offer to expected profits over the next 5–10 years. If the offer provides greater certainty and value than holding, it’s likely the right time.