In this episode, Adam Cooper, CEO of Ascent Consulting, and senior consultants Greg Gorman and Jeff Robertson, dissect a crucial topic for construction companies: the difference between growth and scaling. They break down the distinct challenges each phase brings, from the top-line revenue focus of growth to the structured, intentional nature of scaling.
The team explores common pitfalls when companies grow too quickly, such as lack of standardized processes and the strain of employees wearing too many hats. They introduce essential tools for managing growth, including the PDCA (Plan, Do, Check, Act) loop, and emphasize the importance of documentation and role handoffs, using real-world examples like delegating accounting responsibilities.
In a scenario-based discussion, Adam, Greg, and Jeff tackle client questions on opening new branches, balancing profitable work with marquee projects, and defining success for companies with varying goals. They stress that scaling requires thoughtful organization, while growth often emphasizes revenue expansion at the risk of process overload.
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Full Episode Transcript:
Adam Cooper:
I’m Adam, CEO of Ascent Consulting.
Greg Gorman:
I’m Greg, senior consultant.
Jeff Robertson:
And I’m Jeff, senior consultant. Between us, we have over 90 years of experience and have worked our way up from digging ditches and carrying gear around job sites.
Greg:
We love this business. We love the people. And we’ve seen what running a successful, profitable business takes.
Adam:
We’ve helped hundreds of clients build better construction companies. And we’re sharing it all with you here on Construction Hot Takes. On today’s Construction Hot Takes podcast, we’re going to talk about growth versus scaling. What is the difference when it comes to construction companies? Do you want to grow your company? Do you want to scale your company? Can you scale without growing? Can you grow without scaling? We’re going to kind of delve deep into this area today and give you our insights.
Jeff:
What’s your definition of growth?
Adam:
Uh, growth is typically top line revenue. Typically. But we’re going to get into that. And don’t forget to read our blog about the five different ways to grow a construction company. I would say the thing I get the most calls about, the thing I hear the most is they say it’s grown a lot and it’s great, except everybody’s running around with their hair on fire. Uh, it needs to get organized. I need standard processes. I need processes, procedures. I need standard things. Everybody needs to be doing the same, doing it the same way or I need to have some type of structure to it. Yes, it’s grown out of control. We hear that a lot. Everybody’s wearing too many hats. That’s a common phrase. I hear a lot. Can you help me? I just need it organized.
Jeff:
I could double this company in a year, but I know that I’m not ready. I cannot scale. If I go do that, I’m underwater, versus the … I doubled the company and now I’m out of control. Every now and then I’ll get one of those. I’m ready to go, but I know that I don’t have the infrastructure in place.
Adam:
Yeah, they’re like, we have the pipeline. We can get the work, but we know we can’t take it on.
Greg:
Right. I was gonna say the thing about phrases is one of those phrases is everyone’s wearing a lot of hats. I think that’s indicative of the problem when you start small and grow, which is what we see a lot in construction, I think, right. There’s not a lot of, there are not a lot of trillion dollar general contractors right in the world. There’s some. But the majority of construction that I think that we see is they grew. You know, they started small and they grew and they became whatever they are. But taking on a lot of roles, because there’s no one else who can do that. Whether you’re organized or not, whether you have process or not, if you’ve always done it this way and now you have to do it this way.
Jeff:
Well, there’s that.
Greg:
How do you do that?
Adam:
Well, there you go.
Jeff:
There’s that jump of recognizing, maybe there’s three of you, that three of you are doing everything. So you can’t possibly imagine five or six or seven people being there. And how would that person that I’ve never met know to do it how I do it? It’s kind of the point. Right.
Greg:
Well, there’s that –
Jeff:
Create a standard process so they can.
Greg:
And there’s that business owner or someone who’s been at a company a long time, like you said, Well, I’ve always done it this way, and I’ve always done it. So can anyone else do it the way I do it?
Adam:
I just went through that over the last couple of years. Getting other people to handle things, you know, like the accounting, getting that handed off, that took. It took some effort to figure out how to take everything that I already knew how to do and get it documented and get it. Get somebody else trained to take it over from me and then be able to check that work. And now not doing the day to day anymore, I don’t want to take it back now. Once I finally handed it off, well, to somebody who was competent, and I got them doing it the way that made sense, then I was comfortable letting go of it.
Jeff:
See, that’s a really good point that I think that’s a common misconception. So just creating a process or getting swim lanes and roles and responsibilities set is like, just not even half of it. It’s the first step, but you have to inspect to what you expect or however you like to look. You have to. You can’t just. You can’t just suddenly. Yeah, you can’t just suddenly go, there it is, and it’s gone. Like, sure, I’m sure that process will be just fine. It’ll work just fine. You have to actually stay in it for a while.
Adam:
Sure. I’m still. I will never let it go completely just because there’s things that the anomalies that come up that I’ve handled before, but nobody else has. And I know how I fixed it last time or handled it last time or adjusted it last time. We had that happen with some credit card charges recently, like, they just had not encountered that before. So then I had to go back and make the adjustments and reconcile everything and takes me, you know, 20 minutes. But now I showed Kendall how that works, and now she can do that the next time, same thing happens. Construction companies you have as the owner, typically you, you’ve been the one who’s handled everything to a point. And now getting that tribal knowledge out of your head and onto a piece of paper, like you said, is one thing, then actually training somebody else to do it, but then staying behind to inspect, review, support, help them overcome the next thing that shows up.
Jeff:
I talk a lot about the PDCA loop – Plan, Do, Check, Act loop. So the planning is just creating the process and then you’re doing it. So you start doing it, but you have to have a check function. You have to kind of have an off ramp and every now and then check in. Like, well, how is this, Is this working? Is it accomplishing what I thought it was going to accomplish? Are we faster at this, or do I get to take a vacation now or whatever the thing may be. So you have to, I think that check functions often, I don’t want to say forgot. I just maybe overlooked or miss.
Adam:
Minimize.
Jeff:
Minimize. Yeah, minimize.
Greg:
Well, the other thing, too. And this just happened on a call, a potential sale. The person asked, what’s the difference between scaling and growing? And I said, that’s a really great question, because you can plan a process around what you think growth is, and that could be trying to scale your business up. Like. Like, that can be going from five people to ten people, but doing the same revenue. Or you can grow the business and mean top line revenue. You can go from 10 million to 20 million over five years, let’s say. And you can do it with the same number of people that you had before, and everyone’s three times as busy. Both of those need process. Both of those need help. Both of those need structure, your square. Both of those need structure, but they’re a little different. And I think understanding what you want probably scale creates growth and vice versa. But I think – but it was an interesting question because I think that we maybe sometimes take for granted that we mean growth to mean one thing. It’s lots of things. It’s sort of multi shaped. You can grow tall, wide. You can shrink, you know, too. I mean, there’s a lot of ways to think about how, how to grow business.
Adam:
That’s a really good question. What is the difference between growing and scaling?
Greg:
Yeah. Yeah. I mean, I’ll tell you what I told him. I told him that if you scale the business up, scaling is growing on all sides. It means, it might mean, it might mean adding people, it might mean adding offices, it might mean adding functions, it might mean adding roles. It might mean adding scopes of work. That’s scaling the business to be larger than it is. But growth, to me, is growing your revenue, and that’s how I defined it for him. Growth, meaning you grow from being $1 million to $5 million to $5 million to $50 million over time. But I think they can be interchangeable if you define them. And I think in construction, a lot of times we look at top line revenue, we say, let’s talk about the complexity of your business, and we use top line revenue as something to grow on. Uh, go on. But it doesn’t necessarily mean that they don’t need to scale and do the same revenue. It could.
Adam:
You know what comes up for me in that? I’m just kind of spitballing here, but you can grow a company without scaling it.
Greg:
Exactly.
Adam:
But scaling a company requires you to grow. Like you set it up. It’s almost like growth is, like, uncontrolled and unstructured. It’s just growing like, oh, we’re selling more than last year, and we’re hiring more people. We have more work going on. We have more clients, we’re opening another office. But scaling is like thoughtfully organized growth. Like, you set up systems, you set up roles, you’re now just duplicating. Oh, I’ve got three project managers to handle my current size, I’m scaling up. So now I’m just gonna add more project managers to handle the additional work that we’ve got. Or we’re now creating a marketing department instead of just having a marketing person, or we’ve now got an HR manager instead of us just kind of managing it with the leadership team. So I think of scaling as organized growth, whereas growth is more of, like, unorganized or unstructured or more organic without planning it.
Jeff:
I like that definition.
Greg:
So, this was a specialty subcontractor who asked the question, and what this person wanted to do was, they wanted to open a second branch. So that was the context of that question. What’s interesting about what you just said is you can do both, whether it’s organized or disorganized. But, uh, I think the key is, do you know what you’re talking about when you say, I want to grow my business or I want to scale my business. It almost doesn’t matter what it is, as long as you define it for your company. Growth could mean doubling the office and not doing more revenue. Or growth could mean throw everything at the wall and see what sticks. That’s kind of your example. One’s organized, one’s not. But, uh, if you know which one you’re trying to do, or you know what the definition of what you’re trying to do is, you’ll be a little more successful.
Adam:
You know, one of the questions I used to ask a lot of people who called in, and I haven’t been doing it as much recently, but I probably need to go back to adding this question into the mix, is when they say, I want to grow my company, I would say, how big and why? Like, what does that represent to you? What you say you’re $10 million and you want to – I remember one of our early clients, who’s still a friend, he said, I’m going to keep my foot on the gas till we’re $100 million. And I said, excellent. Why $100 million? He couldn’t give me an answer. He just, He said, well, the last company I worked at, like, they were about that size, and I want to be like they were. I want to be, I want to be able to compete with them. And I said, what if you could compete with them but only be at $20 million, so you’re just competing with them on select jobs instead of on every job? Would that be of value? He goes, maybe. I said, what if you could do $20 million and have more money at the end of the year than that $100 million company because they took on more risk and maybe they’re only going to net $2 million, but you could do $20 million and net $2.5 million. Would that be better? He goes, I’d be interested. All of a sudden, $100 million wasn’t as important as the Like, it meant something to him to be $100 million. But it also comes with a lot of headaches. And if you can make more money being smaller and more efficient, that sometimes is more appealing.
Jeff:
The top line number is often a notch in the belt, or …
Adam:
It’s an ego stroke.
Jeff:
We used to talk about this from just getting assigned projects as project managers. I had a, you know, a boss that I was just itching for a marquee job at one of these high rise things or some kind of a whatever. And he said, there are just as many, maybe even more headaches in 2000 square feet as there is in 200,000 square feet Give me, give me profitable work. Give me steady work all day long. I mean, having a, having a cool project is, that’s, you know, that’s nice for the resume, but it’s like, for me, I just want steady, profitable work.
Greg:
Well, I think both you guys are saying something that we, we talk about, or we talk about this all the time, whether our clients listen to us. I hope that they do. There is a difference between revenue and profit.
Jeff:
Oh, yeah.
Greg:
And we can never take it for granted that people understand that. Back to your point, $20 million making, you know, $1 million. There’s a lot of risk in a $20 million project if you’re a certain size company. If you can do a $5 million job or a $2 million job and make the same $1 million there’s a lot less risk in that. So profit and revenue have to be defined, too. Like, why do you want to be $100 million? Why do you not want to be $10 million? If you can drop the same number to the bottom line, that’s a choice. It becomes a really obvious choice.
Jeff:
Yeah. That’s when you really start talking about your business goals. Like, how long am I going to be in this business? What, you know, what do I want to get away from it? What are its, is this a lifestyle business? Am I going to try to pass this along to my family? Do I have a partner in this? What does he think? Or she think? There’s a lot to that.
Greg:
Yeah. Yeah. I think defining, especially process, because we’re talking about process, a lot of our process definitions, I think it’s helpful to define them. It’s helpful to understand what someone understands. Right. We understand what they understand or don’t understand and then act accordingly. If someone says they want to grow their business to $100 million and they can’t answer that question, we can bring a lot of value to that and say, well, let’s talk about why or why not.
Jeff:
Well, that goes back to that EBITDA thing, I think it’s all about, you know, what words are we using here to describe things, right. It matters.
Adam:
So something to kind of bring this back around to where we started is difference between growth and scaling. A lot of people who called us have already grown the company. Now they want to make it scalable because they didn’t have the processes and the structure. And now it’s feeling like it’s overwhelming. It’s, everybody’s wearing too many hats. We are putting out fires constantly.
Jeff:
I’m the center of everything.
Adam:
I’m the center of everything. We’re all working 60 hours weeks. Right. It’s because they didn’t scale the business, they grew the business, and there’s nothing wrong with that. But now they’re calling us after the fact to come back in. I don’t want to say triage it, but, uh, you know, calm it back down, get it back to being manageable at this new size. It went from $5 million to $10 million. Now they’re calling us in to make it scalable instead of calling us ahead of time to make it scalable, and then growing, they grew it first, and now they want to re, now they want to reverse engineer. How do we make it more scalable? So now we can go to 20, 30 or 50.
Greg:
Here’s a great construction saying. Back in my years of doing construction, doing government construction and government contracting, when you’re the dog. When you’re the dog that catches the car … that’s a great saying for construction because you go out and win the $20 million job somehow, and all of a sudden you have to go do that job, and staff that job, and give resumes for that job, and mobilize to that job. And you haven’t scaled your business up to a point where you can do that. You just got one big contract, and now what? That’s growth versus scale.
Jeff:
That feeling of you know, say it’s a, say it’s a public opening. You’re sitting in the room …
Greg:
You’re like, I want this job, but, God, do I want this job?
Jeff:
Yeah, you want it so badly, and then all of a sudden you’re like, do I really? And then you win. You’re like …
Adam:
There’s a low bid.
Jeff:
How much, how much money did I leave on the table? Oh, my God, I’m in trouble.
Greg:
And that’s, that’s a great example of, you grew the business. Now you’ve grown the business. I mean, you, you won that contract. You’re about to do a $10 million contract, and you’ve never won anything more than $3 million. Just as an example. Now all of a sudden you have to scale the business. How do we grow? How do we make our business viable that we can do a $10 million contract and keep doing our other work and keep doing other stuff.
Jeff:
Yeah, keep doing the stuff you were good at that got you there.
Greg:
Yeah, right. Exactly. So scale is people and systems and process and software. Software. Oh, my goodness. All that.
Adam:
Well, on today’s episode, we talked about growth versus scaling. And for me, I think the biggest takeaway is it’s easy to grow without scaling, but it’s really hard to scale without growing.
Greg:
My hot take from today’s talk about growth versus scaling is sometimes people think about them as the same thing. Like we’ve talked about. Growth is maybe top line revenue. Scaling is growing the size and breadth, you know, width of your business. And sometimes you don’t know why you’re doing one or the other. People grow their business because they think they have to. You don’t necessarily have to grow your business or scale your business in order to make more money. And it’s something that every business owner should be thinking about.
Jeff:
Growth, unrestrained growth is generally not a good thing. And if you take the scaling conversation into it and start thinking about it on, uh, a strategic way of what do I want out of this? Do I want to be a million dollar company or can I make the same amount of money to half a million dollars? There has to be some intentionality, I guess, is what I’m looking for.
Adam:
Yeah, it’s easy to grow top line, and maybe even bottom line in an unstructured and more organic way, but it has a cap on it before your systems fall apart and break down. Scaling is kind of the opposite. Setting up for success so that you can grow the company and grow into what you’ve designed. Structured, organized, strategic growth equates with scaling to me, and unorganized, more organic, just kind of growing top line. Expanding the number of projects or the size of projects is not necessarily strategic and could actually be setting you up for failure. Thanks for listening to today’s Construction Hot Takes podcast.
Jeff:
We hope you learned something
Greg:
And we hope you join us here next time
Adam:
Check us out on YouTube, Apple, Spotify, anywhere you listen to your podcasts. And don’t forget to subscribe to our channel.
