Back in the good old days before the dotcom turned into the dotbomb, scaling up a business, particularly a technology company, seemed like a relatively straightforward thing, writes Ciarán Brennan.

With the big guns paying wild money for any kind of new technology and with valuations based on projected earnings, you didn't necessarily have to develop the company profitably - you just had to develop the company.

Patricia McLister, head of Enterprise Ireland's scaling division, says: "In today's environment very few of the big companies are paying huge premiums for technology for technology's sake. It has to give them a return on investment fairly quickly."

A new reality has crept into the market and that also means a new reality for small companies that want to grow.

There are certain fundamental characteristics that a company must have if it hopes to achieve major growth, according to McLister - a scalable business model, a credible growth strategy and a highly ambitious and capable management team.

So, how do you know if you have a scalable business model? The answer is that your business must pass two critical tests, says McLister. These are the profitability test and the recurring revenue test.

The ability to generate profitable growth is vital to sustaining an aggressive international growth strategy, according to McLister. Profitability gives a chief executive a strong balance sheet from which they can build a global company. Winning new clients, though, can be an expensive and time-consuming process.

To make this investment pay off, a company should be looking for a recurring revenue stream from each client it lands and to increase those revenues over time.

"At the end of the day, it needs to be repeatable and it is recurring revenue that generates profits for the business. If you can provide something to a customer that has a maintenance contract with it, that customer is continuing to generate revenue for you. Or if you can sell your product to multiple customers without having to tweak it or change it, that gives you the repeatability as well as the recurring revenue scenario," says McLister.

Passing the profitability and recurring revenue tests may set you on your way, but a scaling company faces a number of other critical issues on the path to growth, such as expanding the management team; funding the company as it scales; undertaking acquisitions and partnerships; and deepening leadership skills.

"One of the biggest problems most entrepreneurs have is they tend to be control freaks, they tend to want to do everything themselves because they think nobody else can do it as well as they can," says McLister.

"In the companies that succeed, the initial founders recognise that they need to step back from some of those issues and bring in skilled managers, bring in people that know how to handle international sales, that are used to dealing with large global customers and complement their own skills and allow their own role to change and evolve as they develop."

Funding is often necessary to growth but can also provide challenges for the founding entrepreneurs and can lead to a dilution of their ownership and control.

"I often think that people get overly paranoid about releasing some of their equity to raise money to grow the business," she says. "Maybe fundamentally they don't have enough confidence in their own ability and the ability of their company to grow because at the end of the day you're better having a smaller percentage of a large business.

"If you are clear enough in what you're trying to do as a business and run the company well enough with your management team, you have nothing to fear from investors because investors will leave good management teams alone. They're looking for a return on their investment. They don't want to run companies, that's not their business."

Acquisition is a relatively quick means of scaling a business, but McLister warns that it can be fraught with danger. "Do a smaller acquisition first, learn from the experience and have a 100-day integration plan that kicks in immediately you sign the contracts. And it needs to be pushed by a champion within the organisation to make it work."