Strategies to Use and Mistakes to Avoid When Scaling a Business
Entrepreneurs are fierce and do whatever they can to be successful. They work long, hard hours to grow their businesses, but does your company have what it takes to reach the next level?
As new businesses grow and profit, it’s essential to have strategies for scaling your business. Scalability is about capacity and capability. Does your start-up have the ability to accommodate growth? Do you have a laid-out process that is capable of growing with your company? In this article, we break down the strategies to use and the mistakes you should avoid as you scale your business
How to scale a business?
If you have assumed that scaling a business will be easy because it will all happen naturally as your company grows, you could not be more wrong. Without a plan and strategy in place, things have the potential to fall through the cracks and could potentially end your company before you can continue growing it.
What does it mean to scale your business?
Before we get rolling, let us start with the basics. Scaling a company describes the process of a business performing well under a consistently expanding workload. When you scale a business, you are forming strategies to support your business as it grows. The process of scaling requires planning, funding, technology, processes, and partners.
What is the difference between scaling a business and growth?
When you hear the term growth, you are talking about working to increase your company’s revenue. On the other hand, scaling refers to both an increase in revenue and an increase in the costs of production.
Why is it important to scale up a business?
The digital world has taken businesses by storm. The internet has changed the way people shop and do business. It has opened one’s ability to sell a product from just selling to the local community to selling to the entire world.
When should one go about scaling their business?
As much as we would like to tell you a specific date or time for you to know when it is time to scale, we can’t do that. However, we can tell you when you should anticipate it’s time to scale, such as new customer acquisitions, new revenue sources, and better brand recognition.
Markers of those situations are as follows:
- When you have so much client work that your current employees are not able to handle the workload that has been given to them.
- When your leads are continuing to come in, not allowing you to follow through because there are so many.
- When you have a sales model that is working and doesn’t require you to change.
- When your company numbers tell you that it is time to level your business up.
If you find that you have to turn away business because your team cannot keep up with that work, that should be a wonderful indication that it is time to scale your business. On the other hand, if you are excelling past all of your business goals, you have cash coming in repeatably, and consistent sales, then you are at a good place to consider scaling your business.
How to scale a business?
Now that we have spoken about what scaling a business is let’s talk about how one actually scales a business without blowing your current budget with an excessive amount of extra costs.
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Add individuals with different skill sets to your team.
As you expand your company, it is vital to hire a team that brings different assets to the table. At iStart, we suggest investing in your team through team activities, education, etc. At the end of the day, if you invest in your employees and drive them to share their skillset and talent with your company, you can focus on continuing to scale your business effectively.
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Collaborate and network as much as you can.
Many entrepreneurs forgo networking and collaboration outside their business walls once their business begins to make traction, but this is not how it should be. When you prioritize developing a strong network, you build a host of individuals who support you and your endeavors and will help lift your business up as it grows. Believe it or not, these relationships help ensure scaling is achievable with minimum effort on your end.
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Invest in technology to help with productivity.
It’s 2021, and we are all in the throws of surviving a global pandemic. Businesses have turned to technology as a source to do all business, from meetings to buying and selling; technology has shown us that your company can be as successful working from an office in your home as it is in a free-standing office. We have grown to understand how investing in the right technology can allow you to scale your business with less labor as long as you spend your time and money on this sector of your industry.
A few commonly used systems are:
- Customer Relationship Management Systems, which work to increase team collaboration.
- Inventory Management Software that allows you to track inventory levels, orders, sales, and deliveries.
- Accounting and Financial Software, which ensures all of you finances are in order, and you are on the track to make better financial decisions.
- Human Resource Management System (HRMS) that allow you to manage people, tasks, and information
- Digital Marketing tools help you ensure your marketing is successful.
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Establish standardized processes and then work to automate them.
There is no way to scale your business unless you have established processes and procedures to help you operate your company in a fluid manner. You have to ensure that you delegate these core, repeatable tasks to help you simplify your business.
After you have these core tasks continuing to help your business run smoothly, it would behoove you to discover how you can efficiently automate them to minimize the manual work you were doing. Automation not only frees up more of your time, but it also helps to reduce any human error.
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Understand what your customers want.
Understanding what your customer wants is key as you continue to grow. It is key because you must keep their persona entirely in mind. We want to encourage you to ask yourself these questions:
- Who are your customers?
- What do they do, and where do they live?
- Why do they need your product/service?
- How are they choosing to buy your product or service?
- What do these individuals feel about your organization?
- How do they feel about your competitors?
Use this information to help your team focus on your company’s growth and how they can get your business to the next level.
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Focus on growing your revenue.
We all know that scaling your business means that you want higher sales or revenue for your organization, but how can you generate those extra sales? We want to encourage you to have an effective sales plan in place and focus on having a sufficient amount of leads coming in daily, if not weekly. Do you have enough team members to follow up on those leads? What about a system to manage their orders and to ensure they are correctly invoiced?
Mistakes to avoid when scaling your business.
These mistakes are simple to note but crucial to not take advantage of. They are:
- Choosing to scale your business without a foundation.
- Focusing too much on marketing and selling.
- Scaling too fast.
- Not being willing to hire employees that have larger skill sets.
- Ignoring what your early customers have to say about your organization.
- Not having a proper balance between gross revenue and profit.
- Being unable to understand the economic drivers of your business.
- Being unable to identify potential customers.
- Believing that the investors don’t have an opinion on how you scale your business.
- Not taking the time to document your business process.
- Focusing on too many goals at once.
Scaling a business is no easy feat, and it should be thought of as you start your business. If you implement the above strategies, we cannot guarantee that your business will boom, but we have personally seen these methods work for companies, including our own.
At iStart, we understand the challenges entrepreneurs face on their start-up journey, and we would love to help you find success as a business owner. Our non-profit business incubator is currently accepting applications. Head on over to our application to get started!