Scaling a business
Scaling a business means increasing performance at a faster pace than increasing resources. Success depends on first, capability and second, capacity.
It is different than growing a business. Growth is increasing revenue, resources and assets. And typically results in periods of losses and gains. Scaling, on the other hand, means finding ways to grow more efficiently. So, gains outpace losses.
Here are 10 experts on scaling a business. And mistakes to avoid.
1. Have a skill set that benefits from scaling a business
Entrepreneurs need to build a team with a diverse skill set. It is only possible if team members commands impressive skills. If need be, do not hesitate to invest in your team. The learning will ultimately reduce your work and allow you to scale your business effectively. – Arsaian Sajid, Cloudways
2. Learn from competitors who have scaled successfully
Think about how they’ve done it. How have they succeeded? For example, finding out how many staff they now have could give you a rough idea how many you’ll need. Where are they selling and how? Understand their business model and learn lessons. – Martin Norbury, StartUp Donut
3. Scale your team slowly, carefully, and intentionally
There’s no one right way to scale a team, but many startups hire too fast and have to make equally fast layoffs, which has dangerous repercussions for your brand, wider team performance and financial stability. A lot of evidence is that as a team gets bigger than five, and the closer it gets to ten, things get bad. You end up spending more and more time on coordination tasks and less and less time doing the actual work. It’s like going to dinner and having a conversation with many people all at the same time. Impossible. – Lucy Fuggle, HubSpot
4. Secure loyal customers
Customer loyalty helps you increase profits in several ways. When you build up customer loyalty, consumers give you the first chance to secure their business before they consider your competitors. They’ll also be more likely to purchase your new products or branch out to other services you offer. This combination of spending money over time and increased average order values means a higher customer lifetime value – and more revenue for you. On the other hand, lukewarm or lapsed customers will leave a brand if they are not being reached or incentivized to stay loyal. Customer loyalty can also bring in new business through referrals.- Tony Robbins
5. Evaluate your finances
If your operational costs are low or steady, sales are up, and your cash flow is strong, then you’re well-positioned to grow. But you’ll also need to evaluate how much money it’ll take to grow your business. One way to determine how much money you’ll need to expand is by running a break-even analysis. You can then evaluate whether you think that ‘break-even’ revenue increase is reasonable. You may find that you would have to grow revenue much more than you think. – Fundera
6. Find technology that solves business needs for scaling a business
Technology has made scalability more feasible in recent years. Yet, 63% of small business owners frequently feel overwhelmed with the number of technologies available to run their business. Still 72% of small business owners indicated new technologies would offer a bigger return on their investment than new employees (28%). To find the right technology when scaling a business:
- Determine your business needs
- Research available technologies
- Assess the scalability of available solutions
- Get quality technical support
7. Keep processes simple
Process is the key to sustainable, predictable growth. Every successful business is centered around a core system of processes. Achieving scale requires repeatable and predictable processes and systems. Successful business leaders learn how to simplify things. They know how to take complexity and make it less complex. Complexity take time; it slows businesses down and inhibits growth. CEOs of growing companies are aware of the impacts of growing complexity and act to continuously simplify the operations and strategy of the company. – Marsh McLennan
8. Milk your competitive edge
Entrepreneurs give in to self-perceptions of where they want their business to go and what they want it to be. However, as a business begins to scale, owners start to further understand the market and products better. As this knowledge becomes clear, so does the unique competitive strength of the company as well. If you find that your company is better at providing one service over another, lean into that. Further, develop that strength and learn how to harness that throughout other company processes. – Go Top Shelf
9. Regularly reinforce business values when scaling a business
More than just a list of words posted in a lunchroom, values should be an integral part of the company culture built into hiring and onboarding practices. Scaling this requires constant reinforcement. Every interaction, communication and hallway conversation is an opportunity to reinforce and strengthen the culture. Employees who feel connected to the culture become ambassadors for the company. – Tracey Grove, Pure Symmetry Coaching and Consulting
10. Understand whether your growth is truly sustainable
Not all instances of rapid growth are created equally. Soberly make a distinction between ephemeral spikes and sustainable shifts in long-term demand. Develop KPIs internally to distinguish the two. You don’t want to staff up or stockpile inventory for what might turn out to have been a flash in the pan. For example, weigh one-off purchases differently than recurring subscriptions. – Mark Van Wye, Zoom Room
Do these strategies help you understand what scaling a business takes? And what to avoid along the way?