Whether you are looking to improve business valuation for an upcoming sale or you simply see an opportunity in the market to increase revenue, scaling a business is a river that every successful small business owner will have to cross at some point.
And as 70% of startups fail because they attempt to scale too early, and another 16% fail because they don’t scale soon enough and get outpaced by competitors, it is clear that scaling is a process that few small businesses can get right.
To avoid these pitfalls, keep reading to discover 5 pro tips that are essential for small businesses when scaling.
1. Evaluate and Plan
You can’t decide that you want to scale your business tomorrow and expect to be successful. Scaling a business is a process that evolves over time until the company arrives at a position where it is set to handle explosive growth.
Without the proper evaluation and planning over the course of several years, that day will forever remain a pipe dream.
To prepare for scaling, you’ve got to start with an accurate sales growth forecast. Look at your past sales and make note of how they have grown organically over time. Then project how this sales trend will be affected by evolving market conditions and determine at what point running the business by yourself will no longer be feasible. Finally, estimate the marketing costs it will take to reach this level of demand.
However, even if you estimate this figure with precision, it is only half of the battle. What happens if demand does reach this point? With more sales comes more costs--and they aren’t always proportional to sales increases. How much will it cost to hire another employee or add warehouse space? What if the increased demand causes your quality to go downhill and you lose loyal customers?
Obviously, there are a lot of hypotheticals when scaling a business, and even the most prepared businesses can be taken by surprise by unforeseen market factors. However, without the proper planning and evaluation, your business has little chance of attaining linear growth, so always keep an analytical eye on the future if expansion is part of your big picture plan.
2. Perfect Your Product or Service
Many small business owners are so concerned about growth that they forget selling their product or service to satisfy customer needs is at the heart of all business activity. When growth is put before quality, it can actually cause you to go out of business instead of growing your business because you are exposing more people to an inferior offering, leading to an expanded network of negative reviews and customer complaints.
Therefore, in the early years of your business, while you are still building the infrastructure for future growth, you must spend ample time perfecting your product or service. Listen to feedback, find issues with your offerings, and fix any bugs while your business is still small. When you perfect your offering and learn how to meet customer expectations when your operation is still small, you will be better positioned to handle growth through a deeper understanding of how to satisfy clients.
3. Have a Rock Solid Core of Internal Processes
Business processes will change as you scale your business.
It’s inevitable.
From how products are made to how they are delivered, some things will need to be tweaked as your business begins to serve customers en masse.
However, the core process of what you do and how you do it should remain consistent from your business’ infancy all the way through maturity.
As a result, you need to spend time in the early years developing a process that is repeatable as your business grows. The last thing you want is to lose customers because you have to completely change the way you do business to satisfy increased demand.
4. Invest in Technology
Although it may seem like technology and automation are the enemy of small businesses, there are a number of ways they can help small companies compete against their mega-competitors. Small businesses actually have a leg up in all-important local SEO, with 70% of customers saying they use online shopping as a way to support local businesses.
And technology is absolutely essential when attempting to scale.
From reducing the number of new employees you have to hire to allowing you to move some or all of your operations online, technology will reduce the amount of money required to handle growth. Some of the ways that technology can facilitate scaling a business include:
Chatbots and email forms to handle customer service requests 24/7
Store locator software to quickly route customers to new locations that are opening
Inventory management programs that can help track inventory levels, process orders, and handle return requests
By having an elite technology infrastructure, businesses can grow more rapidly without requiring a ton of physical resources.
5. Build an Elite Team
Any checklist for selling a business will start with having a strong team for the next owner to inherit.
This same rationale applies to scaling your business as well.
As your business grows, you will spend less time and money if you have a high-functioning team that is able to identify, assess, and resolve problems without having them trickle down through other operations.
In addition, you will undoubtedly have to cede a bit of control as your business grows, so it is critical that you give some of the executive power to people who are highly trained and invested in the growth of the company.
Scale Your Business Seamlessly With These 5 Tips
Although every successful startup will consider scaling at some point, few can actually get the process right. Whether attempting to scale too early or missing an opportunity and letting competitors pass them by, small businesses are notoriously poor at handling growth efficiently. Therefore, by evaluating and planning, perfecting your product or service, having a solid core of internal processes, investing in technology, and building an elite team, you can position your business to handle growth and scale your company like a pro!
Sam Willis is a contributor to Innovative Building Materials. He is a blogger and content writer for the real estate industry. Sam is focused on helping fellow homeowners, contractors, and architects discover materials and methods of construction that increase property value, maximize energy savings, and turn houses into homes.
Comments