Scaling is the next big, exciting step to growing your business. It is also fraught with risk if you don’t prepare properly.
Startups, in particular, have to be cautious, as 74% of startups fail because of premature scaling. Here are the 10 things you need to know to make sure you’re ready to scale your business.
1. Create Sales and Expense Forecasts
At its most fundamental level, scaling can only be justified if you have the numbers to back it up. How much do you need to increase your sales to support a bigger business? How much more expenses will you have to take into account? This is why you should come up with sales growth and expense forecasts.
Of course, there is no 100% predicting concrete sales and expense figures, but the more detailed the numbers you can come up with, the more likely you are to hit your targets.
Calculate how many customers and sales orders you need with your desired revenue for your sales forecast. Account for new hardware, software, staff, space, and infrastructure for your expense forecast. Map your forecasts out by month so you always have a goal to work towards that will keep you on track.
2. Secure More Funding
Cash flow continues to be one of the most significant challenges for small businesses. In fact, 29% of startups crash and burn after running out of cash.
Scaling will require even more funding to buy additional equipment, invest in new technology, rent bigger office space, and hire more people. Do you have the money to get the resources you need to scale according to your plans?
There is the slow and steady approach of growing your revenue to eventually cover for all your scaling schemes. If, however, you have the prime opportunity to scale as soon as possible, take out a bank loan. The cash injection can do wonders for accelerating your business’ growth.
3. Establish a Rapid Problem-Solving Process
Your business will make mistakes. However, you cannot skate by making mistakes and not fixing them quickly when you have grown your business. Everything escalates when you scale, and that includes the problems you potentially face.
Work on a problem-solving process that focuses on satisfying customers as soon as possible. As the business owner, you have the responsibility of taking decisive action. Looking for an employee to blame is a waste of time. You need to carry this mindset when you have more people under you and more customers to satisfy.
4. Safeguard Your Social Media
As a savvy business owner, you should be using social media to promote your products and services. It’s a great, cost-effective marketing tool that can reach a ton of people if you have the right messaging. Fostering communities with your social media channels to build up brand ambassadors and micro-influencers is a trending best practice.
However, social media can be a double-edged sword with how fast word travels in such platforms. A bad customer service experience or a social gaffe can quickly spin out of your control.
When you are scaling your business from its startup roots, it can be devastating to get bad publicity. Big businesses have the resources to recover from PR hits; small businesses don’t have the same, sturdy safety nets. So make sure that you have a plan in place for best practices on social media and in case something goes awry.
5. Boost Your Back Office
On the thrilling road to scaling your business, the simple day-to-day administrative duties become even more important. It’s your back office that will keep everything from going off the rails. From your HR department making sure you get the right hires to your payroll officer calculating taxes for each employee—they are the unsung heroes of a growing business.
Your admin will feel the burden of taking in more people and inventory as you scale. Make sure they get adequate resources to shoulder the extra workload, or this will be a bottleneck for expanding your company.
6. Hire Early
Hiring more people goes hand-in-hand with scaling a business. You need more people to handle customers, more people to handle manufacturing and distribution, more people to manage your teams, and more people to handle admin tasks. The challenge is that finding the right people to fill these roles takes time.
This is why you need to get started on your hiring process in preparation for scaling. You don’t want to be looking for and onboarding new staff at the same time as you are taking new customers, accepting more orders, and increasing your production.
7. Consider Outsourcing Outside Your Speciality
While hiring is crucial to scaling a business, it does not necessarily mean that you need to get in-house employees for every single process. This is especially the case if you are working with limited finances.
You can outsource jobs that you still need but aren’t part of your company’s core competencies. Whether it’s accounting, legal, graphic design, or marketing, there are freelancers and B2B businesses that can fill the gaps while you grow your company.
When you keep your internal team lean as you scale, you can divert your resources more efficiently to what your business does best. You are also in a better position to pivot in case your initial scaling strategy doesn’t work out.
8. Don’t Lose the Personal Touch
In the pursuit of a more streamlined approach to delivering more products and services to more customers, there is a good possibility to start seeing those customers as mere numbers to meet on a spreadsheet. The charming and familiar human touch that small businesses can bring to each customer interaction can be so easily lost in favour of automation and efficiency.
This is a pitfall you need to avoid. Customers, especially the ones that have been with you from the beginning, might feel like you no longer care. Continue customising the customer experience.
9. Take It Slow
Scaling is not a sprint. You don’t have to go all-in, all at once to bring your business to the next level. Don’t let yourself get carried away by the excitement of higher revenue, pushing yourself and your employees to the point of burning out.
Take your time growing your company. Accept contracts from new clients when you have the resources for them. Bump up production and purchase new equipment as you see your customer base increase. You can avoid going into unnecessary debt that you might have trouble paying off when you have a bigger business but your target market can’t support it.
10. Take A Step Back
The ultimate goal of having a scalable business is to set it up so that it can eventually run itself. From putting in place a logical workflow to hiring the right people who will take on more responsibilities, you should be able to leave your business for some time and have it succeed without your direct input on every matter.
You’ll know you have done the proper preparation for scaling if you can take a step back from your company with confidence.
If scaling your business means you now need to have a physical location for your office, call us 0117 244 3585 and we’ll help you find the perfect coworking space.