Opinions expressed by Entrepreneur contributors are their own.
Did you know that Quibi launched in April 2020 and imploded six months later? It shut down in October 2020, despite receiving funding of $1.75 billion. This article should motivate others to start scaling, so why did I start so dismally?
Entrepreneurs want to scale, but not all businesses are ready for scaling. Some startups never make it big, so first, analyze if your business is prepared to scale up.
Related: 4 Keys to Grow and Scale Your Startup
3 telltale signs you are ready to scale
1. You meet and exceed business targets: As a new business, your sales forecasts and action plans cannot predict how your business fares. Use exact time frames, expenses and average revenue for accurate sales predictions and increased profitability. Document met (and exceeded) targets to assess your statistical data. Next, set attainable, higher goals; if you still beat those, it may be time to scale.
2. Your long-term business goals are challenging: If you are meeting revenue targets, why would the long-term goal of increasing profits be an issue? Your monthly returns may be great because you are fulfilling existing demand. Your long-term success may seem challenging because you currently lack people or resources. Refusing sales orders as your demand increases makes extended goals look challenging. This lack indicates that your business is growing quicker than you expected.
3. Your supply is insufficient for your demand: Rising demand for your products or services is precisely what you aimed for, right? You will lose customers if you lack inventory, employees, or time to keep up with surging demand. The hype and brand image you build will also dissipate. Your revenue and expansion depend on your customer base. Improving customer handling ensures that they remain satisfied with your brand. If your startup is ready to grow, reinforce your infrastructure first.
Related: How to Know When It’s the Right Time to Scale Your Business
Successfully scaling a startup
Entrepreneurs and business owners who scale up earn higher revenue at lower investments. Effective scaling improves your profit margin and increases revenue while reducing costs. Once you have determined that you are ready, the next question is how to scale your business. Below are seven ways you can successfully scale your startup.
Data helps predict the resources required to scale. While scaling, it is crucial to maintain productivity and efficiency. A successful business handles spikes in workflows without losses like employee turnover. The following strategies make scaling up less stressful and improve efficiency and productivity.
1. Create a business plan
Create a durable strategy and include a monthly sales projection and milestone deadlines. List your target audience, ways to approach them and marketing strategies for conversions. These guidelines will help you track your progress.
Do not forget to log known and expected expenses. Your current expenditure will be the baseline to measure how much it will cost to scale up. Make sure you document all the relevant details, or you may run into cash flow problems.
Related: 7 Steps to a Perfectly Written Business Plan
2. Build a team
Hire employees or contractors, or embrace a franchise model as your operation scales. Work towards developing a cohesive team of people with diverse skill sets and talent.
Inform your team members about all expected goals and objectives. Look after your team, and encourage regular meetings to understand their pain points. Brief them on key performance indicators to improve their performance. Do not foster employee burnout by expecting employees to take on added roles as you grow.
3. Reduce costs of products or services
Reduce material costs and buy used equipment. Hire inexpensive labor and reduce wastage. Compare vendor services and choose the most cost-effective ones. Use effective online marketing strategies that are often free.
Negotiate for lowered rent or equipment expenses with vendors. Ask shippers for special rates to reduce shipping charges. Find ways to lower energy consumption and switch to green energy, which will cost less in the long run.
Related: 4 Smart Ways to Reduce Costs Starting Right Now
4. Optimize your product (or service) for buyers
Identify your target market and learn how to reach and sell to them before you scale. Keep building your brand image on established online platforms. Create value additives, such as blogs, DIY articles, press releases and industry publications. Ask customers for reviews to build credibility.
Track sources you get the most traction from to identify and fix issues in your lead funnel. Use the money saved by reducing costs to augment your product or service. Invest in customer service and functionality improvements, add new features and train your employees.
5. Streamline processes
Processes and procedures should be in place before companies scale up. Break tasks down and assign priorities. Automate because it saves you time and money and boosts employee productivity.
Automated billing invoices your customers or adds any applicable surcharges. Automated customer support boosts your customer experience.
Related: Want to Streamline Your Life? Get a System.
6. Assess finances and funding
Scaling costs money. It uses lesser investment but yields better returns. Scaling by using only reinvested profits may be difficult. You may choose to bootstrap to be self-sufficient, but that is not always possible.
Apply for a business loan or line of credit from banks or lenders, or approach investors to fund your growth. The money you borrow will cost less than equity if you manage repayments well. Carefully choose repayment schedules, interest rates or investor control options.
7. Improve your marketing
Small businesses often rely on referrals or free online social media campaigns. You may need to supplement your marketing efforts as you scale.
Focus on organic marketing channels such as search engine optimization and content marketing. Optimize your campaigns to control budget spending if you run paid campaigns on any platform, and set realistic goals to track campaign performance.
Related: 10 Marketing Strategies to Fuel Your Business Growth
Conclusion
Any business growth requires elaborate planning for short-term and long-term business goals. These goals will guide you on the need for investors, recruitment and automation and their relevant solutions. Scaling is attractive because of its returns, but you will face challenges.
Stay efficient and avoid errors by keeping data and processes streamlined. Increased customer retention helps; use your customers’ feedback and suggestions for improvement. You can do this.
