The decision to scale your business will be a pivotal moment in your business' history. Depending on your line of work, the ability to scale, and the path to scaling effectively will be different.
Scaling a company can be an exciting and stressful time and therefore it’s easy to overlook essential details and make mistakes.
However, there are some general strategies that are truly worth thinking about for all current or potential business owners.
1. Work out the kinks before you scale
This may sound obvious but the lesson here is that a well-oiled machine needs to be built well before the oil does any good.
Many founders will try to jump the gun and start to scale with errors still present in their chain of production. This is much more common than you would think.
There is kind of a circular reasoning a business owner can be trapped in — an owner could think that the kinks of her product line will work themselves out one they have more capital to spend, however in order to get the proper capital to spend they need to scale.
It is easy to see how founders can find themselves in this situation, however not working out the kinks beforehand can lead to messy situations down the road. You can turn off many customers and get a bad reputation at the crucial juncture of when your business is trying to take off.
This critical juncture between 1 - 50 customers a month to 100 - 1000+ customers a month is not one to be downplayed and can mean the flourishing or demise of your business’ reputation.
Thus, it is always better to do your homework and figure out how you can get your prototype or product line in peak functioning condition before scaling.
Whether it's finding partners that can help you refine your product or investors that can give you capital to build the necessary infrastructure to your product line in exchange for equity, it is really worth it to figure this out before scaling.
2. Find the right people to work beside you
If possible, employ or partner with people who have scaled a business before. Bear in mind that these people might not be the first ones you’d jump for.
When scaling, many founders usually focus on ramping up their sales by going after marketing and outreach activities, but these are only short-term, tactical initiatives.
These initiatives are important, however, they are not necessarily giving you any insight on how internal changes can make your business more cost-effective, more robust, leaner.
You may be better off partnering with a person that can offer technical advice on a level that you don’t have training in.
The distinction between a small company or start-up and a successful and profitable business normally boils down to time and experience.
However, there are certain factors that play a big part in how those businesses grew to be successful things like timing, having the right individuals, focus, and extremely difficult work.
3. Don’t just cut costs — innovate.
You may believe that if you can increase production, you will then be able to cut your costs and become profitable.
While this works occasionally, it's far better to compete on quality, ingenuity, and customer service than to position yourself as your industry's low-priced service provider.
Customer perceptions can make or break an organization. If you deliver quality experiences, products, and service, and you strive to delight your customers, then they'll sing your praises.
There was a study from Nielsen that found that 92% of customers all over the world trust earned media, such as individual recommendations and customer opinions from loved ones.
Thus, quality products or services that actually impact people on a personal level outperform marketing attempts the majority of the time.
4. Invest in software to scale up
We’ve talked before about how software can help you scale your business and we still stand by it. Like it or not, software as a service is increasingly becoming the infrastructure of our modern lives and it would be wise to take advantage of that.
Although there are many ‘software as a service’ tools that you can use nowadays (and you probably already use a couple) that can give you an advantage as a business, you can take this a step further and prepare yourself to scale immensely if you have a custom software tool that will scale with you. The way you do that is to build your own software tools.
Luckily, even if you have no experience in creating software you can still get in the game by either hiring a team or outsourcing work.
Even using software that already exists can drastically automate many of your internal business practices (bookkeeping, managing) and external business practices (taking customer orders, interfacing with customers).
5. Optimize for the buyer
In order to scale effectively, you’ll need to identify your ‘ideal buyer’. An ideal buyer is a person whose needs correspond directly to your product or service.
This hypothetical buyer is now the basis of your business decisions, and you’ll need to optimize your strategies to best sell to them.
Where does this ideal consumer go to learn about products? Blogs, industry publications, peer-to-peer platforms? You’ll need to have a company presence on all of these or wherever these ideal clients are looking for services. Target them where they already go.
6. Make clear milestones
In order to make sure you are achieving your goals, you’ll need to have clear milestones of success. One way to do this is to link your capital to each phase of your company’s growth.
First, identify your cash flow income and when you’ll run out of cash if you’re spending it on scaling.
Then, you can work backward to define which milestones you’ll need to hit and a timeline for when you need to hit them. Write these in a document or another type of software and refer to them frequently.