As a business owner, you've seen a steady and stable increase in revenue from your product sales or offered services. You know that your operations have the potential to bring in more profits in a variety of ways. So, you've decided to scale your business. Scaling a small business allows you to make changes and grow operations while making minimal investments. Learn more about how to scale a business to achieve sustainable growth.
One thing to understand is that not every startup has to scale its operations. Some smaller ecommerce shops can keep the same business plan and set up for the company's life, depending on the profits and long-term goals you desire. You also need to be aware of the common obstacles you may face when scaling a business and whether your company has the business model to succeed.
While people talk about scaling and expanding a business interchangeably, these are two separate concepts. Both aspects focus on making profits but implement vastly different strategies regarding resource and investment utilization.
Expanding or growing your business focuses on increasing your operation's top-line revenues. You invest in employees, equipment, product lines, buildings, marketing, and anything else that will lead to this growth. While you are increasing the investments and resources in the company, the result should also be an increase in profits. Solid business expansion plans should see that costs used to grow the small business should start out equal. Then, profits eventually outpace the expenses put toward operations to obtain a higher return on these investments.
Scaling focuses on business growth strategies where you increase your profit margins or improve your bottom line without expending many resources. Instead, increases in employees, equipment, marketing, and other investments are more modest and limited. You may scale your business in simple ways, such as engaging in a new marketing campaign or renting additional equipment for a limited time. A business may also scale operations by reducing product waste or investing in automation where the costs are low, yet the business gets an immediate higher return that remains consistent.
Scaling a small business can allow you to stay competitive in your market segment. It allows you to implement strategies that meet fluctuating customer demand while instituting sustainable practices that help decrease operational costs without impacting internal processes for product or work quality. Your small business can increase profits while becoming more efficient.
You may face some challenges when you scale your business. A business owner may not clearly understand the business’ internal processes, products, services, potential customers, or available resources. If this occurs, you could implement strategies at the wrong time, which could lead to decreased profit growth. You may need to develop a clear business plan or long-term vision regarding what you want the company to achieve.
Other challenges may involve not being flexible to the changing market and adapting processes accordingly. Alternatively, your company could expand too rapidly, making it difficult to properly plan and research the market or your capabilities. You can also experience scope creep, where you place more investments into the operations than you had originally planned.
Evaluating your business operations, clearly understanding what you want to achieve by scaling the business, and reviewing available resources can empower you to create strategies that better align with your operational capabilities. You can determine when to implement these strategies and which processes will benefit from the investments. You can also create benchmarks and milestones to gauge progress in reaching desired profit goals.
When talking about how to scale your business, understand that these steps are the basic strategies that most businesses can take, no matter their market segment, client base, or industry. You can certainly add steps that further align to your specific workflow and drill down to making certain internal processes more efficient. The steps should also focus on the type of cash flow available and adjust accordingly when your profits increase.
Take a deep dive into your current business model and operations. You should identify the strengths in your work processes and look for areas that could be improved while reducing waste. Address the weaknesses early on to develop a scalable infrastructure and processes that are ready for the changes you plan to implement. This strategy ensures that your business can weather any unforeseen circumstances while minimizing risk and keeping operations running at full capacity.
Every small business needs a plan so you and your employees know the business goals, what changes will occur when making investments or changes, and milestones that will be achieved. Your business plan should detail how you will conduct market research and perform competitor analysis. It should also focus on how you plan to diversify your products and services to meet customer demands, whether you plan on performing geographic expansion, and if there are other companies or organizations with which you plan to form strategic partnerships or alliances.
A business plan should list the resources that will be used and where those resources will go in operations. You want to create realistic timelines and milestones, as well as a sales projection of revenue that will be achieved when the strategies are in place. You want to anticipate the cash flow to prevent possible project scope issues.
Equipment and processes should already be in place before you scale operations. You now want to look at workflows to evaluate productivity. In this step, you will streamline workflows and implement effective project management systems. This may involve investing in automation, technology, and software to remove redundant tasks and speed up work assignments. By having automation tools in place, you can make work processes more efficient so they are ready for your scalability strategies.
Even with proper equipment and technology in place, your small business operations are only as good as the teams running them. Look at your present talent and determine their job roles as they relate to the scaling strategies. Determine if you have the required personnel available to handle the tasks. Then recruit and retain top talent as you begin your business growth strategies.
Using your leadership skills, you want to empower employees so you receive full buy-in with the new automated tools and resources. Create a culture that embraces innovation and continuous learning, so your team can adapt to the coming changes and know how to handle any obstacles.
Scaling your business will require financial investments in specific processes and departments. While you will be using less funding than you would when expanding your business, you will still need to find a source of working capital. A business owner should plan how much it will cost to make operations more efficient and forecast how much revenue these investments will bring in. Then you want to develop reports on allocating resources and managing costs.
With these reports, you'll have the documents to pursue funding options. Whether you go the traditional route and seek financing options from banks and lenders or seek out private investors, they will want to see your business plan, forecasts, and financial reports before approving any small business loans. You'll be fully prepared so you can receive financing as quickly as possible.
In addition to internal scaling of operations, you also need to focus on bringing customers to your small business. Business marketing and campaign strategies should help to create a strong brand identity and value proposition. You want customers to know about your small business and how your products and services can meet their needs. Marketing is an opportunity to show how you can better serve your customers now and in the future.
Push forward and prioritize the customer experience and how your customer service is designed to bring greater satisfaction to buyers. Your small business should seek to develop stronger business relationships and customer loyalty with existing clients while attracting new prospective customers.
To figure out whether your scaling strategies are bringing in desired profits, you need to monitor your progress. You can use milestones and sales goals to mark progress and use key performance indicators (KPIs) to evaluate the efficiency of automated processes and the productivity of your teams. Research competitors in your industry and gather data-driven insights to compare their businesses to your operations. Utilize analytics to gain real-time information regarding your marketing reach.
Using all this data, you want to evaluate your present growth trajectory and adjust your strategies accordingly. You will also want to evaluate your existing budget to prevent overspending.
Scaling your small business can allow for internal operations growth, make processes efficient, create a cohesive team of workers, and bring in more profits. To further hone your leadership skills, Spelman College offers a Business Essentials Certificate through eSpelman. This virtual program teaches fundamental business concepts so you can develop new skills and enhance your business knowledge. Request more information by reaching out to the College today.