Scaling up a business is not the easiest thing in the world to do. There are so many risks and so much uncertainty involved that it can be difficult for a business owner to know if they’re doing things properly or not. In this blog we will provide you with everything you need to know about scaling a business.
How to Prepare Your Business for Sustainable Growth
Business growth presents a huge challenge for small business owners. Sustainable growth requires careful forethought and preparation; you can’t build a solid house on shaky foundations. It’s easy to get swept up in all the excitement that accompanies business growth, but remember to take the time to prepare and organise your business to ensure that your growth is sustainable. The last thing you want to do is to end up damaging the business you have worked so hard to build. Let’s take a look at how to prepare your small business for sustainable growth.
Create the Right Team
As your business grows, the demands upon your team will change significantly. Your team may be working well right now, but you need to consider how much extra support they will need as your business grows.
When hiring, don’t just look for skills and talent. It’s important to take an applicant’s mindset into consideration, too. You can provide training to bring an employee up to scratch, but it’s very difficult to reset a negative attitude.
As your team grows bigger, management will become more complex, too. You will need to consider implementing new systems and standard operating procedures to ensure that your team can continue to function at its best as your business expands.
Update Your Infrastructure
You will need to scale your IT infrastructure in line with your business. Of course, this can be a very expensive process and may require you to hire new staff, which is a big drain on your resources.
Often, however, you can find cloud services to support your essential business functions, such as CRM software, HR management programs and email services. Cloud services are easily scalable and can help you to avoid many infrastructure-related growing pains as your business evolves.
Manage Your Books
Financing planning is a crucial part of planning for business growth, but before you can make a plan you need to get clear on where you are right now. This means updating your books and making sure that all of your records are impeccable – a task which many business owners tend to let slip.
You should always aim to establish a strong payment history with lenders to enable you to borrow more in the future. Cultivating a good relationship now will really pay off further down the line. It’s also important to pay your bills on time and maintain separate business and personal bank accounts to prove to lenders that you are fiscally responsible.
It’s always wisest to borrow when the going is good. You should arrange some credit now so that you can access it as and when you need it, rather than trying to secure funds when you’re in a difficult spot. Building credit before you need it puts you in a better position to shop around with creditors and negotiate better interest rates, too.
A good way to do this is to take out a line of credit, which is a pre-set borrowing limit. It is there for you when you need it, but you won’t pay interest until you actually borrow. You can then pay it back in increments over a set period of time, much like a traditional bank loan.
For more flexible options, consider arranging an overdraft and business credit card to smooth over short-term cash flow issues. However, bear in mind that these credit options are not suitable for long-term borrowing.
When anticipating a period of business growth, it’s important to ensure that your team is primed to handle growth and that your IT infrastructure can support the increased demands that it will incur. You should also ensure that you have access to plenty of credit and that your records are in good order so that you are able to make the right financial decisions at the right time and protect your cash reserves. Business growth certainly comes with its fair share of challenges, but good preparation is the key to profitable and sustainable growth.
The 6 Most Common Scaling Mistakes
The six scaling mistakes listed below are the most common ones that businesses make when trying to scale up their business, giving you an idea of what not to do as your company grows.
#1 – Waiting to Choose the Right Legal Structure
You need to choose the right legal structure for your business when you’re just starting out. If you wait too long, then it could be difficult or even impossible to change your company’s legal status if needed in the future. It may also lead to a lot of unnecessary complications and expenses since changing a company’s structure involves tax filings that can be very costly.
#2 – Having Too Many Products or Services to Manage
When you first launch your company, it’s best to keep things as simple and straightforward as possible. Adding a lot of products and services at once can create unnecessary complications for your business, especially if you’re not able to handle them all well enough. Having more work than you can handle also makes it difficult for you to provide top-notch customer service.
#3 – Not Implementing the Right Systems and Structures
You need to build the business you want before you actually have it, and this means putting the right systems in place so that things won’t break down once you begin to expand. You need to determine what kinds of skills and resources you’ll need as your company grows, such as personnel with the right skill sets or a bigger budget for marketing. It’s also important to look at scalable software solutions so that you can scale up seamlessly, without errors and delays.
#4- Relying on Informal Agreements
When you’re starting out, it can be tempting to rely on informal agreements that are based only on trust. Your credibility will suffer greatly if things don’t work out as expected because of misunderstandings or unrealistic expectations about what these kinds of agreements entail. It’s best to build a more formal structure for the business so that everything stays organized and clearly defined, and so that there will be no problems with payments or contracts in the future.
#5 – Conservative Spending Estimates
When you’re growing a business, it’s easy to be too conservative in your spending estimates. However, there will always be costs you’ve forgotten to factor in and unforeseen expenses along the way. It’s best to overestimate your spending needs to make sure that you’ll have enough money at the end of each month. Otherwise, your cash flow will suffer and this can greatly impact your ability to scale up in the future.
#6 – Trying To Do It All Yourself
It’s great to be ambitious, but it’s also important to realise your limits. If you try to do everything on your own when the business expands, then this will create a lot of stress and pressure for yourself that could affect performance in other areas. Learning how to delegate work frees up time for you to focus on growth and the activities that really move the needle in your business.
Many business owners are reluctant to hire a consultant/advisor because they see it as an additional cost that isn’t strictly necessary. However, hiring a consultant is actually one of the smartest things you could do for your business since they will help you to identify problems before they become out of control. Then, they will find solutions that are tailored specifically to your needs.
A great consultant/advisor will also set an example for you and hold you accountable, which will give you more confidence in your own ability to lead the business and inspire you to be the best entrepreneur you can be.
These six scaling mistakes can be detrimental for growing businesses. It’s important to note that all six scaling mistakes are directly related to an unwillingness to invest time and money into your business. If you want to scale up, you need to shift your mindset and get ready to go all-in rather than being half-hearted about business growth. It may sound a little harsh, but this is what will make all the difference to your life and take you where you really want to be.
5 Big Mistakes Businesses Make When Scaling Up
As your business begins to grow, it’s important to make sure that you are scaling up in the right way. There are many common mistakes that businesses make during the scale-up phase, and if you’re not careful you could find yourself struggling to keep up with the competition.
Let’s discuss five of the biggest mistakes that businesses make when scaling up, and what you can do to avoid them. By avoiding these mistakes, you can set yourself up for steady growth and continued success.
The Challenges of Business Growth
Business growth comes with numerous challenges, including:
- Hiring the right employees
- Keeping up with customer demand
- Managing cash flow
- Scaling your operations
- Maintaining quality control
If you’re not careful, it’s easy to let one or more of these challenges fall by the wayside. As a result, your business could start to suffer and you may end up worse off than you were originally.
However, growth doesn’t have to hurt your business. By planning ahead and avoiding these five common mistakes, you can make the transition to a larger business as smooth as possible.
Mistake #1: Not Having a Clearly Defined Vision
One of the biggest mistakes that businesses make during the scale-up phase is not having a clearly defined vision. This can lead to confusion among employees and customers alike, and it can make it difficult to make decisions that are in line with your company’s goals.
To avoid this mistake, take the time to sit down and develop a clear vision for your business. What do you want to achieve? What does success look like? Once you have a good understanding of your goals, you can start to develop a plan to achieve them.
Mistake #2 – Hasty Hiring
It’s easy to get caught up in the excitement of business growth and start hiring employees left, right and center. However, this can be a big mistake, as you may not have the time or resources to properly train and manage all of these new recruits.
Not only can hasty hiring lead to lower productivity and increased employee turnover, but it can also put a strain on your finances. If you’re not careful, you could find yourself spending more money on payroll than you’re bringing in through sales.
To avoid this mistake, take your time when hiring new employees. Make sure that they are a good fit for the company and that you have the resources to properly train and manage them.
Mistake #3 – Bad Accounting and Bookkeeping
As your business grows, it becomes increasingly important to keep track of your finances. However, many businesses make the mistake of not keeping accurate records or failing to track their expenses and income. This can lead to problems down the road when it comes time to file taxes or apply for a loan.
To avoid this mistake, make sure that you have a good accounting and bookkeeping system in place. This doesn’t have to be complicated or expensive – there are plenty of software programs that can help you to keep track of your finances.
Mistake #4 – Failing to Delegate
Another mistake that business owners make during the scale-up phase is failing to delegate tasks. When you’re first starting out, it’s easier to do everything yourself. However, as your business grows, you’ll quickly find that you can’t do it all alone.
To avoid this mistake, start delegating tasks to employees and other team members. This will free up your time so that you can focus on more important tasks that drive your business forward.
Mistake #5 – Failing to Develop a Company Culture
As your business grows, it’s important to develop a strong company culture. This will help to keep your employees united and focused on the same goals, and it can also make your company more attractive to prospective employees.
To avoid this mistake, start by developing a set of core values for your company. These values should be based on your business’ mission and vision, and they should be something that all employees can agree with. Once you have your core values in place, start implementing them into your day-to-day operations. This will help to create a strong company culture that everyone can identify with.
As you’re growing your small business, avoid these common mistakes that can lead to a rocky transition. By being aware of and avoiding these errors, you can ensure a smooth transition and help your business reach its full potential.
5 Tips to Ensure that Your Small Business is Scalable
As a small business owner it’s only to be expected that you want to take things to the next level. However, before you begin to grow it’s important to make sure that your business is scalable.
Scalability is your ability to grow your business without overwhelming your current structures or running out of resources. Therefore, you need to anticipate how your needs will change as your business expands. It’s important to predict which systems are going to break as your revenue increases and prepare for the new challenges you will face.
We’ve put together a list of five tips to help you ensure that your small business is scalable in order to prepare you for growth.
1) Keep It Simple
The key to scaling your business effectively is to keep things as simple as possible. It’s important to make sure that your processes are straightforward and your policies are easy to understand. This will allow you to scale as smoothly and efficiently as possible, without compromising your services.
2) Put Your Customers First
It’s no secret that repeat business is very profitable. Not only is it significantly cheaper to retain an existing customer than to acquire a new one, research by BIA/Kelsey found that existing customers tend to spend 67% more. Therefore, you should be careful not to antagonise your existing customers as you scale up because it pays to keep them happy. Take time to anticipate their needs, maintain strong lines of communication and make them feel valued.
3) Take Care of Your Staff
High staff morale is a key ingredient for business success, so you should ensure that your employees are satisfied and motivated, especially when approaching a scale-up phase. According to Forbes, the median cost of employee turnover is 21% of their annual salary, so staff retention is important, especially when you are anticipating a period of growth.
4) Run the Business You Want
When preparing to scale your small business, you need to focus on running the business you want, rather than the one you currently have. You need to prepare for the changes that will happen if your sales volume doubles, or your customer base increases threefold.
Which systems will you need to put in place? How many new staff will you need to hire? Will you need to expand your office space? It’s important to anticipate these needs ahead of time and adequately prepare so that your path to growth is as smooth and steady as possible.
The hiring process is famously time-consuming and expensive, but as your business grows you will need external help. Consider outsourcing tasks in order to free up your time to focus on marketing and strategy. As a business owner, your time is not best spent on admin or accounting, and you’re far better off outsourcing these tasks.
Make sure that your employees’ time is being put to good use, too. For example, if you have an in-house copywriter to create your blog and social media content, is their time really best spent scheduling the posts they create, or could you hire a virtual assistant to take care of this task at a lower price?
Before you dive head-first into a period of growth, it’s important to make sure that your business is scalable. By putting the above tips into practice, you can protect your small business from many of the common issues that companies face as they scale up. This allows you to continue operating at a high standard and plot a steady path to success.