9 Tips to Help Scale Your Small Business
There’s a difference between scaling and growing a business. Growing is a straight line where greater effort results in greater output in equal proportion, linearly. Many solo practitioners who charge an hourly rate operate this way; work more hours, generate more output. Yes, this is growth, but the business is not scaling.
Scaling means changing the way the work gets done. Organizing people, tasks, and processes in ways so that the effort to output the equation is not linear, but begins to curve exponentially. Imagine a company produces 100 widgets at a cost of $100. Scaling would mean finding a way to produce 500 widgets for less than $400.
How many widgets does your company produce now? How many do you think you could? Unlike organic growth, scaling your company requires a purposeful effort. Without clear direction, attempts to expand can backfire and do more harm than good. Small businesses have some advantages over larger enterprises when it comes to scalability. They carry lower operating costs and overhead compared to larger companies that are weighed down by inventory and warehousing. And every day new technologies are making increasing production a more affordable venture. Even businesses based around intangible assets, such as professional services – accountants, lawyers, consultants, etc. – can scale successfully. But don’t rush it. Give your company the time it needs to grow and develop to the point where scaling seems more like a must than an option. Then, when the time is right, scale up your small business with the help of these 9 tips:
- Have a detailed plan
Take a close look at your business as it stands today and decide if you are ready for growth. You can’t know what to do differently unless you fully understand where your business is at now. Strategize what you need to do to increase sales. Then imagine your orders doubled or tripled overnight. Do you have the people and systems to handle those new orders without disrupting customer service? Do you have the money you need to pay for these people and services?This is where a good plan is essential.Start with a detailed sales growth forecast, and Include a spreadsheet that breaks the numbers down by month. The more specific you are, the more realistic your sales acquisition plan can be. Then do a similar expense forecast, that includes adding technology, people, infrastructure and systems to handle all those new sales orders. Expenses will go up, that’s a given. The trick is to anticipate where and how. Again, include an expense spreadsheet that breaks down expenses needed to meet your sales forecast. You’ll need to do some hard thinking and in-depth research to come up with proper cost estimates, but that will make your plan better. Remember to focus on what you want to be, not what you are.
- Secure the sales
Scaling your business obviously assumes you will sell more. Do you have the sales structure in place to generate more sales? Look at sales from end to end. Do you have:
- A sufficient lead flow to generate the desired number of leads?
- Marketing systems to track and manage leads?
- Enough sales representatives to follow up and close leads?
- A robust system to manage sales orders?
- A billing system and a receivables function to follow up to ensure invoices are collected in a timely manner?
- Develop management skills
Developing a wide-ranging management skillset is essential if you want to scale your business. As a business owner, you’re used to wearing many hats during the early days of your business, but knowing how to effectively teach, train and delegate tasks to your employees are essential skills for scaling. You need to be prepared to lead by example to create a winning workplace culture that generates trust and mutual respect.
- Invest in your employees
Companies invest a great deal of money in their employees for good reason — it helps them grow by retaining and attracting top talent, who are more loyal, have a more fulfilling work/life balance, and as a result, work harder. While it’s great to have a bunch of uber-talented individuals, you’ll only get the results you are looking for when you build a great team. I’m not talking about the “take the team out for some axe throwing and cocktails” kind of team building. I’m talking about taking a critical look at the talent pool in your company—are you missing a high-level finance person, or a marketing team leader to help drum up business? Be prepared to either hire or outsource for key responsibilities and tasks to construct a team that’s able to sustain an increased workload.
As a business owner, you naturally understand the value of building out your professional network. But when scaling a business, you also will need to leverage other people’s talents and expertise when it comes to executing a scaling strategy. And then you’ll want to:
- Stay out peoples’ way
It can be hard for company founders to give up control, but it is key to scaling the business. If every activity has to go through one person, then that person becomes a bottleneck that can slow things down considerably. Giving up control isn’t a casting off of responsibility. It involves a specific and formal process for delegation to ensure that decisions and actions are taken consistently even when the leader is not involved directly. It shows trust in your staff that often makes them more invested in the company and, as importantly, gives you the ability to work on your business, not in it.
- Invest in technology
Technology makes it easier and less expensive to scale a business. You can gain huge economies of scale and more throughput, with less labor, if you invest wisely in technology. Automation can help you run your business at lower cost and more efficiently by minimizing manual work. Evaluate new products on the market that save time and money, yet accommodate much higher volumes in every part of your business. Look at CRM, marketing automation, sales management, inventory, manufacturing, accounting, HR, shipping and other technology systems.
- Standardize processes
As you prepare to scale your business, it’s important to implement repeatable day-to-day strategies and standardized workflows. With the technology available, you should consider software to automate functions including:
- Accounting and payroll
- Customer Relationship Management
- Inventory management
Aside from automation, standardizing your business processes will help as you build your team. Documenting and distributing a clear set of instructions to the people who handle specific job functions will make scaling your business that much smoother.
- Use data to fuel growth
Many would say the key to sustainable growth is in the hard data. This can come from a variety of sources and often revolves around your customers and prospects, including:
- How customers move through your sales funnel
- What their pain points are
- What they like about you/your product
- How long they remain a customer
- How long it takes for them to convert
- What causes them to leave/stay
In addition to standard measurements, use industry-specific metrics or create some for your own specific business. Embrace the numbers! The more metrics you can track, the better the quality of your management information, and the better you’re able to plan for growth. As they say, if it can’t be measured, it can’t be improved.
- Capitalize on what makes you … you
For any business to be successful, it must have a competitive edge over other companies in its market. This is beyond your product or service offerings—think how you provide your offerings, rather than what those offerings are. With a critical eye, assess what exactly your business brings to the table that other businesses don’t. What’s your secret sauce? It’s critical for scaling businesses to identify, develop and effectively market their strengths.