If you want your company to succeed, you’re going to need a plan on how to scale your business.
By focusing on scaling rather than merely “growing” your company’s finances, you can generate greater revenue without ramping up costs or diminishing resources along the way.
After all, two-thirds of value creation is achieved when a company scales, according to global management consulting firm McKinsey & Company.
What Is Scaling in Business?
Scaling in business means increasing the size and scope of operations without tacking on substantial costs to do so or negatively affecting other areas of the business. Scalability also refers to your business’s ability to perform under an increased workload or an expanded scope.
For a business to scale, it must be able to maintain its standard performance level when tested by increased market demands and production rate. Also, keep in mind new technologies can make growing and scaling your business a more affordable and accessible prospect.
As an example, consider a company putting in place a cost-saving piece of software that automates a once-manual task. This fosters scalability by allowing the company to take on more work without having to add more processes or people.
7 Steps to Scale Your Business
When the time is right, scale your small business by following these steps:
1. Overcome Cash Constraints
The first step for how to scale business operations comes down to having enough cash on hand. This is important because while scaling does not require significant investments into the business, there will typically be some costs involved that you’ll need to be able to cover.
There are several ways to secure funding to scale up a small business, including some of the more standard options:
There are also alternative options that can help you overcome cash shortfalls more creatively. Today, an increasing number of businesses are relying on different funding mechanisms to finance their scaling plan, including:
- Invoice factoring
- Joint ventures with established players
- Creation of new, predictable revenue streams
2. Develop Management Skills
Developing a wide-ranging management skill set is essential before you 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 mission-critical skills for scaling.
Scaling in business often requires bringing new personnel on board to avoid bottlenecks and optimizing workflow so tasks aren’t concentrated in your hands.
For companies looking to scale, you need to be prepared to lead by example to create a winning workplace culture that generates trust and mutual respect.
3. Team Build
Scaling your business also involves identifying potential partners in the market.
As a business owner, you naturally understand the value of building out your professional network. But when scaling a business, you’ll also need to leverage other people’s talents and expertise when it comes to executing a scaling strategy.
Take 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.
4. Standardize Processes
It’s important for businesses beyond the startup phase to implement repeatable day-to-day strategies and standardized workflows, especially as you prepare to scale your business.
Leveraging technologies and full-suite software packages can help business owners focus on higher-order tasks and expand their company while saving time and keeping upfront costs low.
Consider using software to help automate:
- Accounting and payroll
- Customer-relationship management
- Inventory management
- Appointment scheduling
Aside from automation, standardizing your business processes will help as you build your team. Documenting and distributing a clear set of instructions to the personnel responsible for handling a certain activity will make scaling your business that much smoother.
These instructions should be repeated regularly and will ultimately convert an otherwise complex task into a structured regimen. Whenever confusion arises within the team, members can refer to the process checklist rather than you.
5. Focus on Core Offerings
To operate at scale, business leaders need to concentrate on mastering the company’s core competencies and where you offer the most value to clients and customers. In every company, there are daily or weekly tasks that generate more leads and greater revenue than others. Those tasks must be prioritized and ramped up because they are the ones that stimulate growth.
If these key operations are unclear to you, speaking with an external advisor can offer a fresh perspective and key insights.
Focusing on the wrong aspects of the business results in delayed growth at best and a fracturing of the team at worst.
6. Capitalize on What Sets You Apart
For your business to be successful, you must have a competitive edge over other companies in your 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. While it’s important to continually build on strategic weaknesses, it’s equally critical for scaling businesses to identify, develop and effectively market their strengths.
7. Put a Strategy in Motion
If you want to scale your business, you need to be able to draw up a big picture strategy that envisions where you want the business to go, target revenue and what share of the market you want.
This strategy should include your endgame scenario. Formulate a plan for leaving the market after you’ve scaled, whether you want to cash out, go public or make the company your personal cash cow. You need to have this vision clear for you and your partners.
Before You Scale Your Business to Success
When preparing to scale your business, you should first confirm your business has:
- Established value ladder of products and services
- Available subscription packages
- High customer retention rates
- Diverse income streams
- Predictable revenue
These targets are known predictors of a sustainable and scalable business model. Additionally, if the above conditions are met, chances are your business model is already scaling properly and efficiently to an extent.
Give your company the time it needs to develop to the point where scaling seems more like an imperative than an option.
Also remember these crucial elements to grow and scale your business:
- Develop leadership skills
- Bring in the right team
- Delegate and systematize processes
- Play to your company’s strengths
Follow these steps to build a scalable company that has all the predictors of sustainable growth.