It’s what every entrepreneur hopes for—your business is thriving. Your customers are happy and your revenue forecast is even happier. You can see more potential leads over the horizon, and everyone is telling you it’s time to “scale up.” The next step? Hiring an entirely new team of salespeople to get even more customers in the door.
For small businesses, bigger may look better—but that isn’t always the case. Growing your business and team may equal increased revenue, yet it also means increased hiring and operating costs. Instead, success is learning how to scale a business—and how to build a sustainable business model that earns more with every sell.
What does it mean to scale your business?
“Scaling a business” is defined as increasing revenue while also increasing efficiency. Put simply, you should earn more than what you spend in money (and time) to get every customer in the door. While you’re considering whether to open a second location, hire a team when you’ve been running things solo, or develop a new product, the key to scaling isn’t just about physical growth. It’s about the golden ratio: more money in, less money out.
How to scale your business
Evaluate strengths and weaknesses
Successful small businesses are hard-earned. Compared to 80 percent of small businesses that make it to their second year, only 44 percent of small businesses survive to year four.
Growing to scale will put your business under more pressure than ever before. It’s not the time to gloss things over and assume the kinks will work out as you grow. Take a closer look at every variable: your team, infrastructure, operations, product, services, human resources, and especially budget.
If there are any weaknesses in the way your business runs today, scaling will only magnify them. Set aside the time to turn your business inside out and make sure you can truly support sudden growth. Before you even consider how to scale, your business should already run like a well-oiled machine.
Build a strategic roadmap
After you’ve evaluated your business from top to bottom, it’s time to start building a roadmap for scaling. Like any other strategic roadmap, it should identify which milestones you hope to accomplish, by when, and how each key area of your business is expected to contribute.
Keep your scaling roadmap at the forefront of every decision you make. If a new move or decision doesn’t contribute to hitting your strategic milestones, don’t spend the money just because you can. Remember: every decision you make while learning how to scale your business should be towards building long-term growth. Keep checking in monthly to evaluate if revenue is on track, your operating costs are staying low, and if teams are achieving key initiatives.
Get your finances in order
It takes money to make money. But how much makes the difference between simple growth and scaling smart. Scaling should be a calculated investment your business can support—without just breaking even. Is the demand actually there to validate scaling now? Will you be able to bring in the leads you need without exceeding costs? Can your budget handle the new infrastructure or employees that will be needed to support your expansion?
Eighty-two percent of businesses that fail do so because of cash flow problems. In order to scale successfully, you’ll need financing. Show lenders your strategic roadmap and how your business will be able to grow to scale, with measurable goals tied to profit and revenue along the way. You can also scale faster by exploring financing through a variety of ways instead of through a single lender, with a combination of credit cards, banks, community entrepreneurship grants, and investors.
Evaluate your business infrastructure and tools
Business infrastructure is the combination of tools, processes, and people that keep your business going. You may not even realize you have a business infrastructure already in place—which often means everything is running how it should. But as you scale, business infrastructure begins to play an even more critical role.
In a successfully scaled business, each piece of your infrastructure should build on each other instead of causing friction. For example, your operational tools should enable your employees to do their best work, which will allow them to keep business processes running effectively—all the way down to receiving final customer payment. In a scalable business, infrastructure provides the foundation for your business to learn and perform better each time.
How do you know your business infrastructure is ready for scalable growth? Start with your most important resource: your people. Do some human resource planning and see if you have the right employees in the right roles, or if you need to strategically hire and fill new ones. Evaluate your current tools and identify whether they’re intuitive and efficient to use, or if they slow employees down. Then walk through how your business processes run today. Does the way you collect payments stand up under swelling customer demand? It may work for 100 people, but what about 1,000? The same goes for invoices: do you have the systems in place to handle double the overdue payments you have now? What if suddenly 10 customers don’t pay?
Your infrastructure keeps your business running, easing bottlenecks and making sure you aren’t required to be everywhere at once. If you’re still having to step in, perform basic tasks, and make every decision, chances are your infrastructure needs a closer look before you scale.
Keep customers happy
It can be tempting to cut corners in the name of getting more products to more customers, faster. But happy customers are the key to business growth. It won’t matter if more people have your product if you can’t provide them a quality product or quality customer experience. Your most profitable resource is the one you’ve already convinced to buy: repeat customers.
Eighty percent of future profits come from 20 percent of the customers you already have today. Current customers are likely to spend more money, cost your business less, and make the most referrals. They’re your most important advocates—and can be the source of advertising without having to pay a cent. While you’re focused on quantity, don’t lose sight of quality. Make sure the customers who got you here still feel appreciated, and not forgotten as you grow.
Automate what you can, outsource what you can’t
According to Forbes, 53 percent of employees believe they can save up to two work hours a day (240 hours per year) through automation, and 78 percent of business leaders believe that automation can free up to three work hours a day (360 hours per year). That’s anywhere from six to nine weeks!
Automating saves valuable time, but also allows your employees to focus their skills on what matters most versus repetitive, manual tasks. Things like employee scheduling, invoicing, payments, onboarding new clients, responding to new contact requests, and others can be fully automated to help your team focus on critical tasks deserving of their skillset, without leaving potential customers behind or sacrificing customer service quality.
For what you can’t automate, consider outsourcing. Your team may not be able to design a logo or know the ins-and-outs of SEO, but that doesn’t mean you need to hire a full-time graphic designer or SEO marketer. Instead, look to freelancing and job requests sites like Upwork, Fiverr, and Thumbtack. You’ll be able to tap directly into freelancer expertise on an as-needed basis, while saving time and scaling fast.
Similar to outsourcing, more business doesn’t automatically mean more employees. In his book, The Lean Startup, entrepreneur Eric Ries writes, “It’s a really paradoxical thing. We want to think big, but start small. And then scale fast. People think about trying to build the next Facebook as trying to start where Facebook is today, as a major global presence.”
More, more, more isn’t the automatic answer to business success. After all, Facebook started in a dorm room. Staying “lean” goes hand-in-hand with learning how to scale a business—and it all comes down to doing more with less. Keep costs down, only hire people for the jobs you need, keep work moving, and constantly listen to your customers and iterate.
Take care of your team
Staying lean doesn’t mean running your team (or yourself) into the ground. As your business begins to scale, it can create an atmosphere of uneasiness and instability for everyone. Keep your top talent from looking elsewhere by holding regular check-ins and taking their feedback seriously. Recognize them for their hard work and celebrate the effort they’re putting in to help your business grow.
Scaling is an opportunity to give employees more responsibility and even expose them to new parts of the business they haven’t worked in before. Including them in product planning and things like your strategic roadmap will help them discover new skills and prove that their input matters. They’ll have a sense of ownership—and be there when your business fully transforms from small to scaled.The Comprehensive Guide to Scaling Your Business Grace Madlinger