5 Ways to Scale Your Business
“Scaling your business” is different than growing your business. Scaling means you’re able to handle a growing amount of work or sales in a cost-effective manner while maintaining or increasing efficiency.
Sounds good. But how do you successfully do it? Here are 5 ways to scale your business.
Define your approach. The path to scale a business is not the same for everyone because not every small business deals with cost and revenue in the same way.
“Growth is not a ‘one-size-fits-all’ business strategy because different industries require different approaches to overcome the challenge of reaching more customers while controlling costs,” says Jason Albanese, co-founder and CEO of Centric Digital.
For example, he says, a software company that incurs the majority of its production costs early on in the product development stage is never going to scale in the same way as a digital consulting firm, where operating costs remain fairly constant over time.
Albanese advises developing your scaling strategy based on that one rudimentary distinction, whether your business is more service- or product-oriented.
“One thing all good product-oriented businesses have in common is that they're inherently more scalable than even the best of the best service companies,” he writes in a blog for Inc. magazine.
Evaluate growth capacity. Scalability is about capacity and capability, says Anita Campbell, CEO and publisher of Small Business Trends LLC, a media and information company.
She says small business owners should assess whether they have the capacity to grow, and whether your business systems, infrastructure and team are ready and able to accommodate that growth.
“Scaling a business means setting the stage to enable and support growth in your company,” she writes in a SCORE blog. “It means having the ability to grow without being hampered. It requires planning, some funding and the right systems, staff, processes, technology and partners.”
Plan for costs. Once you’ve looked at ways your business can grow – where you’re at and how you’ll increase sales, etc., assess your organization’s systems to handle the new orders and make a plan on how your business will handle it.
“Scaling a business doesn’t come free,” says Campbell.
Take a look at what you’ll need to grow and the related costs to support the growth, such as hiring staff or adding equipment or new technology.
“The best planning in my view starts with a detailed sales growth forecast, broken down by number of new customers, orders and revenue you want to generate,” says Campbell.
Then, she suggests, create a similar expense forecast, based on adding technology, people, infrastructure and systems to handle all those new sales orders.
“Look at every item on your current P&L to see how it might be impacted. Expenses will go up -- you have to anticipate where and how,” Campbell writes in the blog for SCORE. “Again, include an expense spreadsheet that breaks down expenses needed to meet your sales forecast.”
Find ways to automate processes. If you take a hands-on approach to your business, it may be hard for you to think about scaling operations as part of scaling your business, says Jamie Johnson in a blog for Talyfy. But automating processes is a necessary step.
“In business, flexibility and growth do not necessarily go hand-in-hand,” she writes in a blog posted on the software company’s website. “Look at investing in IT support systems and ways you can delegate responsibility for certain necessary tasks.”
Identify technology that will help you run your business at lower costs and more efficiently.
“You can gain huge economies of scale and more throughput, with less labor, if you invest wisely in technology,” Campbell adds.
Look for software products that can accommodate the higher volumes in every part of your business, things like CRM, marketing automation, sales management, inventory, manufacturing, accounting, and shipping systems, as well as upgrades to your networks and hardware such as computers.
It’s not as easy for service businesses to eliminate redundancies and increase automation – service-based companies can often be complex and people-oriented. It can be done though, and Albanese gives this caution to those business owners.
“The work these businesses do usually becomes increasingly commoditized over time, often to the point that the company can't keep up – as soon as the advantages that come with offering a bespoke service disappears, they struggle to keep their margins wide enough,” he says.
Add the people. You’ll need to make sure you have the right people in place to scale your business.
Assess where new staff is needed, from customer service and sales to manufacturing, inventory and the delivery of products or services.
To get a good idea of those needs, review your company’s data and scaling strategy to determine benchmarks and look at what’s typical for your industry in certain areas, such as how many customers one service rep can be expected to handle.