Is it Time to Scale Up Your Business?
How’s business? If your answer is just “OK,” you might be missing something important. Doing fine today doesn’t mean you’ll stay there. Businesses need to grow to survive. One way to grow is to scale up. That means having the right things in place so you’re able to do more, without jeopardizing the progress you’ve made so far. Take a look at these ideas to determine whether scaling is right for your business.
Looking for Signs
How do you know when your business is primed to start scaling for growth? There isn’t a magic formula for all businesses, but Bplans.com suggests these signs might mean you’re ready:
- Repeatedly turning down potential business because you don’t have the capacity
- Consistently surpassing your goals (and you expect it to continue)
- Strong cash flow to finance expansion
- Reliable infrastructure to support future growth
Notice that each of these assumes you see a trend. Favorable results for one quarter may not be enough. Look for a track record of current success before investing in the next step—scaling.
Testing the Waters
Remember when you made the decision to start your business? You probably spent several sleepless nights considering all the angles before you were ready to make that investment. That’s because success wasn’t a guarantee. But being methodical helped manage the risk. The same is true when deciding to scale your business.
Here’s are three steps adapted from SCORE that can help you test the waters to see if your business is ready to make the investment to scale for growth:
1. Test Your Assumptions
How sure are you that your business is poised for growth? Growth projections can help you evaluate whether you have what it takes to successfully expand. Start with these forecasts:
- Sales projection – Prepare a spreadsheet detailing, by month, how many new customers/orders you will bring on and how much revenue it will bring in. This will give you a check to determine how realistic your expectations are.
- Expense projection – Prepare a similar spreadsheet detailing how much it will cost you to bring on these new customers/orders. Think about whether you need to hire additional staff, acquire new technology, or adapt operational systems to handle the increased load.
2. Examine Your Infrastructure
Scaling often requires upgrades to your business infrastructure to handle the increased demand. Start by looking at these critical components:
- Sales/Marketing – Do you have the structure to generate the number of new leads you’ve projected? You may need to increase the number of sales reps, marketing staff, and promotional budget. Maybe you’ll need a more robust customer relationship management system to accurately track and follow-up on leads.
- Technology – Automation can help you minimize labor costs and operate more efficiently. Look at your current systems to assess whether they have additional capacity. That can include inventory management, accounting, shipping, human resources, and communication networks. Do you need to acquire additional technology?
- Staffing – Look at areas that are most impacted by increased demand, like customer service staff, manufacturing, and shipping. Some businesses elect to outsource additional staffing.
3. Locate Funding
You’ll need to secure funding to scale your growth, especially if you need to hire new people or invest in new technology. One option is bootstrapping—using personal resources, sweat equity, or reducing operating costs. Or you can tap traditional sources like loans and grants. Here’s Fundera’s list of the top 10 small business funding options for 2019. In addition, USAGov details government-sponsored funding sources.
Scaling can be a viable way for businesses to gear up for growth. But it’s important to understand what’s needed to make that investment pay off. Start with these insights to see if your business is ready to tip the scales and take the next step.