Growing and scaling your business is an exciting venture. You've finally crossed the threshold and have what it takes to bring your business to the next level.
According to the Small Business Administration Office of Advocacy, nearly 80% of businesses survive their first year in business. However, only about half of those businesses will make it to the five-year mark.
Often, the difference between those who succeed and those who fail comes down to knowing how to scale a business.
Keep reading this guide to learn more about scaling a business the right way and how it can help take your company to the next level.
1. Develop a Plan
Coming up with a plan on how you will scale your business can help you fully think through the process and determine what exactly will be needed to move forward.
It's important to keep a few things in mind while developing your plan. First things first, you will have to ask yourself, “Is your company ready to scale?”
Taking a look at your business from an outside perspective can help determine if your business is in a position to support the growth you're looking for. You can begin this process by completing a SWOT analysis, which consists of jotting down your company's:
- And Threats
By doing so, you will gain a better understanding of how your business fits into the competitive landscape, giving you an idea of how to proceed going forward.
2. Evaluate Your Needs
After deciding that scaling a business is the right move for you, it's time to crunch the numbers and figure out exactly what it's going to take. Imagine if your business were to sustain a massive increase in sales overnight – how would you handle it?
Would you need to hire more people? Use a different technology system?
These are questions you will need to ask yourself to develop a strategic plan for the future. The more specific you can get with certain benchmarks, the easier time you will have going forward. These metrics can include:
- New customers
- Cost per lead
- Monthly recurring revenue
- Sales growth
- Website traffic
Growing a business will also take time and resources. You will have to consider what it's going to cost to increase these metrics.
3. Generate the Funding
Typically, it will require some capital to support the expansion of scaling a small business. The costs may be associated with having to hire extra employees or even through purchasing automated processes.
Unless your company has the capital upfront, you'll have to look for outside sources of funding. Depending on the financial situation your business is in, will most likely determine the best source of financing.
You can consider obtaining a business loan to get started or even start a business line of credit to secure the finances. If you plan on taking a business loan, you will need a business plan, five-year financial projections, and an expense sheet. Having this information available will give banks a better idea of your financial situation and improve your loan chances.
Luckily, there are other ways of generating the funding needed without having to take out a loan. Companies are beginning to utilize alternative sources of funding to help support their growth, including:
- Joint ventures
Crowdfunding can be an excellent source of funding for small businesses as contributors don't expect a return from the company. Crowdfunding involves raising money from a large number of individuals. It's completely different from finding investors, as investors have partial ownership and crowd funders don't.
Businesses may prefer raising money with crowdfunding over looking for investors because first, they maintain full ownership, and second, they aren't obliged to produce returns.
4. Utilize Business Technology
Technology is improving business processes all around us – automating tasks, and making life easier for business owners.
Technology plays an important role in scaling a business as it improves efficiency and can also save companies money over time. Several software innovations on the market can make life easier when thinking about growing a business.
A few software products that are gaining popularity include:
- Customer Relationship Management
- Sales & Marketing
Making use of this technology can give companies the leverage needed to scale their businesses. The more automation you can implement, the more money can be saved and used to grow your business at scale.
If you try to do it without using technology, you're neglecting a significant factor in growing your business – saving money. With the right technology, companies can save on average 40 to 75 percent over time.
5. Build the Right Team
Technology alone isn't going to get the job done – you'll need the right team of people to properly scale a business.
A great example of how building the right team can help in scaling a business can be observed with Steve Jobs and Apple. Jobs was famously quoted for hiring people smarter than him and letting them do what they do best, and sometimes that's what's needed to grow a business.
Many times all it takes is hiring the right person for the job. That could include a top-notch marketing professional, a consultant who has been through it before, or even the right customer service staff.
Big corporations sometimes forget or become out of touch with what is going on at the lower levels. Leadership comes from the top down but needs to be implemented properly throughout all levels of the organization for it to be effective, making hiring the right management critical.
If you can't find the right people to hire, you can consider outsourcing to find people capable of getting the job done.
Looking for Help on How to Scale a Business Properly?
If you're wondering how to scale a business the proper way, you're not alone. Scaling a business can help businesses take control of their market and gain an edge on the competition. Keep in mind, every company was once a startup, and at some point, they decided they wanted more out of their business.
If you're considering scaling your business and need help, contact us today, and we can help you get started!