If you’re an entrepreneur, you’re probably aiming for success and profits. The more profitable the better. This is the dream of every entrepreneur. But many get lost or stuck on the way, and don’t know what to do to turn their company into a success story. For many smaller companies, it may seem that the more you have, the better. But this is not entirely true. Growing your business and hiring new coworkers may bring you more revenue, but at the same time, it means that your operating costs are also getting bigger.
Business owners have to master the art of scaling if they want to build a strong and thriving business. You have to start at the top and make sure your business is built on strong foundations.
This article will explain what exactly scaling a business means, why you should do it, and guide you through this process with tips and real-life examples of successful business scaling. We hope that by the end of this article, you will learn what you should focus on and learn how to steer your business on the right path.
At the end of this article, we will introduce you to some real-life examples of businesses that scaled successfully and explain how they managed to do so. Let’s begin.
Why Scale?
Technology has advanced significantly in the last decade and that gives companies huge opportunities to expand their company globally. But building a successful global business does not happen overnight. Managing high growth and preventing unhappy customers with scaling your business has to be done strategically. If we look at startups or small new businesses, we can easily assume that they are successful because they achieved massive growth in a short period of time.
But here is the problem. When a company grows too fast, it becomes vulnerable. That is because companies often don’t have a solid foundation to support rapid development. By learning how to scale your business, you will create a strong foundation for your company to grow in the long run.
To scale your business means that you are prepared for increased workload in a cost-effective manner and meet the demands of your customers without overstretching your company’s resources. With scaling, we refer to growth strategies that align with your company’s vision and simultaneously manage how growth impacts your company.
What Is Scaling
Growing your business basically means more sales and success. Having a scalable business means that your company can perform well under expanding workload. You have to ask yourself if your business is capable enough to grow since scaling a business depends on two factors – capability and capacity. Does your company have enough capacity to support growth?
Let’s look at it a little further, shall we?
We often use growing a business interchangeably with the concept of scaling a business. These two concepts cannot be used as synonyms. While growth refers to increased revenue due to some new business acquisitions (hiring new employees, expanding offices, etc.), with scaling, you are trying to find new ways to grow more efficiently.
The real definition of business growth can be tricky, and many professionals disagree over its meaning. They do agree that business growth represents itself in profitability and bigger market share. Making your business bigger is a priority for many people starting a company. However, not all of them consider growth and success their priority.
The core of growth is increasing revenue with a business model you’re currently using. Companies often end up also increasing their costs as they increase their revenue. So even though the company is growing, it does not gain much value.
On the other hand, scaling is more focused on increasing revenue by adapting business models with the goal of maximizing profit. Their revenue is increasing at a faster rate than their costs. That allows the company to grow and have much more value. Businesses that are more focused on scaling rather than just growing can maximize their profits in a sustainable way.
One of the meanings of “scaling” is to increase revenue faster than costs. You can achieve this in many ways, including adopting new technologies, finding loopholes in the operations, and so on. Having the ability to increase revenue and operational demands while having the same or even lower costs will enable you to scale successfully.
Scaling a business is crucial for small businesses and startups. Unsuccessful scaling makes 20% of businesses fail in their first year. That is why it is important for you to scale your business successfully in order to be prepared for the future.
We want to present you five steps on how to scale your business:
1. Step: EVALUATE AND PREPARE – You have to know if your company is ready for growth. Start with strategizing what you have to do in order to increase sales and ask yourself if your organization can handle bigger demands. This is where a good plan on how to handle everything comes in handy. Keep in mind that you will have to think of everything, research many things, and come up with proper cost estimates to make your plan better.
2. Step: GET THE MONEY – New employees, new technology, and equipment do not come for free. You can get the funds for growth from investors, banks, competition, or bootstrap the process if you have enough funds in your business accounts.
3. Step: SECURE THE SALES – Scaling businesses need to have a good sales structure, a good marketing system to track and manage leads, and enough sales representatives to follow up and close leads and close the deals.
4. Step: INVESTING – Technology has advanced so much that it makes it a lot easier to scale a business and makes it less expensive for scaling. Investing in the right technology can make the scaling process a lot smoother. Talk to your department heads and ask what kind of technological solutions they need in order to scale their operations.
5. Step: HIRING OR OUTSOURCING – Ask yourself whether you want to hire new employees or outsource them. Think about which operations you can do internally and which you can’t. You will need all the workforce you can get while scaling.
Set the stage to enable and support your company through the process of growth. Be prepared and plan everything.
What are the benefits of scaling a business?
Scaling does mean growing in a way. But it defines much more than that. It means that your business is flexible, agile, and versatile. With these three characteristics, you will make your business ready for expansion and prepare for unpredictable changes that can make businesses close their doors forever.
Let’s take a look at some of the benefits of scaling your business:
- Improved efficiency: Planning for any unexpected changes that may occur.
- Consistency: Always be prepared for anything drastic happening on the market.
- Adaptability: Being able to be flexible to adapt to changes.
- Competition: Being better prepared than your competitors makes you dominant in the market-.
Prepare your business to accommodate growth, and you will gain durability and longevity to stay on the path that can guarantee you success in the long run.
The bottom line is this – if you manage to successfully scale your business, you will increase your company’s value. You will have better profits and a larger market share. This is the goal of every business and entrepreneur out there.
How Long Does it Take to Scale a Business?
Building a strong foundation for your company can take a long time. Small businesses can reach profitability in about two or three years. But that depends on the company. Some of the organizations scale more easily. Companies that don’t have as much inventory and have low operating costs are more scalable. This is because they do not need to build infrastructure or invest as much money to scale. Tech companies, for example, can grow rapidly.
Some organizations will scale more easily than others. Businesses with less physical inventory and low operating overhead are more scalable because you won’t need to build infrastructure or even invest a lot more money to scale.
This is why tech companies are able to grow so rapidly. But you don’t have to be a tech company to scale like a pro. There are tricks and tips you can follow to scale any company.
The more labor-intensive a business is, the harder it is to scale. The same goes for businesses that have a lot of inventory. Lean business models are the easiest to scale. That’s why this approach is becoming so popular with new startups.
A lot of companies want to experience a rapid growth phase as soon as possible. By doing this, they lose focus on what matters. Scaling should be done carefully, thoughtfully, and as meticulously as possible. Once your sales skyrocket, you will need a solid foundation to support you.
Let’s look at two examples of companies that managed to scale their operations really fast and are continuing their strong performance.
Slack: Slack represents a great example of one of the fastest-growing businesses. As a cloud-based communications tool, they scaled very quickly. When they started the company, they wanted to do something that was completely different, and their initial focus was to make money fast. The app was extremely popular among different companies all over the world. They needed a lot of clients to grow quickly. The challenge they faced was scaling their technical capacity and maintaining a strong work culture while hiring 60 engineers in just one year. They went from 8 to 385 employees and raised over $160 million in funding in just under 3 years.
Their biggest challenge was the people. They knew they had the technological capacities, thanks to the advancement of solutions in the past decades. Managing new people was the hard part. Every new developer and engineer has new ideas, and setting processes gets tricky in a large and growing technology company.
Slack managed to keep its work culture, and the company continues its success story. They are one of the largest and most prominent players in the market.
Chobani: Chobani is an American Greek yogurt brand that had an extremely popular product in the food industry. With very little competition for years, they were one of the first Greek yogurt brands to establish their name. The company took big loans so they could increase their production capacity, and without competition, they didn’t have to provide licensing rights or sell their company to big yogurt companies. Since they didn’t have much competition and they sold their products in a limited area, they knew they could scale easily. They also knew if they took this product globally, it would be as popular worldwide as it already is in America.
Chobani solved a problem their customers weren’t even aware of since most of the consumers didn’t care much for Greek yogurts. When they first put their products on the market, people became excited about Greek yogurt for the first time. The company had a solid business and production process before it scaled its operation. They knew exactly what they had to do, and they executed the plan perfectly.
By always challenging the status quo on wages and benefits of their employees, focusing on local sources, and consistent messaging in the press they were able to scale fast and successfully.
Learning How to Scale A Business?
We looked at what scaling is and why it is important for your business. You should know that scaling is more important than growth because growth alone doesn’t mean you’re making your company more valuable.
That’s all fine, but how do you actually go about scaling your business? Where do you turn for information?
There are no standards and step-by-step guides you can follow. We know that each business is different, and you can’t have uniform rules for scaling. But that doesn’t mean you can’t copy some of what successful companies are doing.
You can use business reports and case studies that you find online for real-world examples of startups that scaled. Startup founders and business owners sometimes hold AMA (ask me anything) sessions online. This is a great opportunity to ask them how they scaled and how they solved specific challenges. You’ll be surprised how willing successful entrepreneurs are to share their stories.
You can also turn to books for more formal types of information. Keep in mind that books can quickly become dated, especially in the rapidly changing world that we live in.
The best way to get started is to keep reading this article. We did a lot of research to create 11 actionable tips to help all business owners and entrepreneurs scale their operations. You won’t find all the answers you’re looking for, but the information we present will give you a very solid foundation. Thinks of the tips as the starting point in your scaling journey.
Top 10 Tips to Scale A Business
We went through the theory behind scaling a business. We even covered a couple of examples of companies that successfully scaled their operations in what seems to be record time. You know what scaling is and why it matters.
It’s we look at actionable tips you can use to help you scale your business. We collected eleven best tips and practices that will help you prepare for scaling your operations. There’s a chance you won’t use all of them. But we’re sure you’ll find some that will make a huge positive impact on your business.
Let’s dive deep into actionable things you can do when scaling your business.
Identify Clear Milestones
A common mistake startups make when going through a rapid growth phase is they start hiring salespeople immediately. That’s normal. You want to maximize the potential revenue you can get. But that can also be your death sentence.
Salespeople cost money and you can quickly run out of money if you’re not able to guarantee consistent cash flow. That’s just one of the examples showing growth isn’t all roses. Without planning, too much demand might do more harm than good for your business.
Setting clear milestones and goals help you stay above the line. Try to define each step in your growth phase. Try to be as precise as possible. Make sure to estimate the timeframe for each milestone. Some of the questions you need to ask yourself are:
- When will you run out of money?
- When will you need to hire more people to help you with production?
- When will you have to add new departments?
- How long do I have before any of these happen?
Scaling a business can get messy. Knowing which milestones you need to clear makes the whole process a lot cleaner. It gets a lot easier if you know the exact steps you need to follow to reach your business goals.
Setting clear milestones helps you stay on track. They ensure you don’t go over budget and they ensure you don’t run out of money during the growth process.
Some startups and companies want to keep some flexibility and they avoid setting milestones. But we don’t think that’s the right approach. You can always pivot and create new milestones if needed. But the important thing is you know where to go.
You can think of your milestones as your guidelines. Whenever you feel lost, just look at where you’re going and you’ll be back on track.
Analyze Your Competitors to See What They’re Doing
You need to know your competitors better than they know themselves if you want to compete with established players in your market. You have to know their acquisition channels. You have to know who they’re targeting and what makes them successful. How much are They paying to produce the products they offer? Are they offering premium products and services or are they lacking in that department?
By knowing who you’re competing against you can prepare the best strategy to reach your business goal.
There’s a chance your competitors already went through a rapid growth phase. Especially if you work in a modern niche with established startups. You can look at how they solved the problems they faced on their road. You might even be able to avoid mistakes they’ve done by identifying common treats.
Startups sometimes share case studies detailing every step of their growth. These can be a gold mine of ideas you can use for your company. Go through their reports and highlight the problems they faced when scaling and take note of the solutions they used.
Another source of information is business reports. Startups have to report to their investors periodically. Some investor reports are made publicly available for everyone to see. You can go through the numbers, KPIs, and other business data. They also usually include business updates in the report. You might find interesting examples of the problems they have to deal with during their growth phase.
It’s important that you don’t just copy what others are doing. You should use the information to prepare for potential threats and have the answers to common problems before they even arise.
We also suggest you keep an eye on the delivery times your competitors use. This can give you insight into their business operations. Are they capable of fulfilling their orders? If you also find the number of employees they have you can estimate the size of the workforce you’ll need. And you’ll be able to estimate the delivery times you can promise to your customers.
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Reduce Risks
You can use the previous tip, analyzing your competitors, to reduce the risk associated with scaling. How do you reduce the risks of scaling? You have to identify all potential threats that you might face when your startup or business enters a rapid growth phase. How do you do that?
You can probably identify some of them from the top of your mind. Sit down with the top-level management in your company if you have any. Try to think of all the problems you might face when scaling. List them down. You’ll need the list later.
Add all the problems you identified in the previous chapter when you analyzed your competitors. You can also talk to senior managers of other companies in your industry if they’re willing to share their experience. Your goal is to identify as many potential threats as you can. The more the better.
Once you have the list it’s time to start ranking them. You want to determine which are most likely to happen. We suggest you forget about the ones that aren’t likely to happen. You can’t prepare for everything and it would be counterproductive if you spend too much time on problems that might not even happen.
After you’ve identified the biggest threats your company might face while scaling, it’s time to start working on the solutions. Sit down with your leadership team and start preparing solutions for the threats. What will you do if any of them actually happen?
This way you’ll be completely prepared for most of the challenges you’ll face while scaling your company. You’ll know exactly what to do and when to do it. You’ll be able to focus your efforts on other things during your growth phase.
Here’s the algorithm you should follow when reducing the risks associated with scaling:
- Identify the risks
- Rank them on the likelihood of happening
- Prepare solutions for them
The better you prepare the easier it will be to navigate your company. This is one of the crucial tips you shouldn’t take for granted.
Identify Your Ideal Customer
Some would say this is the first and the most important step a business should make. Knowing who you’re selling to shapes the way our business operates. It defines how you talk to potential customers and it influences how you position your services and products.
It also helps you scale your business. You can make better decisions if you know what your customers are expecting from you. Getting constant feedback from your customers is crucial when scaling your business. This will help you prioritize the right things and it will show you, which parts of your brand connect the best with your customers.
You might learn that your customers value a certain aspect of your business. If that’s the case, you should do everything you can to keep that part of the business as intact as possible while growing.
You might also learn that some features of the products or services you offer aren’t all that important to your customers. These are the things you can trim when growing to simplify the scaling process.
As you see, your customers have a huge impact on how you’ll scale your business. But keep in mind you can’t please every customer. You want to average out your customers to make the best decision. You will spread yourself too thin if you try to please everyone. Instead, focus on what the average customer wants.
We suggest you create buyer personas. These are fictional characters that represent your average customer. Every time you’re making important scaling decisions, think about what the buyer persona would want from you. This way, you’ll ensure you’re always making decisions that the majority of your customers want.
The bottom line is this – listen to your customers and they will tell you what the right decision is when facing scaling problems.
Streamline Your Business Processes
The simpler your business, the easier it is to scale. It’s common sense. The more something is complex, the harder it is to emulate on a larger scale. Just ask yourself this – what’s easier to reproduce? Something that’s as simple as possible or something that requires more people or more power.
Streamlining your business means eliminating everything that’s not necessary. Lean business models are becoming popular because they’re the easiest to scale. Your goal should be to eliminate all non-essential aspects of the business. This is true for the features you offer in your products and services, and it holds true for your day-to-day operation.
You have to look at all elements of your business and simplify everything you can, to the smallest detail.
You should be constantly asking yourself what else can I simplify? What else is there that I can eliminate? Keep experimenting and simplifying until you you’re left with the core that makes your business go forward. That’s what you should focus on. And that’s what you should try and scale.
Let’s look at a common example that happens as you’re scaling. Scaling usually means adding new people to the team. You have to teach them processes and work operations if you want the new employees to contribute to growth. Can you imagine how much easier it would be to teach them a simple process compared to complex operations?
It’s also a lot easier to spot the bleeding spots in your business when you streamline your processes. There’s a good chance you might identify places you’re losing money without making a positive impact on your business. This is what you should immediately eliminate.
Remember, the easier your business model is, the easier it will be to replicate on a larger scale. Keep thinking about the things you can simplify without negatively impacting your business.
Find Great Employees
Your employees are the backbone of your business. You cannot grow without them. While technology helps us automate many business tasks and processes, you still need people to grow your business. And not just any people, you need capable people who understand what you’re trying to achieve. You want people that share your values and are willing to work to achieve their dreams. Getting them to work for you isn’t easy.
While you can convince some workers with a good salary and inviting bonuses, people also look for other things – job flexibility, a good working environment. opportunity for growth… Money is important, but it’s not the only thing people consider when accepting job offers. Think about that when you start hiring people during your growth phase.
Another thing you need to consider when hiring people is the impact they’ll have on the work culture. Your goal should be to build a positive work environment where people feel great and enjoy working.
Businesses often make the mistake of hiring the wrong people during rapid growth. That’s completely understandable. You need manpower to support your growth and you’re willing to accept almost anyone you can get. This means that bad workers might slip through the cracks and end up working for you.
Make sure you monitor your employees. But instead of focusing entirely on their productions, also look at how they fit into the work environment. It’s often better to have a mediocre worker that goes along with everyone than a superb performer that’s arguing with other employees.
Your business is only as successful as your employees. Make sure you create a business that attracts the best performers in the industry. This will make scaling a breeze compared to having an office of workers that can’t wait to clock out and forget about the job.
Remember, you can not grow without capable employees.
Outsource the Work
Businesses are sometimes so successful and grow so rapidly that their employees aren’t capable of supporting the new influx of demand. If that’s the case, you need more manpower, and there are two ways you can get it:
- You can hire more people.
- You can outsource the work to freelancers and agencies.
We already covered hiring new people in the previous tip. It’s always great if you can attract the right people to join you. But the hiring process often takes a lot of time which you don’t always have. If that’s the case, freelancers and agencies might be your best solution.
We live in a globally connected world where finding freelancers is relatively simple. You can turn to big freelancing platforms like Fiverr, Upwork, and Toptal to add freelancers to your team. The best way about this process is that you’re able to add a new team member very quickly. It might even take less than a day.
The downside to working with freelancers is that they aren’t your employees. They are just an extra pair of hands that you hire when you need help. That’s why we suggest you protect yourself. Ask the freelancers working for you to sign a non-disclosure agreement. You don’t want them to share details about your business with people outside of your organization.
Another tip we have for you when you work with freelancers is to start small. Start with small projects. Test the freelancers and see how they perform. If they do a gob job, give them a new and bigger project to see if they can keep up. Who knows, you might even discover someone that’s good enough to join your team full-time.
You can also turn to agencies if you don’t want to work with freelancers. The basic principle is the same – you pay the agency to deliver workers that will help with the tasks you need help with. You get better protection when working with agencies, but you should expect to pay a higher hourly rate.
Create Amazing Work Culture
We already talked about the importance of employees, and freelancers for a growing business. You know that having the right people is important when scaling your company. That’s why you should do everything you can to attract the top talent in your market to help you scale your business.
We also mentioned that money alone won’t get these people to come to work for you. People are looking for more than that. A positive work environment might convenience potential employees to give you a chance. It also improves the productivity in your office and helps your employees perform at their best.
Think about it – who’s more likely to work hards and produce better results? A motivated worker that’s happy to come to work and feels fulfilled in the workplace, or someone who dreads coming to work every day? The motivated worker will be miles ahead of the unmotivated one. Having the right work culture that produces motivated employees is very important for all businesses, including businesses that are experiencing rapid growth and need to scale.
So, how do you create a positive work culture? It really depends on the employees you have. Some people want to have all the freedom in the world, while some produce better results when they are closely monitored. Let them express themselves and let them share their thoughts. Show them you’re listening to their ideas.
The important thing is to talk to your employees and listen to what they have to say. Chances are they will tell you what you need to do to build an amazing work culture. And believe us when we say this, a positive work environment will pay dividends for your company.
Build Sales Funnels In Different Channels
One of the most common mistakes young and inexperienced businesses make is focusing on a single acquisition channel. We understand why that happens – you want to scale and focus on what’s bringing in the money. You want to grow the channel that you want is profitable.
But that doesn’t mean that you should forget about other possible channels. You don’t want to put all your eggs in one basket as the saying goes.
It’s easier to scale a business if you have more than one option when it comes to bringing in new leads. You have to diversify your business. Having more channels enables you to experiment with marketing, test new campaigns, and tweak your offering.
Would you be willing to test and change your marketing message if you only had one acquisition channel bringing in all the leads? We didn’t think so. This makes it very hard to grow a company on a single acquisition channel.
Testing and changing your campaign helps you streamline your marketing. We talked about this in one of the previous tips. It’s very important if you want to scale your business. The more you test, the more you learn about the business and the better you can optimize all your operations.
Adding new sales channels is usually positive, but you also have to make sure you’re not spreading yourself too thin. You don’t want to overdo your expansion and end up with a lot of different channels producing marginal results.
Instead, focus on a few that deliver the majority of the revenue. Just make sure you leave yourself enough room to experiment with new approaches.
Never Compromise On Quality
As you scale it gets harder and harder to monitor the quality of your products or services. Sure, you can hire new people to monitor the quality, but it takes time to train them and teach them everything they need to know, which means that your products (or services) are being delivered without passing your internal quality control.
Startups sometimes fail, because they can’t keep producing the same quality when they’re growing and scaling. It’s one of the crucial mistakes we see in rapidly growing businesses today. Our advice is to slow down the sales process if you can’t keep the production quality to the level that your customers are used to.
The last thing that you want is to become known as the brand that delivers subpar products or services. Most people would probably be willing to wait for the product or service a bit longer if you honestly explain to them why they wait. They would rather have the best quality than something quick and cheap.
By staying consistent and constantly producing great quality, you will become known as a reliable brand in the market. You will be able to streamline the processes in your quality control teams. Businesses that constantly produce quality products or services are simpler to monitor and scale.
This tip ties back to the streamlining tip. If you’re constantly producing great work, you eliminate a lot of problems you would otherwise face.
Real-World Examples of Successful Scaling
Shootsta: Shootsta is the only subscription-based, scalable video solution in the world that wants to enable different brands to create high-quality and cost-effective videos in a very short amount of time. As their business grew, they knew they had to digitally transform their processes fast.
They started with unifying all customer data. They wanted to improve customers’ and employees’ experiences. This made a tremendous difference and changed the way they sign up new clients. All these changes they made were essential to make their customers and employees feel happier and make their experience better and with less stress.
They loved the improvements, but that required a lot of work to lay the groundwork. The company thought of everything, and they knew they needed to focus on the end-users and stay flexible.
Realizing their internal processes were not ready for scaling, they had to make a change. That is why they started from within the company, making their employees work more efficiently by making them a part of the decision-making processes.
Laundry Care: Laundry care is a wash and folds laundry service founded by a stay-at-home mom. She decided to start a business out of something everyone has to do but most people hate to do. Her simple solution grew rapidly as people started learning about the company.
She hired other stay-at-home moms and even expanded into other cities. Due to careful spending, her company was able to scale successfully. In the beginning, she worked on a very tight budget, but she reinvested almost all of her profit, so that larger and not so frequent purchases were either paid with liquid assets or a 0 % APR credit card.
This is a prime example of how a company can grow by being smart about its expenses. They had to cut all necessary expenses in order to grow the company. It goes to show what smart planning can do.
Impact Power Solutions: This solar energy company out of Minnesota grew from $3 million to $38 million in revenue in just 5 years. Their success story started when they partnered with a private equity firm and decided to hire a scaling consultant.
Together, they prepared a plan that would get them ready to rapidly scale their business. They restructured their leadership team and started strategically hiring the people they will need for growth.
They started with daily huddle meetings to keep their teams aligned and started organizing strategy planning meetings with the leadership team. They also started meticulously tracking their cash flow to ensure they have enough funds to scale their operations.
The results were amazing. They 10x their revenue in just 5 years. This example shows that planning is the culprit of success. They were strategical about their growth, and they scaled in a sustainable way.
Conclusion
There you have it. You know everything you need to know about scaling to start the scaling process in your company. We went over the theory, and we learned why scaling is important. We also touched on the difference between growth and scalability.
We provided you with actionable tips and looked at how different startups scaled their operations. You know how to use the tips in real-world applications. We showed that each company is different, and every situation requires different solutions. Don’t just copy what they did. Instead, think about why companies did what they did to really understand what goes into a scaling strategy.
It’s now up to. The sooner you start working on scaling your company, the better. You know that with the right planning and strategy, everything is possible. All you have to do is devote the time and resources to get your company ready for what the future holds for you.
We suggest you come back to this article every time you feel lost. It never hurts if you sharpen up your skills and knowledge. Happy scaling.