Looking to scale your business? Research from McKinsey1 found that only 22% of new businesses launched in the decade to 2021 successfully scaled. But, they obviously didn’t read this article! Dive in as we run through practical tips and strategies to help you scale your business successfully.
What does it mean to scale a business?
Scaling a business can sometimes be confused with growing a business. Though there are similarities between the two, there are also key differences:
- Growing a business is when a business adds/invests in new resources – such as team members or technology – and thus increases its revenue at the same rate.
- Scaling a business is when an enterprise identifies ways to operate more efficiently so that it increases its revenue without substantial spend on new resources. It takes thoughtful and strategic planning to succeed; the goal is to create sustainable growth that doesn’t compromise the business’s quality or culture.
Common mistakes made by businesses trying to scale include doing so too fast or too early – such as when a new business is still establishing its core goals/product lines/customer profiles.
Practical steps and tips for scaling a business
2. Identify target audience
You need to really understand your target customers to identify growth opportunities. A good place to start is by analyzing your current customers’ behaviors:
- What are their key pain points and challenges?
- How did they find your business?
- Which of your current marketing strategies have been most effective in engaging them?
- What feedback do they give you about your business?
These questions will help you identify the most effective route(s) to acquiring new customers.
3. Allocate resources
Though scaling up your business emphasizes increasing revenue with minimal investment in resources, there are some areas where you will need to spend. It’s about strategically allocating resources – time, money, technology – to where the biggest Return on Investment (ROI) will be achieved. Once you have defined your priorities for scaling, you can balance that with your budget – whilst not neglecting your existing core activities. Automating and outsourcing jobs are things to consider, too.
4. Invest in technology
Automating your logistics processes can support your business as it scales. For example, inventory management software uses predictive analytics to help you better forecast demand surges and automatically order new materials from your suppliers when needed. This means you’ll never face stock outs or missed sales opportunities. Meanwhile, automated picking technology in your warehouse can increase the number of products packed and shipped out to customers per hour.
From autonomous delivery vehicles to artificial intelligence, these are the technologies that can help your business meet demand as it scales.
5. Establish efficient workflow processes
A big part of scaling up your business involves improving existing processes. This includes:
- Integrating automation technologies
- Negotiating with current suppliers and vendors to reduce costs
- Switching to green energy solutions
- Reducing wastage along your supply chain
6. Invest in employee development and efficiency
Turning your employees from good to great will have an impact on your business’ bottom line. As your business scales up, motivated and proficient employees will help you meet increased demand. You may identify skill gaps amongst your existing team which you will need to fill in order for your business to meet its growth goals.
Challenges of scaling your business
Scaling too early or too fast
It can be tempting to get carried away with plans for your new business, especially if it has enjoyed a successful start. But scaling too early or too fast comes with several risks – such as being unable to meet demand – which will impact the quality of the experience you give customers.
Solution
To know whether your business is truly ready to scale, ask yourself these questions:
- Do you have the right resources – people, skills, tools, and money – in place to support your scaling goals?
- Do you have an established and loyal customer base yet?
- Is there enough long-term demand for your product or service? You may have been having robust sales so far, but is that due to short-term circumstances – such as a busy Christmas period?
- Imagine a scenario where your business doubles or triples its sales overnight. Could it cope without sacrificing on customer service or your brand’s core values?
Remember, it’s better to do things slowly and get it right then rush ahead blindly! Scale in stages. You should create a detailed scaling plan, with small and measurable KPIs along the way.
Maintaining sustainable business growth
With attention and resources diverted to scale, it can be easy to get caught up in numbers, revenue and profit. Yet, sustainable business growth is about more than that…
Solution
The key to long-term success is:
- A Unique Selling Proposition. What is your USP? Is it a unique product, or perhaps the way you serve your audience? Is it the original purpose behind your business? What attracts your existing customers to you? Don’t lose sight of this, make sure you retain the sense of what makes your business special.
- Clear – but flexible – goals. As you scale, you should be continually checking in with your KPIs. But remember too, that business is not always predictable; as challenges come your way, be willing to adapt your plans.
- Customer retention. As the saying goes, the customer sits at the heart of every business. When scaling, always keep the customer experience in mind. Without them, you don’t have a business!
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1 - McKinsey, 2021
