How to scale a business: If you’re a startup and trying to scale up, you’re at the right place. In this piece, I’ll not just discuss how to scale your business, but also a few titbits associated with the same.
Contrary to popular belief, scaling up doesn’t always have to be investment-heavy. In fact, most strategies discussed here require either no, or very minimal new investments.
Let’s get to the point then?
Table of Contents
- Difference between Scaling and Growing
- Are you ready to scale your business?
- How to scale your business?
- What you shouldn’t do when scaling a business?
- Conclusion- How to scale a business in 2024
Difference between Scaling and Growing
One of the biggest misconceptions around scaling is it’s the same as growing. It isn’t. It sure results in growth but the process isn’t exactly similar.
Growth is you simply increasing your input (funding/labour/ marketing) and getting more sales/clients. Now, getting more clients would probably require you to increase your workforce and that would require more investments.
In fact, growth may not always be profitable. You putting in $100K and acquiring 100 new clients is cool. It’s growth for sure, but what you’re selling may not always cover what you’ve put in.
Similarly, you may get 2 new office which sure is growth but it may not be “profitable”.
Scaling on the other hand is trying to grow & increase revenue, without increasing input by a lot. It should be growth and bring you more revenue without requiring substantial new investments of any kind.
Are you ready to scale your business?
Before you learn how to scale your business, it’s paramount for you to verify that you’re ready for it.
“I have never seen a company die because it didn’t scale fast enough.”– Guy Kawasaki
Did you know that 2/3rd of the companies that grow the fastest FAIL! So, you certainly shouldn’t be in a rush.
Here are a few aspects you should pay a bit of attention to before scaling:
- Proven business model: Make sure you have business model that’s been working for a long time at a steady pace. You can’t scale something that’s still experimental and “may or may not work”. Scaling is always “built over what’s already built”.
- More work than you can handle: Are you getting more clients/contracts than you can handle at the moment? In other words, you shouldn’t be struggling for revenue sources.
- Current goals are achieved within designated timeframe: This is one of the best signs that you’re ready to scale your business.
Do note that this is just the basic framework. These three signs do not ensure that you’re 100% ready to scale. As you read through this article, you’ll gain insight into a few more things you probably should look into.
Let’s get your business scaled then eh?
How to scale your business?
Here are the primary steps most companies follow when they’re scaling:
1. Build a solid roadmap
What comes to your mind when I say “roadmap”? A simple document which details how to get from point A to point B, doesn’t it?
Well, your business roadmap needs to be a bit more detailed. You can start by listing exactly which areas of your business you plan on scaling. This can be output, delivery, management and many others.
Be sure to not overinvest into what’s already better than the other departments. Just because you’re scaling, not everything needs to go up.
Then, write down every tiny detail involving the departments you’ll be scaling. These should include:
- What’s the biggest change you’ll be making for each specific department.
- Who exactly from your team will work on that?
- What resources will be required to make the change.
- The source for these resources.
- Deadlines and other timelines.
- And most importantly- When to stop scaling each department!
2. Improve, don’t change
The best way to bring in more sales? Sell better versions of what’s already selling, isn’t it?
Identify what products/services of yours bring in the most sales. Then, build on those products.
By “build”, I do not simply mean quality improvement. Obviously, one of the biggest points you should pay attention to is quality. Especially when you’re scaling, you’d be exposed to a newer client-base. As a result, you’ll be compared to and tested against many of your competitors. Hence, quality definitely needs to be your first priority.
However, what “build” means is much more than just quality. You also need to build on your marketing, advertising, packaging and every other aspect of the product/service.
3. Clear out the clutter for senior management
Scaling up is practically the level-2 for any startup. As a startup, I’m sure so far your employees are spread pretty thin, especially the senior management.
Scaling is when you need to leverage your employees based on their “skills”. Every person working for you has a specific skill-set and things they’re best at. That’s what they should focus on, instead of trying to manage multiple avenues at work.
In other words, what’s someone’s speciality and let them focus on that one aspect.
Additionally, this will free up time for these individuals to focus on what they’re good at resulting in even better growth and output for you.
4. Focus aggressively on your weaknesses
More than building on your strengths, your weaknesses weigh you down. No matter how good your product, a single bad product/leak may be fatal for you.
By weakness, I again do not simply mean bad products. It can be in your financial department (better investments/ cheaper purchases), legal department, marketing (rent better billboards maybe?) or anywhere else.
See the avenues that bring in the least clients for you, or those costing you the most money. Those are the areas you need to work on.
If these aren’t addressed when you’re scaling, they tend to pile up. Eventually, you’ll make more mistakes and errors and hence all of it compiles into a much larger monster. Hence, scaling up is the best time to clean your brand so you can start fresh and make new mistakes (you definitely will!).
5. Identify your “actual” product/service
This is being listed last because it doesn’t impact every kind of business. However, it does have a lasting impact when it does.
Did you know McDonald isn’t in the “food” business? They’re a real-estate empire. They make more money by leasing their franchises than they do selling burgers!
Similarly, Facebook isn’t a “social network”. It’s a data company. It makes money by storing your data (what pages you like, what links you click) and then by showing you ads relevant to your likes.
E.g. even for a normal website owner, the actual business may be “advertisements” or “SEO services” rather than “information”.
Point being, you may not be in the business you think you are. Identify what you’re actually selling and them focus on making that better.
6. Work on better employee/customer relationships
Your employees are your first customers. They help you spread the word and at times even bring in talent. Similarly, by “treating” your customers right, you can make them work for you.
As far as your employees go, you can start by asking them for their ideas and opinions about relevant matters. This make them feel they matter. At times, you’d be surprised how revolutionary some of these ideas may turn out to be!
Similarly, go that extra mile when it comes to your customers. Use feedback forms, calls, or other modes to communicate with your customers after-sale. After-sale support/feedback is one of the most important aspects that most startups lack.
Asking them how they like/dislike your product/services tells them you genuinely care. Everyone likes when people care, don’t they? Whenever the client discusses your product/service next, they’re likely to recommend you to others.
Moreover, their feedback can actually help you make your company better so it’s a win-win.
7. Automate busywork
This is something that every scaleup should take advantage of. When you’re trying to scale up, there’s a lot of “busywork” that you can possibly automate.
Busywork defines work that doesn’t require any special talents or research. It can be as simple as running e-mail campaigns, updating client contact data, social media scheduling and so on.
The goal here is to free up personnel who can be used elsewhere. Sure there will be new investments in software and apps. However, this will be considerably less than hiring new recruits.
Also, you got free employees now and their skills when used elsewhere pretty much makes these software free.
Here are a few best CRM tools for startups that may help you with your hiring, acquiring, support, and other departments.
What you shouldn’t do when scaling a business?
You can do 9 things right but a single thing wrong can bury your business. Hence, pay special attention to these things when you’re scaling:
- Fund mismanagement: When scaling, you’d surely have access to excess cash. Now, you need to prioritize the things your business needs immediately, those which have a direct impact on your business rather than those which “may” have an impact in the future. E.g. investing in automation software will immediately free up employees and let them help you in other avenues. It’s a better investment than getting better packaging (in most cases), isn’t it?
- Not focusing on others: A major issue with scaleups is that they try to make themselves better, without looking at what the competitors are doing. No matter how well you upgrade your product and business, you should always pay very close attention to what your competitors are doing. That’s one of the best sources of ideas and helps you keep yourself one step ahead.
- Not changing management: It’s easy and “comfortable” letting the same management run your new, scaled up business. However, scaling up brings in many new challenges and even recruits who actually need a better-suited and structured management than what you started with.
- Not leashing growth: This generally happens when there’s not a cut-throat plan on what you’re scaling and what’s the absolute goal. Scaling doesn’t simply mean “increasing everything in all directions”. You need to know what needs to be scaled but also what needs to be reduced, or when you need to stop something that you’re scaling.
Conclusion- How to scale a business in 2024
There’s truly no one concrete answer to this question. The exact strategies differ for each startup based on their current position, goals, business industry and many other factors.
However, the strategies discussed above should give you a general direction. It’s all about growing using more diversification and better utilization of available resources, rather than “buying” new resources.
As long as you do at least a few things right and don’t make major mistakes, you should be successful. But then again, this is very subjective for each company and the team.
I’m sure this isn’t a definite answer however I hope you learned at least something about how to scale a business then, eh?