There comes a time in any successful start-up when scaling the business becomes the next logical step. I’ve been through this process several times and in the early days, I did get this part completely wrong to the point that I almost lost my business.
This is a list of the ten things I learned during scaling my own businesses:
- Scaling is not just growing
- Preparation is everything
- Set your target
- Get your staff on board
- Prepare for change, but keep a foundation
- Watch your overheads
- Allow for failure
- Putting your customers first
- Patience – allow decisions to mature
- Be open-minded and keep learning
These are the experiences I’ve learned over time and wished I had known at the beginning of my entrepreneurial career. If you keep those things in mind you should be able to avoid the most common mistakes new and seasoned entrepreneurs make when scaling their business.
1. Scaling is not just growing
When scaling a business every aspect of your business will be impacted. Think of it as a model of your current business and now make the whole thing just a bit bigger. This is often mistaken with growing.
For example, you might want to grow your sales and you put some effort in to do that, but without growing your production line you won’t be able to fulfill the demand. That’s where many businesses fail. Scaling is about every part of your business.
2. Preparation is everything
Because scaling impacts every part of your business you will need to prepare every part of your business for controlled growth. If your sales increase you will have an increase in demand in accounting, production, service, and overhead. Make sure each part is ready. If one of them lags behind, you will run into problems. Indeed, this is a difficult task.
You can’t just hire more people in the hope that sales will increase. It’s more about knowing the possible capacities of each section of the business while maintaining the standards of quality you created over time which is what your customers expect and rely on. Another very important part is your market. Does your market provide the ground for scaling your business? Do your market research first.
3. Set your target
Scaling is not a smooth process but more a step-by-step kind of thing. On every step, you need to reassess your capacities, your quality of services and the demand for each sector of your business. If you identified that across all areas you can comfortably cope with an increase of 20% in sales, make sure you watch the progress and its impact on a very regular basis.
As soon as you find that an area is struggling, give it time to adjust and grow before increasing the sales further. Don’t fall into the trap of Sales Channels and Resellers whose interest is to sell as much as possible of your products and services if you can’t fulfill that demand.
4. Get your staff on-board
Scaling your business will put lots of pressure on your staff. Very likely, processes will have to change, new staff to be added and stress levels will go through the roof! Make sure to include your staff in the planning and let them be part of the scaling process. They are the ones on the front line giving you the feedback you need to make the right decisions.
Creating a positive attitude towards scaling the business where each member of your staff can see the advantage for your company and for themselves is probably the most important part of scaling your business. Finding the balance also helps with on-boarding new staff into the teams.
If the new members join a team that is excited about the business and its success, they will have the right attitude from day one. This part took me a long time to understand and put into practice, but it’s probably the most important one!
5. Prepare for change but keep a foundation
Many things will change during scaling your business. Too many, really. You will face situations where you have to make quick decisions that might have a huge impact on your business. You might not see it straight away, but after a while those things surface and you will regret some of the decisions you’ve made.
It’s hard to know what the right decisions are in advance, therefore it’s vital to create a foundation strong enough to support anything you throw at it. I do this by outlining the points I will do and the points I won’t do in advance.
Any sudden decision will be matched against the points and if it fits it might go ahead. If it doesn’t it won’t be done. Of course, over time those points might change, but not because of a decision I have to take at that moment.
6. Watch your overheads
When scaling your business correctly, every aspect of your business grows, including your profits. The only one that stays variable is your overheads. Every business needs to invest in the future. But those investments don’t translate straight away into profit. It might take some time for it to take fruit.
I made this mistake a few times. I was watching my profits and production and service capacities but didn’t see the overheads spiraling out of control. This can happen very quickly. It starts with hiring staff before you actually need them and then continues to invest in a new IT system or software far too large and costly for what is really needed. Make sure your overheads don’t eat into your profits too much.
7. Allow for failure
Setting up your business for scaling doesn’t guarantee that you will succeed. At this stage, it’s just a direction and a very big hope that it will all work. Changes in your market might put a real stopper to your scaling ambitions. Be ready for it and have a strategy in place if it doesn’t go to plan.
If you’re anything like me – always seeing the best possible outcome – this part might be difficult. But if you step back a bit and change your perspective you will be able to create different scenarios and see how they might impact your plans. This will also help you with creating a stable foundation for your scaling process.
8. Putting your customers first
This could be point Number 1. Make sure that you don’t forget your customers when planning to scale your business. What’s in it for your customers? Are you going to be able to create better products or services? Will you be able to reduce your prices while maintaining quality? Will you be able to provide better support?
If you can’t answer any of these questions with a clear ‘yes’, then don’t bother scaling just yet. You will most likely fail. Your customers are the core of your business. If they can see that you’re doing all this for them, they will support you. If they think you’re doing this for yourself, they will walk away.
9. Patience – allow decisions to mature
If you have an important decision to make, give it time to mature. Be patient. There’s a proverb that says, “All things take time.” That’s very true. Many times in my life I had a business and personal decisions to make, some of them quite important. But most of them were not split-second, life or death decisions.
I had plenty of time to reasonably consider what I was going to do. However, I often did not feel that way. I somehow put myself on some kind of false time-clock thinking I had to make a choice quickly. This often led to regretful outcomes that could have been avoided…if I had waited a bit longer for more information and insight. So, what’s the rush? Slow down and let things develop before you make a decision. Give things time.
10. Be open-minded and keep learning
This is more about self-development and the understanding that you’ll never know it all.
Times are changing and force us to change. The only way I found to deal with this change is to welcome it into my life and my businesses.
This requires me to learn new things all the time and to find new ways to put my knowledge, experience, and expertise into practice. A curious mindset certainly helps and a fresh breeze of positive thinking and excitement for the things to come are the cornerstones to stay ahead.
It’s not just your business that needs to be the best in its market, you need to be the best for the business to make it work. So take some time to work on yourself to be the best entrepreneur your business could wish for.