The distinction between growing and scaling is often overlooked, but very important to business owners at every level. To scale effectively, one must grow revenue without requiring significantly more resources like employees or IT infrastructure.
Growth is great – scaling is better. But can it be done?
The challenges of scaling are many, but not insurmountable. Here are some key pieces of advice from entrepreneurs on how to scale a small business in a steady and sustainable fashion.
Thousands of companies experienced the power of remote work for the first time in the past year or so, and now, executives are seeing the benefits for revenue and efficiency.
“Using a remote-work model, even after the pandemic is over, is a great way to quickly scale your business without too many overhead costs or growing pains,” said Michael Fischer, Founder of Elite HRT. “People can meet virtually anywhere to be trained in their positions and can access more people quicker without having to meet in a central location. This way, your time and resources can be used to improve other aspects of your business, including manufacturing, labs, or other capital.”
Remote work environments are naturally conducive to a quick-scaling business, so don’t hold out on implementing these technologies and policies.
Get Funding in Order
Don’t put the cart before the horse! Before you attempt to scale your business, start with good old-fashioned growth. This could mean getting a boost of funding expands your footprint and leaps you to the next level.
“Regardless of your business’ scale strategy, your growth plan could include hiring additional employees, securing equipment and facilities, deploying new technology, and creating systems to measure and manage results,” said Andrew Bernstein, Co-Founder and CEO of Kinder Beauty. “Cash will be required in order to fund your company’s growth and assist you in implementing any actions necessary to lead you to the next step.”
Once you and your teams are comfortable with steady rates of growth, then you can make scaling a higher priority.
With pressures from investors and shareholders, nearly every small business owner is incentivized to grow fast and scale every possible revenue source. However, this can backfire if you lose sight of what your company does best.
“Scaling your business all comes down to what market you are in and what you specialize in,” said Michael Scott Cohen, CEO of Harper + Scott. “For example, if your company does something extraordinarily well, then growing out of that space because you want to scale can be quite a risk. Key thing to remember when scaling is that you are not losing your identity as a company.”
Rather than compromising on core values for quick gains, take the longer and more proven road to scaling and success.
Keep it Sustainable
A quick-scaling company is exciting to watch, and even more exciting to be involved as a team member or owner. Remember to play it safe during times of rapid growth and not derail your chances in the long run with poor short-term decisions.
“In order to effectively scale your business, you need to make sure you are doing so sustainably and not getting in over your head,” said Eric Wu, Co-Founder and COO of Gainful. “Sometimes it’s better to create scarcity in the short run so people will be excited for your product as you continue to expand. At Gainful, we hired the majority of our company during the pandemic and experienced triple digit headcount growth, all while we were completely remote. We will have to take that into consideration when we slowly transition into offices, or how much of our new staff will transition at all. In order to not crash as a company, it’s important to manage that quick growth with thought and precision.”
To avoid the endless hamster wheel of growth, set clear goals for scaling and slow down expansion in favor of greater profit margins.
Everything in Order
Every business has weak points, but it takes honest and courageous leaders to acknowledge those areas that need improving. This is doubly important when it comes to scaling a business and fortifying the game plan from every angle.
“Scaling and growing your business requires sound preparation,” said Jeff Henretig, President at Apothecanna. “Sometimes, simply getting back to the basics is the best way to prepare for the challenges ahead. Identifying your business’ key strengths and the aspects of your business that aren’t as strong will give you a good idea on which areas to further develop and those you need to improve in order to scale your business successfully.”
Need a fresh set of eyes on your business plan? It never hurts to get a second or third opinion when plotting a big move.
It’s natural to focus on bookkeeping and resource allocation in a digital world, but don’t forget to talk logistics with your peers and team members when aiming to scale. There are still physical necessities and limitations that must be addressed for your company, no matter how you make money.
“Have a tentative plan in place before scaling up, so the transition between a small to a mid-sized company and beyond is easier on you and your employees,” said Cody Iverson, Co-Founder and CEO of VisCap Media. “This plan can include location of offices, how big of space will you need, manufacturing locations and costs, and even how many employees will be commuting and how many will be remote positions. Are you going to meet in person with all your employees, and if so, where? Are there specific logistics that need to be worked out now before they become a bigger problem? Questions like these are good to bring up and discuss as soon as possible, especially if you think your business will scale up quickly.”
You might find that you need to go back to the drawing board and rethink logistics so that you don’t run into more serious problems around the next corner.
What is motivating you to grow your company aside from the possibility of a bigger paycheck? That’s a worthy pursuit, but it may not sustain your efforts to grow and scale in the smartest way possible.
“Companies that grow for the sake of growth or that expand into areas outside their core business strategy often stumble,” said Jamie Dimon, President and CEO of JPMorgan Chase. “On the other hand, companies that build scale for the benefit of their customers and shareholders more often succeed over time.”
Identify the reasons why you want your company to grow, and don’t let those priorities fall to the wayside as you undertake your next projects.
When setting goals, specificity is your best friend. Avoid vague statements about revenue growth and efficiency – use clear terms that require clear plans to achieve.
“Focus on where you want your business to be and don’t base decisions on where you currently are, but rather on what you want your business to become,” said Jordan Nathan, Founder and CEO of Caraway. “You can start by having definitive objectives. It is important to understand the ultimate goal for your business, particularly what company you need to be.”
If not everyone in your company can clearly understand your objectives, they may be too general or not rooted in reality.
Your sales strategy might need revisiting if your goal is to boost revenue without spending a significant amount. The more production you can squeeze our of your people and process, the easier it will be to scale.
“Businesses rarely come up for air to re-evaluate how they are selling,” said Tiffani Bova, Head of Global Customer Growth at Salesforce. “This means that current sales practices, process, and organizational structure may in fact be hindering their growth more than any external factor they believe they are facing.”
An efficient sales approach is among the most important aspects of scaling a business, so don’t leave it to chance.
The path to growth is not going to appear with a big flashing arrow overhead telling you where to go. You’ll need to pick a starting point and proceed with a mix of intuition and information.
“Scaling your business at first can seem difficult due to the fact that most do not know where to start,” said Aidan Cole, Co-Founder of Nailboo. “The first thing I would do is look at the overall landscape of the business and see where you can improve and where you are struggling. Once you have identified those two areas you can begin to plan. Let’s say for example your marketing budget for the month is 3K, and your rate of return is 5K. This would be an area I would scale up because it is having a net positive effect on the business and is bringing in actual revenue.”
You can always change tack or shift priorities around down the road. The most important step is the first one – just get started somewhere.
Use the Right Tech
What technology is responsible for the most ROI in your business, and what tech could you do without? Running this type of audit can help you make better decisions about which solutions to implement next as you scale.
“Leveraging software and technology systems is a great way to help scale your business,” said Steve O’Dell, Co-Founder and CEO of Tenzo Tea. “Automation is one system that can significantly benefit your company, one of the most obvious benefits being time. Implementing automation typically enables you to have more time to focus on broader strategies, new ideas, and business growth, allowing an increase of output without necessarily adding any resources or costs.”
The right tech can take your company to the next level while the wrong choices can backfire hard. Do your research and get some consultation if need be.
Don’t Go Backwards
It’s always tough to watch a business plan go awry, especially when it means regressing instead of growing. Scaling requires risk management like any other business function, so don’t get greedy.
“Most of the time if someone wants to scale their business it is because they have reached a point where they can no longer grow and have mastered their current model, said Sean O’Brien, CMO of Modloft. “The idea of scaling a business is exciting, but has to be done right or you will go backwards. Lay out a plan of action, within that plan list exactly why you want to scale, what it will cost and set a deadline for completion. You want to be precise when you are scaling.”
Remember that maintaining your current state of success isn’t always bad. In fact, it’s necessary to keep an even keel when plotting a big jump forward.
Business owners are so caught up in the daily grind that they often forget to evaluate the progress of their companies on a macro scale. Zoom out and use whatever analytics engines are at your fingertips to track trends and patterns.
“Investing wisely in technology can make it easier to scale your business,” said Bill Yates, Executive Vice President of Velociteach. “Most companies today run off of multiple systems. Those systems must work together in order to help your business operate more efficiently and at lower costs. Therefore, it’s crucial to constantly evaluate the systems your company uses to ensure they are not only saving you time, but also money. After all, time is money.”
Watch how all the pieces fit together from the top down and you might experience some useful realizations.
Brand New Business Plan
You mapped out a business plan before your company ever existed. Now that you’ve made some progress, it’s time to do it all over again. Thankfully, you don’t have to start from scratch to scale your business, but it helps to take a blank-slate approach.
“The best way to scale any business is to have a specific process in place that secures a safe growth effort,” said Artie Baxter, CEO of Paperclip. “Review each section of your business including marketing ,sales, assets, liabilities, etc. Make sure you have given every section of the business careful attention before you plan your growth efforts. As you are planning to grow make sure you are putting the necessary finances and resources aside that it will take to launch. Once you have forecasted what it will take and when you plan to take action, then you can officially scale.”
No shortcuts or assumptions allowed when creating a business plan, even if you’re on version ten or twenty.
Keep the Sales Coming
It’s always fun to dream up new business ideas, bring products to market, and expand your roster of support staff and front-line employees. But if those sales don’t keep rolling in, you might find yourself in deep trouble sooner than later.
“Scaling your business means maintaining a solid sales structure in order to generate more sales,” said Patrick Crane, CEO of Love Sew. “By having a sufficient lead flow to generate the desired number of customers, marketing systems in place to track and manage leads, and the required number of sales representatives to follow up with customers and close a sale, you can guarantee your sales will increase.”
Many business gurus suggest starting with sales team expansion before you start picking up the slack in other areas of the company. This seems to be the smartest approach.
Slow and Stable
We all want to scale our business with the snap of a finger, but this can only be made possible with lots of planning and obtaining the resources needed to shift gears. Map it out and take your time so that you don’t end up in the red.
“Scale slowly and properly allocate the necessary funds,” said Katie Lyon, Co-Founder of Allegiance Flag Supply. “Determining the costs to grow accordingly within your budget is essential. Growing too fast and not allowing the proper time to scale will affect how well a small business can manage inventory and keep up with sales. Along with having patience in creating brand awareness and establishing yourself in the competitive market, a small business needs enough cash flow to continue to grow. Budgeting for a slow and steady incline is crucial to succeeding in the end.”
It’s not the most exciting part of business, but savvy financial management will be vital to successful scaling.
Get the Help You Need
There are many ways to secure more funding for your business – what are you waiting for? If you have confidence in your product, a clear vision for growth, and a loyal customer base, most of the hard work is already done.
“I founded Fly By Jing, my modern Sichuan food and pantry brand, in 2017,” said Jing Gao, CEO of Fly By Jing. “I launched my first product on Kickstarter: Sichuan Chili Crisp, an all-natural chili sauce that I developed as a foundation for a lot of my dishes. It was clear that we were ready for a new narrative about Chinese food, one that did not conform to preconceived notions of value, taste and tradition, and it enabled me to scale up production of the sauces I had been making out of my kitchen. Scale up your business by making efforts where necessary to gain these funds.”
Nobody enjoys the process of getting funding and grinding out these early stages of growth, but it’s a rite of passage we all must endure in the business world.
Embrace the Lead Role
If you’re managing a team or even leading an entire business, everyone will be looking your way when it comes time to make tough decisions or sprint ahead on projects. Be ready to step up to the plate and convey confidence because you will need it.
“Leadership and vision are both incredibly vital for scaling your business,” said Maegan Griffin, Founder, CEO and Nurse Practitioner at Skin Pharm. “It’s important to have adequate leadership resources in place to keep everything running smoothly and for leaders to have a forward-thinking vision and efficient processes so that they could come into work daily and hit the ground running.”
A growing business is something to celebrate, but effectively scaling a business is an accomplishment like nothing else! It’s not easy, but it can certainly be done.
Whether your goal is to scale with speed or simply grow at a steady pace, these tips should help move your business forward.