How to Scale a Business: The Focus and Scale Method
According to the Startup Genome, 90 percent of internet startups fail. When analyzing the leading indicator of what causes business failure, their research team found: “70 percent of startups scaled prematurely along some dimension.” In essence, this study proves scaling a small business in an unfocused, unsustainable way gives you about a 10 percent chance of success.
Having innovative ideas is a great quality to have as an entrepreneur, but when it comes to scaling, focus is vital. Navigating through 10 different ideas and projects eats up profits and keeps the team from growing at a faster rate. At best, this leads to disorganization. At worst, this leads to the end of your organization.
If it seems companies like Google, Netflix, Pinterest, and WhatsApp have some kind of secret formula that allows them to scale with ease, they do. The good news? Follow The Focus and Scale Method below to replicate the process large-scale companies like these use for sustainable, long-term growth.
How to know when it’s time to scale a business?
If you are able, there is never a bad time to think about scaling your business. You will want to be prepared to scale as early on in your incorporation process as possible. Increasing your revenue only by adding more resources with a corresponding increase in costs is likely to cause stagnation. The effort it takes to grow often simply isn’t worth the modest financial gain. Scaling, however, increases your revenue significantly without the same operational costs.
Businesses need to implement strategies to increase revenue while also increasing efficiency. You can increase your company’s value by increasing the efficiency with which you can bring in new revenue. Most companies, though, will notice it’s time to focus on scaling when they are not a start-up, but they also haven’t reached the point of being a large corporation either. The decision will have to be made between growing at a regular rate or faster scaling. Scaling can be difficult, as companies will want to keep overhead down so they have a chance at lasting, but they also need to ensure their current resources and efficiencies are enough to successfully complete the workload.
Some key points to look for that it’s time to scale:
Best tips for scaling a business
1. Building an impressive skill set
It’s quite clear that scalability demands an expanded skill set. Entrepreneurs need to build a team with a diverse skill set. It is important that your team understands your business goals and strive to achieve them on time without compromising on quality. It is only possible if they hold command over an impressive skill set.
2. Networking and Collaboration
The mindset that promotes growth and scalability must extend itself to collaborations and partnerships outside the business. Developing a strong PR network is the key to success in the long run.
You should build a network of collaborations with people and organizations, for instance, service providers, sales partners, suppliers as well as customers as they may be willing to assist you by providing important market statistics. Such engagements may take the form of a formal alliance and when that happens, scalability becomes achievable with minimum effort.
3. Investing in Technology
When it comes to scaling a business, technology makes things easier and inexpensive for entrepreneurs. You can gain massive scalability with less labor if you invest your time and money in technology wisely.
Businesses today don’t run on a single system, instead, system integration is a prime aspect for scalability for most businesses. There are numerous systems that an entrepreneur adopts in order to enhance effectiveness. Following are a few commonly used technology systems that you can set up to achieve your business scaling goals.
- Customer Relationship Management system (CRM): Enhances user data and also increases team collaboration (especially between marketing and sales teams).
- Improved and efficient manufacturing machines (for manufacturing businesses): For increased production efficiency to meet demand.
- Inventory Management Software: For tracking inventory levels, orders, sales and deliveries.
- Accounting and Financing Software: They provide timely and accurate reporting facility, allowing you to better use the information to make financial decisions.
- Human Resources Management System (HRMS): It allows you to manage people, automate manual tasks, and sort information according to your needs.
- Digital Marketing Tools: Allow marketers to create, test and measure their marketing campaigns with effectiveness.
4. Establishing Standardized Processes
You cannot scale your business unless you’ve established processes and procedures that facilitate streamlined operations. You must ensure the appropriate delegation of these repeatable standard processes to simplify growth of your business.
By aligning and standardizing your core functions, you’ll be able to quickly build a solid foundation for the long haul. Instead of focusing on short term fixes, you will be able to accomplish larger business goals with ease.
5. Automating processes
Automation allows you to run repeatable processes smoothly at a lower cost and more efficiently by minimizing your manual work. It allows entrepreneurs to improve the delivery time of any task. It further reduces the risk of human error as well as saves a lot of time. However, automation doesn’t necessarily mean integrating a mechanical system into the process and laying off employees.
Here, automation is the integration of a system into a process through which the number of checkpoints decreases. Hence, aside from quality assurance, automation increases the rate (yield) at which raw products reach their final phase.
For example, you can automate your welcome process while onboarding a customer after they register with your business. Once a customer signs up for your product or service, you can send them a simple welcome email in order to build a healthy relationship from the start.
6. Find your A-Team or Strategically Outsource
When it comes to scaling your business, it’s important to identify the right time to hire more team members or simply outsource the tasks to a third party organization or freelancers.
For instance, during the initial stages of a business, you have a few members in your core team who multitask. However, as the business continues to grow, it hires experts in order to improve and streamline processes so that the core team can work on scaling the business while sustaining quality. You must ensure that customer satisfaction is not at risk, or else, you will regret hiring the wrong team.
7. Understand what your customer wants
These 10 key points will allow your team to understand what your customer really wants. Also, it’s a good practice to look at the growth of your business in the perspective of your customers. Your internal team must work along in focus and set milestones of the growth for your business.
Mistakes to avoid when scaling a business
- Scaling without a foundation
- Focusing too much on marketing and selling
- Not listening to your early customers
- Hesitation to recruit employees with a better skill set
- Scaling too quickly
- Ignoring your people and culture
- Compromising your long term business plan for short term growth
- A wrong balance between gross revenue and profit
- Not understanding the economic drivers of your business
- Being stuck into the product road map without improvisation
- Unable to identify and approach different kinds of customers
- Refusing to implement change management principles within
- Believing that your investors will let you play your own game
- Not documenting your business processes
- Scaling a business is an organic process
- Running out of resources while scaling the business
- Risking customer experience
- Focusing on too many goals at the same time
Scaling a business truly begins from its ideation stage. You must have a clear idea of where do you want your business to be 10 years down the road. With the light at the end of the tunnel, everything will connect and scaling your business won’t be as stressful as you might’ve thought.
By implementing the above-mentioned strategies, we cannot guarantee that your business will boom however, we can assure that these strategies are tried and tested, they will certainly help your business to flourish and grow in the right direction.
Needless to mention, it’s also important to anticipate things that can go wrong, because they will, however, you don’t have to worry about them. Just keep the bigger picture in focus and don’t lose that light at the end of the tunnel.
Every entrepreneur tends to face various challenges along their journey but it’s wise to take preventative measures. With appropriate planning, right team members and a mindset to advance forward, you will scale your business with little to no trouble at all.