There are hundreds of ways to scale your business, and no doubt you’ve already researched several articles yourself. Most likely, you’ve read a lot about famous CEOs who made huge risks that paid off tremendously. But what to do if you’re not one of them? What if you don’t want to put your brand on the line to be able to scale?
Well then, this is the right article for you. We set out to show you the safest, most effective ways to scale your business. Keep on reading to see what it takes to make the right expansion choices in today’s market.
When to Scale?
The number one piece of advice that plays both into effectiveness and safety is knowing WHEN to scale your business.
Overall, there are three things you need to address before making the decision:
- Observe the Market
- Is there a market shift and you need to keep up?
- Are the customer demands changing?
- Consider your Fulfillment Capability
- How well are you meeting customer demands?
- Is there a shortage in your inventory?
- Are you unable to meet your turnaround times?
- Are There any Business Constraints?
- Do you lack team members?
- Do you need more space?
Answering all of these first should give you an idea if the reason for expansion is a viable one.
Know Your Endgame
Every good business owner, whether they own an online printing company shop or a software development company, needs to know their endgame. There needs to be a single goal you will work towards. Why?
Because every new step will have to work towards that endgame. And that alone makes the decision-making process much easier. Decide if you want to turn your business into a multimillion-dollar one, build a better product, expand internationally, or something entirely different. Only then will you know which direction to take when scaling.
Safe scaling is best reflected in taking small steps. If you already know what growth-related changes you’ll implement, choose a steadier tempo. What you don’t want is to scale too fast, because even if you find affordable, effective ways, it can all fall through. You’ll spread yourself and your team thin by doing too much too quickly.
Try introducing one strategy at a time. Set a timeframe during which you’ll let the change set in and track how it affects the business. That way you can see if it was beneficial for your growth or not. It’s a great way to pull the plug in time if something doesn’t work out.
Take Calculated Risks
Mark Zuckerberg, the founder of Facebook had said:
“The only strategy that is guaranteed to fail is not taking risks.”
And while most entrepreneurs are in the same boat with that statement, plenty more like to add one caveat: be careful with your risk-taking. You may be offered opportunities that yield high rewards but also require a big leap of faith. In those moments, you need to step back and analyze your current position.
Consider how much you will have to give in order to reap the rewards. Will the payoff really match the time and resources invested? Make sure you know what you’re getting into, instead of falling for the bells and whistles of a brand name or a person. Getting an outside opinion is always good in these cases, so consult with your team or the trustworthy right-hand man.
Know the Kind of Capital You Need
A solid scaling strategy plan needs to have one essential thing above all others – the financial breakdown. You absolutely must know how much this expansion will cost you.
If you’re moving to a bigger office, think of the price of utilities, location, and office space maintenance. Branching out to a new project? You’ll need research and development, more efforts poured into marketing, etc. Jot down every aspect of the business’s expansion, noting how much it will cost. That way you will be able to make decisions regarding financial backing: whether you’ll bootstrap, crowdfund, or look for investors.
Know the Pitfalls
No matter how well you plan out the scaling process, there is a good chance that something will come up to derail it. It can be poor customer feedback, unexpected bugs, investor problems – you name it. While you don’t have a crystal ball, there is a way to be prepared. You need a good financial advisor by your side. Since everything in business is about money, it’s your other most valuable resource, right next to time. Which means you have little of it to waste.
Hire a tax expert (if you don’t already have one), and have them inform you of the possible financial issues and roadblocks the scaling could bring you. They could also be of great help in advising you concerning the speed and scope of expansion.
Get Financially Creative
Since any kind of growth requires financial backing, the very first thought is to find investors. However, Tim Ferriss, the author of the bestselling book “The Four Hour Workweek” advises against it. At least in the beginning.
He argues that investors usually expect a tenfold return on their investment. This can cause a lot of pressure during the early stages of growth. Not only do you have to think about scaling cautiously, but you also need to keep the investors in mind. Ferris urges trying bootstrapping at first, crowdfunding, or taking bank loans. After you’ve secured the first few scaling milestones, then try introducing investors into the strategy.
Wanting to scale your business safely is more than just making low-risk decisions. It’s about knowing where you currently stand, where you want to be, and how to properly gauge the obstacles in between. With this article, we wanted to emphasize the need for careful strategic thinking, and valuing second opinions. Safe and effective growth requires patience, cunning, and a little bit of moxy. After all, if you really want to become a serious, well-respected brand, then practice making financially informed choices, and assessing risks before you take them.