Scaling your small business means planning for sustainable growth and taking the leap at the right time. It will include strategy, business plan analysis, and funding, as well as new staff, technologies, process, and partners. As you can see, scaling is more than just selling more, because at some point you’ll hit a barrier of not being able to fulfill and deliver on more orders because you don’t have the capacity or the capability.

Scaling allows your business to accommodate for growth now and in the future.

Four signs it’s time to consider scaling your business

  1. Turning down business opportunities. In the beginning, it was necessary for your business to accept and accommodate every customer that could be managed, because you didn’t have an established client base. Now, over time, part of your sales capacity is taken up with repeat business—which is great, but it probably means you’re not able to take on as many new clients as you would like. You don’t want to remain in this position, because new business converts to repeat business, which is at the heart of business growth.
      
    If your business can no longer both support its existing client baseline and grow its customer network, it could be time to scale up. Client rejections could be based on lack of system support, lack of inventory, lack of employees, or not enough time to deliver quality service.
      
  2. Surpassing previous goals. If you are consistently attaining or surpassing your business goals, scaling up could be the next step. Your new goals should be attainable but challenging. And maybe scaling up means adding entirely new goals, not just an increase on previous goals’ metrics.
      
  3. Maintaining strong cash flow and repeat sales. Strong, stable, predictable cash flow and repeat sales are good signs your business has hit its maximum potential at its current scale. A narrow ratio between best results and worst results is often a result of a healthy consumer base and evidence of repeatable sales.
      
  4. Your business concept is proven. Having proof that a concept is sound, a product will sell, and the marketplace can sustain your business is a must before considering scaling up your operations. You want to identify and avoid any pitfalls, like a premature product or saturated market, before moving forward.

Five steps to scaling your business

  1. Evaluate and plan. Just like when you first launched your business, you’ll need to identify what you need to increase sales and fulfill those sales without compromising the customer experience. A detailed sales growth forecast should be broken down by number of new customers, orders, and revenue you want to generate. The more detailed, the better. From there, do a similar expense forecast that includes adding technology, people, infrastructure, and systems to handle new sales. You should then have an idea of the expenses you’ll need to invest in to meet your new sales forecast.
      
  2. Find the money. The thing about scaling is that it almost always requires money up front to get the infrastructure and inventory in place to handle an increase in sales. Where is that money going to come from? You might have a portion in savings from previous years’ profits, but chances are you’ll need a business loan or other line of credit to secure the needed capital. See what your current banking institution can offer you, but also don’t be afraid to look into other sources, like a local credit union.
      
  3. Secure more sales. It’s one thing to believe more sales are out there for your business, it’s another to put the sales structure in place to generate and accommodate them. Do you have:
      
    1. Enough lead flow to generate the desired number of leads?
        
    2. Marketing systems to track and manage leads?
        
    3. Enough sales representatives?
        
    4. A system to manage orders?
        
    5. A billing system and a receivables function to ensure invoices are collected on time?
        
  4. Invest in technology. Investing in the right technology allows you to gain economy of scale and more throughput with less labor. Part of this is automation, which can run entire processes more efficiently, at lower cost, and with minimal labor. It also empowers you to track a range of business data that will help you stay profitable and adjust as you grow. Systems integration is essential. Everything from your CRM, marketing automation, POS, inventory, accounting, and shipping technology should talk to each other. Your hardware, such as servers, computers, printers, and telephony equipment may also need upgrades to handle higher sales volume.
      
  5. Hire more staff or outsource. Look at industry benchmarks to get an idea of how many sales and customer service reps, IT support, inventory specialists, delivery personnel, HR, etc. you will need with increased sales. Will you need more managers or new levels of management? Also investigate how cost effective it would be to outsource roles like HR, accounting, IT, and marketing rather than create brand-new in-house positions.
Go to main navigation