Small Business Scaling: How To Get The Timing Right
Setting goals is natural for an entrepreneur, even if you do so subconsciously. You started a business, hit milestones along the way, and then eventually you start to wonder if you can scale it.
If, perhaps, it can evolve into something beyond just you (whether that’s with automation, or teams of people helping you build it out).
The scaling myth
The thing is, bigger is not always better. Many companies, with the intention to hit large milestones, will start taking on more clients or selling more products. However, at the same time, their expenses will increase at a similar rate.
But if your expenses increase at the same rate as your profits, your take-home pay will stay the same. You essentially start doing more work, processing more sales, but bringing home the same amount of money.
This is what happens when you grow or scale without a plan. You make more money, but you also spend more money and end up at the same place where you started, except with more clients to manage and more stress on your plate.
The businessman and the fisherman
We can’t talk about scaling without mentioning the story of a successful businessman that meets a fisherman. The businessman, upon meeting this fisherman, sees the potential for growth, for the fishing company to scale. And yet, the fisherman is working, just enough, and otherwise relaxing on the beach watching the sunset, his pole resting in the sand.
So the businessman suggests that the fisherman get busy with work, that he should get more boats, buy bigger nets, and hire more people.
The fisherman, though, kept asking what the reward would be.
From the businessman’s perspective, he saw the potential for more work and therefore more money, from which the fisherman could spend his days idling at the beach.
But the fisherman saw the dilemma — he already had that life. Scaling his business would mean more work and less time, between now and retirement, to do what he enjoyed.
Sometimes, it’s not necessary to grow, if you have the quality of life you desire.
What small business scaling looks like
Small business scaling involves growing your business (hopefully) in a careful, precise way — like hiring more employees so you can take on more clients as a web designer, or creating more products to increase your sales.
The scalability of your small business
If your business is steadily running with a stable income and happy clients, but with a desired quality of life that you have yet to achieve, that could mean it is time to scale your business.
Here are some ways to grow, reliably so.
How to scale your business
Create a growth plan
The prospect of scaling your business can be intimidating. But breaking down the process into achievable parts can ease the stress and streamline the steps to getting it done. Creating and then referring back to an outline on how to scale your business is essential. All growth plans should include, at least, the following:
Your business’s current status, competitors, target market, as well as KPIs (key performance indicators). KPIs are, in other words, measures of performance. What are the profit margins and income goals you have in mind?
Locate growth opportunities. See what other competitors are doing that you might not be doing yet or find gaps in what is being offered in the current market. Determining your business scalability, and how much your business can reasonably be expected to grow, is key.
Figure out what you would need to achieve those growth opportunities, be it more time, money, or employees.
Use technology to your advantage
No business can last today without being in tune with current technology. But, there are always ways to improve your use of technology in favor of better efficiency. Customer relationship management software will help with the day-to-day management of customers and leads. Looking into the latest in accounting software can save so much time and money too.
This is a fantastic way to lessen the amount of time you spend on admin work, without largely increasing costs by hiring an employee to do the same work.
Build, invest in, and expand your team
As the runner of a small business, you only have so much time. Small business scaling, almost always, will involve hiring additional team members or investing in training your current employees and expanding their duties.
Outsourcing to part-time employees and contractors is increasingly popular among companies as work-from-home practices expand. Many of your competitors will be relying on contractors and other specialized resources. Considering them will help you to stay competitive. There is also much less overhead and security to be found in temporary forms of employment if you are unsure about the amount of business you will be taking in as your business grows.
Platforms like Fiverr and LinkedIn are great resources for finding the right people.
Understand your cash flow management
As simple as it sounds, having a clear idea of where your business’s expenses and income are coming from, how much, and when is fundamental to small business scaling. Debt, poor credit, and other pitfalls can otherwise plague a business.
Work on customer retention
If you don’t already know, it is much, much easier to retain customers than to find new ones. Relationships are key. Customers will be loyal to a business that treats them right — with care and no-nonsense treatment. As your business changes, aim to provide your customer base with reliability.
Scaling your business
Small business calling properly means retaining customers, managing cash flow, expanding your team, and investing in the right technology. Creating a plan for your business’s growth will allow you to do so safely, and with less stress. If you’re interested in other ways to increase your bottom line, check out our list of passive income ideas for 2024.