You start your company with a fantastic product that customers want and are willing to pay for. And as your business continues to grow, well-meaning people begin telling you that you need to find ways of scaling your business operations and growing your business even further.
A lot of companies have chosen to downsize, and maybe that was the right thing for them. We chose a different path. Our belief was that if we kept putting great products in front of customers, they would continue to open their wallets.Steve Jobs
In business, many people will pay lip service to the term “scaling your business”. But what does that really mean? And how do you know if you are doing this in your own business? The term “scaling your business” is used frequently in business but it can have different meanings depending on the context it is being used in.
When a business is able to scale their operations, this means that they are able to handle a growing amount of work or sales in a capable, cost-effective manner. This article will look at what it means to scale your business and the difference between growth and scaling your business. It will also look at five different ways companies can scale their operations to continue to be competitive in the marketplace.
What Does Scaling Your Business Operations Mean?
Imagine that you are a service-based business who has just signed a new client. You increased your revenue by signing that client but now you don’t have the resources available to fully serve them. So you hire a new employee to help your business manage the workload more effectively.
Yes, your business may be growing but it isn’t scaling. Although you grew your revenue when you signed on a new client you also increase your expenses at the same rate. The reality is, if every sale you make requires the same amount of time and effort as the previous sale then your business model is not scalable.
Your business scales when it can cope with an increased amount of work while maintaining or increasing its efficiency. When it comes to scaling your business, here are some great predictors of success:
- Predictable revenue
- Subscription-based services
- Having diverse income streams
- High customer retention rates
- Creating a value ladder of products to offer for your customers
According to this article in Fortune, companies scale their business when their revenue increases while their operating costs remain low. If a company increases their revenue but increases their costs at the same rate, then that business is not scaling. But how can you focus on quickly scaling your business while still building a strong organization?
5 Ways You Can Scale Your Business
Now that we have defined what scaling your business means – the question becomes, how can you do this in your own business? The best way to scale your operations is to identify the aspects of your business that can be duplicated in a quick and cost-effective manner.
Here are five effective, actionable steps businesses can take toward scaling your business:
Entrepreneurs must have the desire to scale
Most entrepreneurs want their businesses to grow but many don’t dream of their business growing past a certain point. According to a report by Barclays, many entrepreneurs lack the fortitude and ambition to scale when they are in the startup phase of their business. If scaling your business is a priority, then you must develop a plan and action steps for how this will be achieved.
Find ways to automate your processes
If you take a hands-on approach to your business, it may be very hard for you think about scaling operations as part of scaling your business. This is because, in order to scale your business, you have to find ways to automate your processes. In business, flexibility and growth do not necessarily go hand-in-hand. Look at investing in IT support systems and ways you can delegate responsibility for certain necessary tasks.
Identify your competitive edge
What sets your business apart from your competitors? In order to scale your business, you need to clearly understand what sets you apart in the eyes of your customers. You also need to understand the core strengths of your business so you can invest in focused growth.
Focus on the right things
Entrepreneurs that are not able to scale their operations are usually focusing on the wrong things in their business. Yes, there are daily tasks within your business that must be completed. But you must begin to focus on the key activities that will move your business forward in a focused and strategic way.
Build your network
Most entrepreneurs understand that developing your network is key to succeeding in business. Yes, you also have to continue to develop your skills and clearly understand the value and expertise that you offer your customers. But as this article in Forbes points out, building the right connections is key to effectively scaling your business and long-term growth.
Conclusion
For businesses, the path to success is not found in simply growing but in scaling your business. To effectively scale your business you must be achieving exponential growth while keeping your costs fairly low.
But truth be told, scaling a business requires a whole new level of skills and systems that many entrepreneurs can’t fully anticipate. For this reason, some business advisors caution against scaling too quickly. According to Startup Genome, over 90 percent of startups fail due to self-destruction, not competition.
As you begin scaling your business, you may find yourself having increasing expenses, customer support issues, and miscommunication between staff members. So in short, a bad process will only be amplified once you begin trying to scale.
This is exactly why we developed Tallyfy’s repeatable workflow app. In order to scale your operations, you must have repeatable processes for every role in your business. With Tallyfy, you can easily define and measure every step of your workflow. The tracker will allow you to identify problems, progress, and delays. And because we know that not all processes follow the same path, it is easily adaptable.
Check out this customer story to read about how one of our customers was able to streamline their processes and scale operations by using Tallyfy’s app. They were also able to gain clarity and reduce bottlenecks.
Related Questions
What are examples of scaling business?
Consider McDonald’s – They grew one little drive-in into a worldwide company using a repetitive method for making hamburgers. Another classic is Netflix – they went from mailing DVDs to delivering content over the Internet all around the world and didn’t have to grow their staff at the same rate as they did their customer base. Software companies like Zoom or Slack exhibit ideal scaling — they can take on millions of new users without needing thousands of new employees. The common theme in all these instances is doing more with the same resources.
How can you scale up your business?
Begin with capturing and trying to automate your core processes — this lays a solid, scalable foundation. Leverage technology and software as much as possible in order to take repetitive tasks off the table for your team, so that their time is free for the more important issues. Create things that function without your constant involvement, e.g., self-service customer support or automated onboarding. Concentrate on solutions which are outgrowing your costs – this may be digital products, subscription models or leveraging partnerships to access new channels.
What is the difference between growth and scaling a business?
Growth is putting resources on in direct proportion to putting on revenue – not dissimilar to the addition of one new salesperson and one new client. Scaling is much smarter — it doesn’t mean having to necessarily hire more people but instead growing the revenue much more than the amount of resources needed. Well, imagine a software product for which you can receive 1,000 new customers without having to employ 1,000 new workers. Growth and scaling are not the same: Growth is linear, scaling is exponential — and that is why tech companies can become so valuable, so quickly.
When should I start scaling my business?
Begin scaling once you have a proven, repeatable business model that is reliably profitable. What you need are stable cash flow, a high percentage of truly satisfied customers, for whom you have the honor to do repeat business, and processes that are superior for your core operations. Monitor for signs that might include turning away customers, your team feeling stressed or operations getting messy. But if you aren’t waiting until you have everything perfect—if you’re actually solving real problems and making sales—then it’s time to start thinking about scaling.
What are the biggest mistakes when scaling a business?
So Many businesses just grow too fast with weak base/ground – compare, run before walk. The second mistake is to throw money at the problem, rather than the creating systems to solve them. Some companies put their focus on acquiring new customers and forget to cater to their existing ones, or they expand so quickly that they don’t put proper training systems in place for a large group of employees. The secret is to grow thoughtfully and systemically, to not just grow for the sake of growth.
How do you know if your business is scalable?
Watch for signs, such as if you have repeatable processes that do not require your near constant attention. Is your product or service deliverable reliably without you having to go over every detail? Do you have good margins that aren’t going to contract as you grow? Is there work that can be offloaded onto technology? If your customers keep returning with relatively little effort on your part, and if everything clicks smoothly along even while you’re not there, you are likely ready to scale.
What infrastructure do you need to scale a business?
What you need are solid mechanisms for dealing with customers, managing finances, and running your operations. This tends to include quality software for customer relationship management (CRM), accounting and project management. You also need clear procedures that anyone can follow, strong data security and scalable technology won’t crash under pressure. Think of infrastructure like blocks in a tower game – the blocks should be strong enough to support a load much heavier than they currently bear.
How do you scale without losing quality?
Write comprehensive standards and procedures to preserve your quality at growing any amount. Leverage automation to avoid the mundane, but retain the personal touch when it really counts. Train your team well and have clear rules for everything you do. Begin with a scaled-down approach to this problem and try things out before making them widespread. Remember – it is better to grow a bit slower and keep your quality then to grow fast and ruin your reputation.
What role does automation play in scaling?
Automation is a bit like a superpower for scaling: It allows you to do more work without adding more people. It can handle everything from customer-support emails to social-media posts to employee onboarding. The best part is that automated systems also work as an always-ready standby tool, but they never get tired, and they don’t get things wrong. Begin by automating easy, repetitive tasks and slowly scale to more complicated process as you scale up.
How do you fund business scaling?
Think about a few different sources of funding — reinvesting revenue, applying for a loan from a bank, looking for investors or trying crowdfunding. A few businesses scale through partnerships or licensing deals. The trick is to match your funding to your scaling strategy – if you are scaling by means of technology then venture capital may be a good fit. Now, if you are gradually scaling up, it might be wiser to use profit. After all, the best source of funding is often happy customers who buy more.
