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Scaling Your Business

Business & Commercial

Cheerful online store owners embracing each other in their thrift store. Two happy businesswomen celebrating their success as a team. Female entrepreneurs running an e-commerce small business.
Your path to productivity success lies not in just growing your company but in scaling.

Scaling Your Business

The best way to grow your business is to scale up or replicate your business without adding in top-heavy overhead. Here are some things to consider when you’re thinking about a strategy for sustainable growth and improved productivity from scaling.

 

The difference between scaling and growth

Scaling and growing a business are different things.

Often growth refers to an increase in sales volume with the corresponding bump in infrastructure to manage market demand. For example, professionals charging by the hour usually need to employ more people to do the work for each new client, and they only have 24 hours in a day. Construction companies wanting to expand usually need more heavy machinery. Retailers will open more stores; manufacturers may need to move to larger premises or upgrade equipment to improve capacity.

Scaling a business, however, usually involves taking on an increased workload in a cost-effective manner. To do this, you need a strategy to scale your business that focuses on new revenue and efficient systems. Good examples are tech companies who charge subscription fees such as, Google, where their expenses for serving each incremental customer are almost zero because the raw material is software. The same approximate overhead can handle delivery to 1 million customers or 100 million (accepting more customers may mean an increased need for customer service).

Casting a productivity lends across the argument for scaling gives the exercise extra weight. An agribusiness tends to be constrained by the amount of land they use. It’s not easy to simply double the size of the farm or orchard to double output. But you can improve the capacity of yield, using smart technology, automated picking, robotics for precision planting, drones to monitor livestock, software to regulate feed, fertilizers, and sensors to monitor soil moisture and water delivery.

Your path to productivity success lies not in just growing your company but in scaling.

 

Step 1. Check which products or services are scalable

Audit your business to determine if scalability is viable. Sounds obvious, but if you’re the local café with limited seating, your company won’t be increasing revenue tenfold with the current business. However, this raises the business scaling opportunity to investigate different, profitable business models. For example, your company could wholesale coffee to other cafes, license recipes, sell online to shoppers around the country, or sell franchises.

Industries which typically scale include:

  • Manufacturing, by introducing automated production lines and robotic systems to handle repetitive and labor-intensive tasks, increase production speed, reduce errors, and maybe even 24-hour operation. We tend to think a working day in people hours. We could operate in machine hours which never sleep.
  • Wholesalers and distributors using supply chain management software to optimize inventory levels, reduce lead times, and enhance overall efficiency. Further benefits include reduced carrying costs and fewer production delays.
  • Healthcare services, by reaching a broader patient base without necessarily increasing the number of healthcare professionals with virtual consultations and remote patient monitoring.
  • Educational companies providing online courses, reaching students without the limitations of physical classrooms.
  • Companies offering cloud computing services by serving multiple clients using shared infrastructure.
  • Software businesses offering subscription and license-based models, gaining new customers without significant increases in operational costs.
  • Building or construction using production systems that are modular, with standard components and processes that can be replicated or expanded as demand grows.

Online retail businesses are the obvious example, reaching a global customer base without the need for extensive physical infrastructure.

 

Step 2. Adopt the technology

Technology will make business scaling easier and more efficient while lowering costs, as it tends to remove the need for human intervention to deliver immediately.  Some things you can do include:

Use software for invoicing, sending receipts, tracking delivery, customer queries or complaints, FAQs, and inventory management. Clear the decks of any distractions or unnecessary tasks.

Integrate processes, so you have one primary way of tracking what’s going on. List all the software, physical inventory, job costs or ordering procedures you currently run and find a way to cut down the clutter.

Automate your sales funnel (prospecting, qualified leads, closing and delivery). CRM software solutions make this easier, such as HubSpot and Zendesk. You’ll most probably want to automate qualified leads, tracking, selling, and a robust system to manage sales orders.

Look at your manufacturing, HR, shipping, and other tech systems, including networks and hardware such as servers, computers, and communication equipment.

Software is an easy adoption to improve your productivity.

 

Step 3. Staff up or outsource

Technology gives you leverage, but you’ll still need sales, post-purchase service, and support to accommodate growth. Identify your industry benchmarks to determine a rule of thumb for how many customers one service rep can handle. Sometimes the answer is to outsource or look to partners to help meet demand rather than hire internally (depending on what you’re doing).

A good example is drop shipping, where companies can sell an item online but don’t hold the item in stock, as the wholesaler ships directly to the customer. It’s one way of scaling online businesses (like Amazon and Trade Me) without needing to focus on storage solutions.

If vital skills are missing amongst your staff, look at upskilling through training or hiring someone with the knowledge, ability and experience you need. With scalable business growth comes the need for advanced skills such as dealing with data, delivery and supervising complex computer-based operations.

 

Step 4. Measure everything

Scaling a business often requires instant data to know when to change what you’re doing fast, especially if the business gets the speed wobbles. For example, software companies use monthly recurring revenue (the number of sales from subscriptions each month). Then, decide what key performance indicators you want to monitor, such as online queries, leads in your pipeline, conversion metrics, or margins. You could also measure the growth rate of revenue or customer base month to month.

In addition to these standard measurements, you may have sector-specific metrics you want to track.

 

Step 5. You have enough capital or resources

The last step is to be confident you have enough capital to fund your rapidly growing company or have the internal capability and capacity to deliver. Many companies become stuck when their sales volume increases ten-fold. Before you begin scaling, calculate cash flow scenarios predicting different levels of growth to identify what strategy you should implement for success.

 

Summary

Scaling your business doesn’t come without its risks, but the productivity rewards can be significant. For example, improved operating efficiency, greater market value, broader brand reach leading to new customer acquisition and more sales, and, of course, better productivity leads to improved profit margins.

 

Next steps

  • Talk to your industry contacts or other business owners to identify how they integrate their software.
  • Find out from similar businesses which CRM software they use to manage leads.
  • Build internal capability through your people or technology.