How to Scale Your Small Business
In small business there are few bigger questions than the question of how and when to scale your small business. It’s a question that plagues all small business owners often more than once in their business’ life cycle.
How do you know when it’s the right time to scale? What should you consider before beginning? And what processes should you follow?
Knowing When to Scale
Before deciding to scale your small business, you need to look for the right signs that it’s time to scale. Scaling too early can only lead to disaster and bankruptcy. On the other hand, you might be ripe to scale your small business if you find yourself in the following situations:
- You’re turning down potential business. If you have to consistently turn down potential business due to a lack of inventory or staff.
- You’ve accomplished your established business goals earlier than anticipated.
- You have regular and repeat customers or clients.
- You’ve crunched the numbers and it’s a low risk scenario.
If you’ve reviewed this list and thought, “Yes, this is me”, it might be time to scale.
Understanding and Improving Your Product
Before you scale your small business, it’s time to review and improve your product. Is it the best in the business, do you have a difference and what can be done to improve your current product or service? Asking yourself these questions will help you to establish what steps can be taken to improve the success and potential of your business ahead of scaling.
Knowing Your Customer
Knowing your product is one thing but do you truly understand your customer? Take some time before launching and scaling up your business venture, to complete market research on your customer base.
If you are thinking of physically scaling the business by opening a new storefront, then in-depth market research in the new location is going to be required ahead of your launch date. If you’re considering adding additional staff and products to an online model, you need to make sure you’ve established a position in that online market, and you have untapped customer bases to market to.
Go first to your current customers and get some relevant and extensive feedback, what do they like about the product or service? What don’t they like? What else are they looking for?
Then approach possible future customer bases, either by engaging a company that can source and report on market research for this potential client base or by doing the grass roots approach and hitting up people in the area or finding untapped online markets through groups and communities and getting their feedback there.
Understanding your customers and potential customers will help to shape your plan for scaling the business.
Planning the Process
Rome wasn’t built in a day, scaling your business is a long process. You should begin with the earlier steps, look at whether it is time to scale your business. Then start the process of reviewing your product and completing market research in the new area or additional clientele base you’re looking to sell to.
After this you need to establish your plan for scaling the business. Complete a detailed sales forecast based on your market research and design and budget for the estimated cost. Establish how long you are willing to take a loss on the project, so you know how quickly you need to be turning a profit.
Think about your marketing. How are you going to penetrate this new market you’ve found and what are your budgets for pre-launch and post launch activities? Generating hype about moving into a new retail space or launching a new product is essential to build brand awareness and capture that new market so don’t skimp on this step. Then it’s onto the money situation.
On the Money
Scaling a business is going to be expensive, no matter which way you swing it. Most small businesses don’t even turn a profit for the first year. According to Forbes it can take 18 months to 2 years for most businesses to start turning a profit.
But that means if you’ve already reached profitability, you may be doing better than the majority of businesses. Even so, this may still be a financial hurdle you’ll need to get over. Renting new retail space or designing and manufacturing a new product is fraught with financial stresses and unknown factors.
If you’re ready to scale, you will have to have a clear financial overview and the funds to back up the project. If you don’t have the funds you can look to involve investors or get a business loan from your bank. However, make sure you’re very clear on your budgets and projected growth and sales, this is going to be important to your financial stakeholders.
Recruiting the Right Staff
If you’re scaling your business, you’ll need the right people behind you. Now is the time to build out your team, take that market research and review where there are issues with your infrastructure. Then make calculated additions to the business to streamline your processes and get the expertise you’ll need to succeed in your new venture.
If you are scaling the business, it’s the perfect time to upgrade technology and automate all the systems you can to streamline your administrative processes. If your Point of Sale System (POS) is a bit antiquated, or if your website needs a refresh, get this sorted before you finalise your plans for scaling.
Investing in Professional Development
Maintaining your future success means investing in learning and professional development. This could be organising some training for your staff such as a customer engagement course or it could mean investing in your professional development to help you run the most successful and efficient business you can.
The perfect course for a small business owner just starting out is the Certificate III in Entrepreneurship and New Business. This course is designed for small business owners and aims to give you all the tools you’ll need to succeed. In the course you’ll learn how to:
- Investigate business opportunities
- Develop and present business proposals
- Organise finances for new business ventures
- Address compliance requirements for new business ventures
- Build and maintain business relationships
- Deliver and monitor a service to customers
- Organise personal work priorities
- Contribute to continuous improvement
- Assist with maintaining workplace safety
- Engage in workplace communication
You can learn more about this course here.
Scaling your business can be a difficult task. It takes a lot of research, sales projections, money and time but if you do it right it can be the best move you can make. If you’re thinking about scaling your business and you want to find a course that will help you do it, you can check out our small business courses here, or get in touch with our friendly course advisors, they’d be happy to help you find the right course for you.