Turning a passion or great idea into profit is hard work. This is often the case when someone decides to launch a business. For most, the journey can be one of trial and tribulation, but for some, they will go on to see great success. For a small business owner, the ability to go from startup to growth phase is exhilarating.
According to a recent study, startups that succeed in scaling, are known to raise upwards of 250% more money than they anticipated. Whether you're thinking about opening a second location, hiring more staff, or investing in new technology, small, mid-size, or large, let’s discuss how you can scale your business successfully.
How to Tell You’re Ready to Scale Your Business
So, how do you know when you’re ready to scale your business? Businesses in their growth phase often have several key factors in common. The first being consistent revenue; demonstrating that their business model works. When your business starts to bring in consistent revenue it indicates several things. It could mean that demand exceeds supply, the business is running smoothly, its reviews continue to remain positive, and it has the capacity to do more.
Consistently selling out of products or more service requests than you can handle, is a good sign as well. It is a tell-tale sign of a scalable business. Daily operations should be smooth, with minimal hiccups, allowing you to increase production and productivity without the feeling of being overwhelmed.
The flowchart below will help you start to determine if your business might be ready to make the leap:
6 Tips for Scaling Success
Now that we’ve discussed how to determine whether your business is ready to scale. Let’s explore, for a moment, six ways you can successfully scale your business. First, you must check your financial health. Analyzing your finances and historical revenue data is a great start in assessing whether you can financially take on the cost and resources that will be necessary to scale your business. You’ll also want to assess market demand. Paying attention to customer demands, which products and services are bringing in the most sales, as well as market trends allows for proper planning and preparation to meet those demands. As demand grows, you’ll want to pay closer attention to your customer feedback. Your customers will provide you with primary market research. They’ll tell you what they love, where you can improve, or even spark ideas for new products or services.
Similarly, conducting a competitive analysis can help evaluate your business’ value add and what sets you apart from your competitors. So much so, that you hone in on the product and services that have garnered the most sales. Becoming focused and specialized with your business offerings can open doors to having a competitive advantage.
You’ll also want to ensure you have the right team, individuals with distinct and necessary talents, to strengthen your business as it grows. If you can’t hire a team, outsourcing mundane tasks will give you time to focus on sales. And with the right team comes the necessary infrastructure as you prepare to grow. Consider the required tools and equipment to better manage the business’ day-to-day operations and scalability.
Check Your Financial Health
Financial forecasting will likely be a part of your growth strategy as you prepare to scale. Creating reporting dashboards to measure and manage results will allow for tracking and adjusting your sales projections. It will be important to look over balance sheets, income statements, and cash flow statements. Speaking with a financial advisor can allow for proper planning and preparation.
Now is also the best time to secure extra funding if possible. Start by researching different types of investment options, from traditional bank loans to venture capital. Be ready to make your case with a strong business place and solid financial projections. With the research you are already doing into your financial health, putting together these plans should be easier.
Assess Your Market Demand
Scaling your business will also require ongoing monitoring and assessing the market and consumer demand. You can use surveys or conduct market research to remain knowledgeable regarding market trends and demand. Knowing there’s demand means you’re not setting up for failure. You can also use tools like Google Trends or industry reports to get up-to-date info. You might also think about running some test campaigns; small-scale efforts to see how new products or services fare in the market. This can give you actionable data and can be a lifesaver if you're on the fence about a big decision.
Knowing there's a demand out there means you're not just throwing darts in the dark; you're making moves based on what people are actually interested in. And that's the key to scaling without stumbling. Keep your ears to the ground and be willing to pivot or adapt. The market won't stand still, and neither can you if you want to keep growing.
Check Customer Feedback Loops
Your customers can tell you a lot about what’s working and what needs improvement. Use customer surveys, reviews, or direct conversations to gather feedback. And as always, make sure your one-star reviews have been resolved and learned from.
Speaking of reviews, don’t zero in on just your five-star reviews to see what is going right. Pay special attention to your four-star ones as well. These usually come from people who like what you’re doing, but think there’s a bit of room for improvement. If you start noticing patterns in these reviews, like the same issue popping up, take it seriously. Addressing these minor issues now can prevent them from becoming major headaches as your business grows.
Platforms like Trusptilot or Zoek’s own Listing Sync service can help you with putting all your reviews and information in one spot. They help you gather customer feedback in terms of reviews instead of going to individual platforms or creating your own spreadsheets.
Competitive Analysis
Scaling your business will introduce you to a whole new set of competitors. Knowing these competitors and what they are doing can help you avoid mistakes and find opportunities to make your mark. It helps you set prices, figure out what services to offer, and even help to guide your marketing strategy.
By conducting a SWOT analysis (Strengths, Weaknesses, Opportunities, Threats) relative to competitors will provide you with information you can leverage to determine what they are good at (Strengths), where they fall short (Weaknesses), whether there are gaps in the market that you can fill (Opportunities), and be on the lookout for external factors that could negatively impact their business (Threats).
Upgrade Your Technology Stack
When you're scaling your business, upgrading your tech stack is crucial. Maybe you started with basic accounting software, but now you need something with more features like in-depth analytics or better integration with inventory management. Or perhaps manual customer service used to work fine, but now it's too much to keep up with. The good news? There are AI tools out there that can help you in these areas and more.
First, figure out where your business could benefit from AI. It might be customer service with tools that can handle inquiries round the clock, or maybe you want to get deep into data analytics to understand your customers better. Chatbots like Zendesk Chat, LiveChat, and Intercom can act like your virtual customer service reps. For insights into customer behavior, predictive analytics tools like Google Analytics, Adobe Analytics, and Salesforce Einstein Analytics can give you that edge.
But it doesn't stop there. Sentiment analysis tools such as Clarabridge, Brandwatch, and Repustate can help you understand how people feel about your products or brand. Marketing automation platforms like HubSpot, Marketo, and Pardot can streamline your marketing efforts and make your life easier. And if you're looking to give your customers a more personalized experience, tools like Barilliance, Dynamic Yield, and Acquia Lift are worth considering.
To learn more about if your business could benefit from the help of AI, read our blog here.
Outsource What You Need To
In your growth strategy, in addition to hiring the right team, consider and determine which tasks are essential to your business's core operations and which can be outsourced as you scale. Generally, non-core functions like IT support, customer service, or even content creation can be outsourced. Consider local outsourcing options, especially for tasks that benefit from a personal touch or understanding of your local market.
Being strategic about which tasks you outsource can free up your time and resources, allowing for you to concentrate on growth, and your core business functions while maintaining strong community ties.
Companies That Failed After They Scaled
It's worth looking at examples of companies that stumbled while trying to scale, so we can avoid making the same mistakes. Every company wants to grow, but growing too quickly can be just as dangerous as growing too slowly. While we want every business to be successful, being able to support your business growth is one of the most important aspects of business ownership.
One notable example is Pets.com, which came on the scene in 1998, aiming to be the top online destination for pet supplies. They managed to secure $110 million from notable investors and even went public. However, the company folded in less than a year. One issue was the shipping costs for heavy items like cat litter and canned dog food that ate into their profits. Another problem was their reliance on discounts to bring customers in, which led to selling products at a loss. The lesson here is that no amount of buzz or marketing can save a business if the basic financials aren't sound.
Another noteworthy example is Quibi, a platform that wanted to change how we consume short-form video on mobile devices. The company launched with a staggering $1.75 billion in funding and the support of industry giants like Goldman Sachs, NBC Universal, and JPMorgan Chase. Despite all the attention and high-quality production, Quibi shut down after just six months. They misunderstood how people use mobile video and couldn't get enough users to engage or renew subscriptions. The takeaway? Even massive initial investments and industry buzz can't save a company that doesn't meet a market need or adapt quickly to feedback.
Key Takeaways
Recognizing the right time to scale is crucial. Look for consistent revenue streams, demand exceeding supply, stable operations, and the capacity for growth as indicators that your business is ready to take the next step.
Understanding the market and how your current customers feel is crucial for implementing the right growth strategy. Evaluating demand, market trends and conducting a competitive analysis is only half the battle. Putting the right processes in place can allow for ease in transition from startup to a business that is in its growth phase. This includes investing in the right technology, hiring the best people to get the job done, or outsourcing tasks and responsibilities that take time away from successfully scaling your business.
Zoek Marketing is a testament to the power of the strategies we're about to share with you. By implementing these very tips and methods, we've been on a transformative journey ourselves. We're in the thick of rebranding, progressing from our roots in SEO and web design to establishing ourselves as a full-scale marketing agency. Our reach is expanding, and now we proudly assist businesses not just locally, but all over the world. Don't you want to be one of them?