A huge challenge that all businesses have faced is getting it launched and off the ground. However, scaling a business up is something many firms struggle with. There are so many issues, risks and new skills that need to be learned to successfully scale up a business idea.
The road ahead includes planning for the future, making sure the needs of customers and clients are met, all whilst managing funds and resources. This is where many businesses fail, as they aren’t prepared for what is coming.
But what is the best way to scale up a business? When is the best time to do it? Are there any tips and guidance on what to do?
If you’re asking these questions, then you’re in the right place. Let’s get started and help you on the way to a successful business.
What Does Scaling Up A Business Mean?
There is a difference between scaling and growing a business. Scaling is being able to handle increases in workload, sales, as well as dealing with outputs in cost-effective ways. Being able to add revenue faster than they have new costs is scaling. Company gains that are faster than losses allow a business to grow and scale up.
To scale up means to increase in size according to a common scale. Some reports suggest that the absolute growth number is 20%. This is for three years, year over year. This number can be from both growths in revenue or employee headcount. Let’s talk about the UK. A lower level of 10 employees is indicated by the OECD.
If we look at £100,000 per head – which is the UK SMEs average – then the lower limit definition of scale ups at around £1m in annual revenues.
What Are The Benefits And Disadvantages Of Scaling Up A Business?
Knowing when to scale up a business is crucial. There are risks attached and they could potentially ruin your business. But on the other hand, there are plenty of benefits that can propel your company towards your goals.
Growing too soon can have huge consequences, however, waiting too long increases the risk of competitors gaining the advantage. So, let’s take a look at the pros and cons of scaling a business.
| Benefits | Disadvantages |
| Economies of scale – One of the fundamentals of business, this is when the cost of creating one unit decrease when you produce more of those units. | Supply chain revamps – More sales create the task of managing a larger company. Those who aren’t experienced may find it hard to maximise efficiency |
| Increased workforce – Most small businesses have a small number of employees, all likely being at the company since launch. Adding staff can open up more opportunities, focusing time and energy on new projects, sharing tasks among more employees. | Dilution of your brand image – There is a reason your business was successful, sometimes when a company expands, they lose their identity. New staff may not have the same passion for your business as the starting employees did, not giving the same service your customers know. |
| Rise in revenue – If you start to sell more services or products to customers, this will increase cash flow. Here, you can start to make investments, such as better facilities, hiring marketing teams or increasing staff wages. This will create more chances for you to try new projects. | More expenses – An increase in revenue won’t always mean larger profits as there are added expenses. If you open a new location and your research wasn’t thorough enough, you could set up in an area with less local demand for your business. |
What Are The Biggest Challenges To Scaling Up?
When you start scaling, building leadership systems as well as making processes automatic and big issues that businesses face. There are new decisions to make, with more complexity, bigger risks and an increase in stakeholders involved.
To handle these challenges, businesses have to improve IT systems and organisational structures to be able to deal with an influx of new situations to face. Then comes the task of maintaining quality whilst focusing on scaling up and it can become a huge mess.
Staff become stressed with more roles and hands-on work, customers can get frustrated with the lack of structure and service. This is where someone has to take leadership and start to dictate where the company is going and steer the ship.
How Do I Scale Up My Business?
Ensure You’re Prepared
So, you’re thinking about scaling up. That’s amazing news. Now is the time to start preparing and planning ahead, as when things start to progress, cracks start to show and once you take the leap, it can be hard to fix some of these problems.
Cash flow, IT systems and your supply chain are major areas of concern and should be treated with caution. Take your time to think about how business growth will impact your company as you need to be ready for when this time comes.
Protect Your Brand Image
You need to realise your time will be limited, with so many new projects and actions on the go, your attention is being pulled in 30 different directions at once. When this happens, it is important to remember what your business stands for.
Your brand image can’t suffer because other areas are taking importance. Think about what made you successful in the first place. Maybe it is customer service for example. This cannot suffer as it will be the factor that starts the decline.
Don’t Compromise On Quality
Your customers will begin to shop elsewhere if you start to become sloppy and fail to deliver the quality you once did. When growth happens, it can be easy to get distracted and fail to meet the standards you once set.
Make sure your key values are maintained throughout the growth period. This includes your processes, staff and culture. Understand that mistakes will happen, but learn from these and make sure they don’t happen again.
Create Your Dream Team
Hiring new staff will be in the pipeline for most growing businesses. But how do you hire new staff that suit your needs? Well, to start with, they need to fit the culture and values your company stands for.
Team members need to be on the same page to make sure everyone is pulling in the right direction. Take time to search for the right people that suit your business. Your staff will inspire and motivate each other to provide the best service for your customers.
Speak To Others Who Have Been There And Done It
Surrounding yourself with people in the industry who have completed the route you want to take can be a valuable tool. They have made mistakes, paid the price and lent from them. This can be something you learn from, avoiding unnecessary issues.
Not only this, but you can build relationships and network with others to build your brand. Make sure to ask questions and absorb as much information you can. You may need to pay to get this sort of friendship, but it is worth every penny.
Think Bigger
Have huge goals and dreams. This will create ambition among your team and get everyone excited to help accomplish these big targets. Your staff will work harder, be more creative and evolve faster to get the results.
Your workplace will be a place where people support each other and grow as a family. They’ll show up with a smile on their face, surrounded by like-minded people that want to complete the vision until it is successful.
Diversify Your Business
When building your brand, you want to make sure you don’t put all your eggs in one basket. Becoming dependent on a single large customer can be a risk if it is for the majority of your revenue.
Yes, keep that customer happy and look after them, however, if that relationship does come to an end, where do you go next? So, keep an eye on revenues and spend some time developing your brand in other ways.
Daily Check Ups
There will be bumps in the road and most businesses don’t have a smooth ride all the way. So, when difficulties arise, make sure you’re prepared and spot them in advance before they have too much of an impact on your business.
Often, people don’t see the signs of failure which can be seen months in advance. Keep a sharp eye on your revenue and cash flow daily. This gives you a chance each day to make changes, rather than once a month.
Well, you’ve got the advice, now is time to take action. You’re on the way with your journey and your big goals are just around the corner. Just remember to be cautious and don’t jump into things without planning.
When you take time and pay attention to the information, you’ll be able to tackle and deal with both minor and major issues more efficiently. Plus, you’ll have your team to help deal with problems. Be brave and take the opportunity with both hands.