Like every small business owner, you want to grow your business; however, scaling your business is an entirely different goal. To scale your business, you need to take the necessary steps to expand at a steady pace without applying any limits to that growth. That means growing beyond what you and your current group of employees, investors and partners can feasibly manage.
Additionally, you must be able to generate revenue at a higher rate than what it costs to operate your business. If marketing, production, personnel and other costs will grow at the same rate as your revenue, your business isn't scalable. On the contrary, if you can maintain a higher revenue rate while decreasing operating costs over time, you likely have a business that is scalable.
Preparing to Scale
Keep these important precautions in mind if you want to scale your business:
Accept that you are working to replace yourself.
You are taking your business to the level where you will no longer be able to manage it—and, in some cases, control it. The business will become an entity that can function on its own without you. That is a difficult mindset shift for many small business owners who have poured everything they've got financially, mentally and emotionally into the business.
Plan for financial growth.
When you are starting out, you focus mostly on cash flow, day-to-day operations and hitting your budgets on a monthly basis. While making a lot more money is an upside, you need to be ready to budget and manage all of that extra cash. You'll need to plan for the future and forecast several years out, understand the tax implications of generating more revenue and decide what you will do with that money (will you reinvest it, or will you distribute it to employees via bonuses or stockholders via dividends?). You should also take into account the need to hire more people (e.g. experienced accountants), purchase more equipment and find a larger office space. The key is to be prepared well in advance for windfall profits—even if they don't materialize.
Ensure that your systems are successful.
The basic principles on which you run your business must be sound. For example, if you have a solid sales process in place, it doesn't matter whether you have two sales people or 200 in the field. Create a solid plan for executing all the functions of your business. Establish job descriptions for the types of employees you need to run the business, and set goals for each department so that they can function without your input. Once you have the system in place, you simply need to find the right people to fill the roles.
Prepare to hire a lot of people.
When your business is still small, you can personally handle the responsibilities of recruiting, interviewing and hiring people that fit your personality and suit the needs of the job. As the business grows rapidly, you will no longer have the time to focus on hiring, much less figure out what types of employees each department needs to fill critical roles. You'll need to create a designated HR department that will work with hiring managers to find job candidates, manage the process and ensure compliance with state and federal laws. You can also consider an HR service, such as Trinet, to manage your payroll and benefits.
Ready yourself to hand over control.
At the start, and probably through much of your growth, you've been the commander-in-chief, likely making most—if not all—of the decisions. As you scale your business, prepare to delegate and hand over decision authority to your department heads and stakeholders (e.g. board members, investors and partners) so that you can focus on big-picture issues. You will no longer have a say in every aspect of product development, marketing, sales or customer service. Ultimately, you'll have to grant autonomy to trusted department leaders to make key decisions that will affect the business.
Prevent silos and interdepartmental conflicts.
With a tight-knit, small team, everyone plays multiple roles, doing whatever it takes to ensure that the company meets its goals and the needs of the customer. Everyone—from the person doing your marketing to the person packing shipments—is in it together. As you scale your company and create different departments, however, teamwork and collaboration across departments could suffer. For example, the marketing team focuses solely on its goals and responsibilities while the customer service department does the same. As a result, people stop working together to ensure that the customer is satisfied from start to finish.
Emphasize the importance of teamwork and collaboration across departments by explaining how each department supports another. Bring department heads together regularly to discuss ways of improving inter-department communication and collaboration. Offer employees opportunities to connect with coworkers in other departments through brainstorming meetings, cross-training and job shadowing. Above all else, reinforce the message that everyone—from the c-suite to the frontline—is responsible for ensuring a stellar customer experience.
Don't go overboard on rules and procedures.
As your business grew, you likely stayed away from creating too many policies or standardized processes because, with few or no employees, it wasn’t necessary, or because you didn't want to limit your creativity or flexibility. However, with exponential growth, many organizations feel the need to establish strict rules and procedures to ensure that everyone is on the same page.
However, your core group of employees—the ones who have been there since the beginning—may resent and resist your new way of running things. They could become less productive or even quit. Those are people you just don't want to lose. Before you establish policies or processes, ensure that they are absolutely necessary for the success of the business and that you have discussed these changes with your team so that they understand why they are necessary.
How to Scale
If you feel mentally and financially prepared to take the plunge and scale your business, here are some of the best ways to do so:
Boost your business profile.
Take every opportunity to be seen and heard. Attend industry events, present keynote speeches, and join groups that allow you to build your network with people that can offer feedback, resources and financial support as you quickly expand your business. It's also a great way to find potential partners, joint venture opportunities and investors.
Open offices in other locations.
Whether you move to the next town over, head to another city or leap into another country, establishing a presence in an entirely new area can grow your business at a rapid pace. Just be sure the location and demographics of the customers fit what you're selling and that the expansion fits your budget. This should only be done if your first location is already profitable.
Reach a global audience.
Expanding your products and services to foreign consumers opens up your business to an entirely new market. This can be done by selling your product through sites like Amazon, selling your services through a site like oDesk, or (if you’re ambitious) by pursuing your own business connections or supply chains with foreign partners. Online marketing through your website, Google AdWords and social media is the easiest and cheapest way to connect with a global market. Social media makes it easy to reach potential customers in other countries. For example, the localization features on Facebook, Twitter and LinkedIn allow you to customize your updates for different localities. When marketing to another country, it’s a good idea to work with a translation provider to ensure that all of your marketing content, including your website, is available in multiple languages and leaves a positive impression on your non-English-speaking customers. Before entering a foreign market, you should research that population’s culture and market trends to avoid any issues or taboos that could offend them.
Franchise your business.
If you have a well-established and popular brand, franchising is a great way to go. You allow other small business owners and entrepreneurs to lease the rights of your brand, and in exchange, you receive a percentage of the sales, royalties and franchise fees. You broaden the reach of your business and make more money without having to run more than one store location yourself.