How To Scale Your Business
I’ve lost count of the times I’ve heard people say they want their business to grow instead of scale. In a culture obsessed with LinkedIn CEOs posting about how rich and happy they are, it’s easy to confuse the idea of growth with that of success. To really experience ‘success’, you need a business that delivers profit – which means you need to understand what scaling is and how it impacts your bottom line.
Growth vs Scale
Growth, in business, refers solely to the linear concept of growing a business’ resources to be able to expand its revenue - hiring more staff, buying a bigger office, holding more stock etc. All of these are considered growth.
The problem is that growth has a cap. Imagine you’re a business that produces something that costs £100 but you sell it for £200. You can grow your revenue by selling to more customers – but the costs associated with achieving that growth, such as hiring a marketing team or investing in advertisements also grows. This means that you’re now selling something for £200 but your costs are now £150.
Scaling, instead, refers to growing your revenue without a substantial increase in resources. Taking the example above, a scaling business finds a way to sell to more customers whilst also sustainably managing its resources and team, meaning your revenue increases more than your costs.
I know that all sounds like a mouthful, so I’ll take a shot at making it as clear as I can:
- Growth in a business refers to increasing revenue regardless of cost
- Scale refers to increasing revenue at a faster rate than costs
“But Michelle,” I hear people say. “Everybody wants to grow without the costs, but that’s just not how it works.”
Scaling isn’t a pipe dream - all of the world’s most profitable companies have scaled rather than grown. Scaling is a strategic approach, one that you have to learn to adopt within your business.
How to scale your business
So, now that you know the difference between growth and scaling, you can see the value of learning how to scale your business. But there isn’t a single answer here...
Realistically, understanding scaling and its importance in your business is already putting you on a better pathway than a company that simply goes through the motions and grows without considering associated costs.
To take things further, you’ll need to put scaling into the core parts of your business. The first step, in my opinion, is being able to proactively identify a need for scaling…
Spotting when you need to scale
In an ideal world, you could scale your business all the time – ramping up profits and becoming mega-successful. In reality, scaling is best achieved when you reach decision points in your business.
These decision points are largely based on demand – as demand increases, you’ll need to consider how to better accommodate for it without increasing costs at the same rate.
If demand is decreasing, scaling in reverse can help mitigate the damage and keep your business afloat long enough to plan for recovery.
To get more strategic about scaling, you should also consider ways you can grow outside of the traditional increase in ‘demand’. By analysing what you do, what your customers need and what resources you currently have, you may be able to identify other routes such as a new service offering – which allows you to expand your revenue stream without an associated cost increase.
Build a plan
Growth can happen naturally, but businesses need to plan their goals if they’re going to scale. Natural growth and spikes in demand are great – but they also create false urgency and reactionary problems, such as needing to hire a new full-time member of staff to serve the demand.
If you’ve created a business plan that accommodates for scaling, you’ll have goals and processes mapped out ahead of time – which allows you to plan your resource allocation and ensure you can keep costs under control as you grow.
In my opinion, plans should include a vision for your business that remains core throughout. Embed your values within each stage of the plan too. Outline your core focus for the business, then begin to map out a 3-5 year picture. Once you’ve nailed that, you can develop a strategic 1 year plan.
Planning allows you to anticipate the moments and stages where demand will increase, which means you can more accurately prepare for them and manage your costs. Knowing how to plan is crucial to success – so ensure you read more about this in my Importance of Business Strategy Planning post.
Implement strict processes
As demand grows, it’s easy to forget that one of the biggest problems in a business can be poor internal processes. If you’re trying to grow but everyone in the business is doing things in their own unique ways, you’ll always lose value.
To scale, you need to implement strict processes throughout your business. These processes must be built around the marketing, sales, finance and operations within your business. Define the processes involved in each and then document them to make sure they are standardised.
Defining a process means mapping it out fully. Who is responsible for it, when does it occur, how is it done? You’ll then need to put each process into a task and assign it to the right person, which helps ensure all work is kept on track and will also set the foundation for scale. As demand increases or other factors hit the business, you’ll be able to clearly identify which processes are working and which are going wrong. You can read more about writing an SOP for scaling success in this post.
Rather than juggling all of this work alone, I’d recommend using one of my recommended online task management systems such as ClickUp. Don’t keep things written down or inaccessible in your private documents – your team needs access to process documents to be effective.
Build your team carefully
Founders (Visionaries) tend to be creative and ambitious people, but they can find it difficult to manage a team. If you’re not a Pragmatist, you’ll struggle with the day-to-day realities of managing staff. That’s without factoring in the management of recruitment and resources – which is why the first role many business owners need to help support them is someone in operations.
A business is ultimately a representation of the people within it. As you grow, you’ll be forced to hire. If you plan ahead with the support of an operations professional, you can instead treat the idea of recruitment and resource allocation in a more strategic way – allowing you to identify moments where you anticipate demand may spike and hire a freelancer instead, meaning you can part ways when the spike dips without the same employment commitments.
Salaries and employee commitments are one of the biggest barriers to scaling. You can’t simply hire more staff when demand increases, or you’ll pay out the profit in wages. It takes careful planning and task management to help streamline workflows, hire the right people and hand off tasks to automated systems etc.
You can read more about building your team strategically in the following posts:
Make scaling easier by working with me
Okay, I know that this heading is a little bit selfish of me – but I’ve just given you all of that information for free so I’m allowed, right?
If you want to take scaling seriously, you’ll need support. My job is all about helping businesses to plan and carry out growth whilst managing costs, allowing for a sustainable scaling journey that results in increased profits.
Rather than worry about the operations side of your business, working with me means you can rely on an experienced partner whilst you focus on what you do best.
Stop banging your head against the glass ceiling and unlock a better business future with my help. If you’d like to know more about how I can help you scale, get in touch and let’s talk about your goals.
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