• Peri Avari

What Does Scaling Look Like for a Small Business?

Updated: Dec 19, 2021


Every business reaches a pivotal point at which an entrepreneur will need to determine the next stage of the company’s trajectory. Business scaling is a concept that comes into play at different junctures in the life of an organization; whether it is a start-up looking to scale for the first time, or a mid-size business hoping to move into the big leagues.


First, it’s important to understand the difference between business scaling vs. growth. Growth is when your company generates more revenues, but along with an increase in costs, like hiring more people or adding new technologies. Scaling is different; it is the sweet spot when you can attract exponential business growth, by using the resources you have already set in place, hence leading to increased profits.


Key Signs that Your Business is Ready to Scale

It’s easy to be too eager to scale up, but there are some clear signs that you need to look for, before going down this path as a start-up. Having all your proverbial ducks-in-a-row, and scaling at the right time is critical, since backtracking while you are in the midst of a scaling cycle, can be more trouble than you signed up for.


Here are some questions and thoughts to consider prior to scaling your business:

  1. A steady stream of paying customers is a good sign for your business in general, and a heads-up that you might be getting ready to scale.

  2. A product-market fit, where what you are selling is in demand in your marketplace, is important before you consider any growth in your business. It’s simpler to tweak your products at the early stages when you have fewer customers.

  3. Do you see a path to profit? It’s normal for businesses to make a loss in the early years with the heavy expenses of starting out. But your key metrics will show a trend towards profitability if your business is set to scale.

  4. Positive client feedback is relevant to help you scale quickly. It’s a good idea to get as many testimonials, as you can, from early customers of your business.

  5. Repeat business means satisfied customers, and you want as many of those as possible. If your business has a low repeat cycle, then look for referrals from previous customers instead.

  6. Is the industry you’re in, showing a general growth trend? If demand is outpacing supply in your area of business, then you definitely want to consider joining the upward flow in the space, by scaling at the right time.

  7. We often view competition as a problem. But most veteran entrepreneurs know that their business concept is scalable if there is competition in their space, which also means there are sufficient customers to attract.

  8. Is your product a proven concept in your space, one that has been validated with early market acceptance of a product prototype? Then use knowledge from the research to scale up at a faster pace.

  9. If you are turning down business because you can’t manage to take it, that’s the surest sign that you are ready to scale up. At this stage, I’d advise that you take a good look at your reasons for refusing business, like not having enough people, or processes not being in place, or supplies not keeping up to demand. This information will help you correct the course, and get ready for scaling.

The Steps to Business Scaling

There are a few basic aspects of the business, that an entrepreneur needs to have in order, before scaling up the company.


Vision

Go through the simple process of envisioning what your scaled company looks like, from a strategy, people, and operations perspective. The vision will give clear direction before you grow too large to pivot. And it could also happen, that the scaled vision of the start-up, is not exactly what you had in mind, saving you heartache down the line.


Culture

One thinks of culture as a soft requirement for a company, that can be instilled into the organization after everything ‘else’ has been attended to. But culture starts with the founder, and as the creator of your company, take a moment to put in place your desired workplace culture, before you start hiring people and creating processes for your business.


Business Model

A model with simple processes that can be followed company-wide, seamlessly, and repeatedly, are key to scaling up. While it is easy to attend to complex processes, needed to execute a sale when you have just five orders, the same will not be true when you scale up to 500 orders.


Team

Having a well-trained team, on the operations and sales end, will get you ready to scale up and attend to more customers. For a start-up, sometimes, a team can consist of a small number of key people, each one being adept at their role.


Cash Flow

Not having enough money on hand can easily run a business aground, while it is trying to attract more revenues. Keep in mind, that payments don’t always follow a sale. A steady cash flow allows your company to run smoothly, and pay its bills and people on time.


Starting out on your first journey of business scaling is a key milestone, for you and your company. Whether it finally turns out to be an exciting dream or your worst nightmare, will be determined by how well you have prepared for it.

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