Scaling a business means growing a company while keeping costs in hand to maintain or increase profit margins. There isn’t just one way to do it. Scaling a business involves many things. This blog is an introduction to scaling a business. In the coming months, a different aspect of this endeavor—adding staff, expanding a product line, taking on investors, etc.—is examined in greater detail.
Ready for growth
Is it time to scale your business? Is your current space to small for your needs? Is your staff unable to handle your customer base? Is revenue growing significantly? It may be time to scale your business.
In addition to all the business-related matters discussed later, one big factor is you. Are you ready for growth? Childhood growing pains are one thing; growing pains experienced when expanding your business activities are quite another. An NIH study a few years ago addressed the mental health of SMB owners, looking at factors such as financial stress and long work hours. Taking your business to the next level can exacerbate these factors and cause stress, burnout, and depression. Are you emotionally prepared to handle greater and more complex matters in your business?
Stages of growth
According to Harvard Business Review, there are 5 stages of small business growth:
- Stage 1: Existence. This is the startup phase. The management style here is direct supervision if in fact there are any employees and business practices and procedures are just being formed. The major strategy: existence.
- Stage 2: Survival. Here, management is supervised supervision (one layer of management) and systems, although minimal, are in place. The major strategy: survival.
- Stage 3(a): Success-Disengagement. Management in this phase takes on another layer and business practices and procedures are operational. The major strategy: maintaining profitable status quo.
- Stage 3(b): Success-Growth. The same strata of management is used and systems continue to be developing. The major strategy: Get resources for growth.
- Stage 4: Take-off. Management is divisional and systems are maturing. The major strategy: Growth.
- Stage 5: Resource maturity. Increased layers of management and extensive formal systems. The major strategy: return on investment.
Businesses take different lengths of time to pass through these stages; some never make it beyond stage 1 or 2. Whatever stage you find yourself in, you can be looking to scale up and move into the next phase.
Steps for scaling your business
It’s essential advisable to have a plan that you can follow for expansion and growth. Set goals so that you can measure progress and make changes as needed. Ask yourself these questions:
- Do you have the skills for running a bigger company? Some business owners can grow as their business grows; others need to bring in managers or CEOs for assistance or to run things.
- What’s it going to cost to [add staff; buy equipment; expand the product line; etc.] and do you have the resources to do it? How much are you willing to risk?
- What changes are needed for your people? More training for employees? More employees? Outside sales help?
- What time frame to plan for changes? What can you do now? What do you foresee in the coming months or years?
- How can technology help you scale your business? What role can AI play? Is robotics something usable for your business?
- Who can help with growth? Which professionals—accountants, marketing experts, IT people—are needed? Is it time to develop a serious board of directors?
Final thought
“Take chances, make mistakes. That’s how you grow.” ~ Mary Tyler Moore, actress and producer
There is a notion that a business either grows or dies. This is not necessarily so. Many small businesses stay small and remain viable for years. The corner coffee shop can survive given the right set of factors, such as a loyal customer base. Main Street, anywhere U.S.A. usually has small shops and other businesses that are there for years. But ambition and opportunity may inspire small business owners to scale their business—the sky’s the limit. Go for it…wisely.
