Scaling Your Business
Most entrepreneurs will nod in agreement when you say that starting a business is tricky — scaling it is even more so. From the moment they start their ventures, entrepreneurs begin to dream of scaling them. This is because scaling is essential to improving a business’ profitability, expanding its reach, and strengthening its long-term prospects.
And that’s just the tip of the iceberg. Scaling helps a business:
• Create more jobs as it expands
• Be more pioneering and innovative in its industry
• Develop into a great place to work, with a vibrant and dynamic atmosphere
• Offer high-quality jobs with increased levels of employee satisfaction
• Enjoy greater diversity within the workforce
But there’s a subtle difference between growing and scaling. Growth occurs when businesses add resources at the same rate that they add revenue. For instance, they may add more employees to handle an increased client base, move into a new office, or subscribe to an answering service to handle calls and appointments.
Scaling, however, is all about adding revenue to the business at an exponential rate while adding resources at an incremental rate. Here, businesses add customers at a rapid pace, and then add the minimum number of resources needed to serve these customers and generate more revenue.
What this means is that, when you do decide to scale your business, it’s not enough to have sufficient capital and the required resources. You need a great long-term plan. A plan helps you prioritize your next steps and helps you add the right support at the right time. As you scale, you will need to make a number of investments, so it is extremely important that you prioritize high-quality resources that will pay off in the long run, rather than spend on low-quality investments that will hamper your growth down the line. So what exactly does it mean to focus on quality while scaling? Here are some points you can keep in mind that might help answer the question.
Hire the right people
Unless there is a deadline to meet and having more hands on deck will help you get there, there is no reason to rush the hiring process. In fact, you will benefit far more from being judicious about whom you hire. Taking an extra month to hire for a key leadership role, even if it slows your growth for that month, will give you better results in the long run.
Take, for instance, Larry Page from Google. In 2002, he got into trouble with his investors, his team, and even prospective employees because they felt that he didn’t appear to be hiring fast enough. “But when you look back, it turns out that focusing on hiring the right people was critical to Google’s growth at that point,” says Bob Sutton, organizational behavior expert at Stanford’s School of Engineering. Ultimately, it turns out that Page had the right mindset for the right time.
Expand with purpose
If you’re unable to envision the future of your business, you’re probably contributing to stunting its growth. However, being clear about your destination helps you plan your growth strategy better. For instance, when scaling, you might invest in better equipment and multiple new offices. This shouldn’t be done in a frenzy — one high-quality new office is better than multiple low-performing offices. Although it seems like scaling quickly will earn you revenue faster, mere expansion for its own sake can be more detrimental than helpful.
Choose your audience
Ok, so you’re ready to create a buzz for your business and are tempted to market to everyone. But before you know it, you’re using up your entire advertising budget with hardly any measurable results. Here’s where you pause and rethink your strategy. It is far better to choose specific audience segments than cast a wide net — you’ll see a better response to your promotions and even drive more engagement with your customers.
Invest smartly in marketing
While there are a multitude of marketing channels out there, you’ll probably choose a select few that can help build recognition and awareness of your brand. Instead of choosing quantity and distributing your money across multiple channels, funnel that money towards the most effective marketing strategy for your particular industry and audience.
Many founders believe that, as their company scales, the going will get easier because there are more resources — and possibly more money. However, the truth is that with growth comes greater complexity for everyone involved. So, in order to truly ace the scaling game, you will need scalable infrastructure, a capable team, an effective marketing strategy, and a single-minded focus on your organization’s values and vision. After all, why you started should, at all times, be what drives your growth.