Is your business surpassing goals? Do you have a strong cash flow? Is your customer base healthy? Have you proved that your product will sell? These are just some of the factors to consider before deciding if it’s the right time to scale your business.
Get to Know Your Customers
Some small business owners are so caught up in the day-to-day grind of running a business, they fail to look at it through the eyes of their customers.
According to one report, an entrepreneur aspiring to grow a company needs to “develop a clear articulation of their company’s competitive strength in the eyes of the customers, and how this is related to internal processes and knowledge.” Research also suggests that some founders build a distorted self-perception based on their own definition of the quality of their interactions with their customers.
It’s important to understand what your customers’ experiences are with your business. If you’re looking to scale, you may want to create a detailed customer profile to understand who your customer currently is. Consider the following questions:
- What is your customer’s age and demographic?
- Is your customer married or single?
- Is your customer a working professional?
- What income bracket does your customer fall into?
- Is your customer a millennial or a baby boomer?
- How does your customer benefit from your product/service?
Gathering this type of data will aide your marketing efforts. Also, the more niche focused your small business is, the easier it is to reach your target market. While focusing on customer retention, you can also expand your customer base by incentivizing your customers for referrals.
Remember, Scaling Is Different From Growing
It’s important to understand the difference between scaling and growing. Many successful companies, Google, PayPal, Expedia and eBay for example, have created business models to scale their companies, not necessarily to grow them.
Growing means you are adding resources at the same rate you are adding revenue. Professional services usually follow this model:
- Gain a client.
- Hire more people to service the client.
- Add revenue at the same rate at which you’ve added more cost.
Scaling is all about adding revenue at an exponential rate while adding resources at an incremental rate.
- Add customers at a quick rate.
- Keep additional resources at a minimum to service your customers.
- Generate significantly higher revenue while keeping costs and resources minimal.
A solid foundation with room to grow is what will help sustain your business. As your current customers see your business grow, their loyalty to your business will also increase.
Set Reasonable Expectations
As demands for your business increase, you could fall short of those demands without a suitable system in place. You need to be able to scale your business without sacrificing the quality that made you successful in the first place.
As Richard Branson said, “Focus on your passion, start small, dream big and plan ahead. Scale up only when you are ready — not just because opportunity knocks.”
Financing is often a necessary part of scaling your business. There are several options for business loans and funding:
Regardless of how you decide to scale your business, the focus should remain on how you can balance growth while retaining your core values and customers. It all starts with a long-term plan to understand your customer base, set reasonable expectations, acquire financing as needed and plan for success.