Growing your business is one thing, but scaling it is another — it’s about handling increased capacity (ideally driven by customer demand) and increasing profits without relying on expensive, heavy infrastructure. It’s the reason we are seeing so many online businesses. Their business model allows them to scale fast, as once software is developed, it’s almost $0 to add new users — compared to traditional businesses which could involve adding production lines, equipment, employees, raw materials or products when expanding. Make sure your business is equipped with these elements necessary to achieve scale.
1. You have horizon money
Horizon money is having enough capital to be able to invest in the business (possibly making short-term losses), usually covering overheads for a period of months or years until you have enough customers to start making a profit.
Funds can come from your own savings or business cash reserves or you may wish to seek external funds from business colleagues, friends and family. Other financing may involve angel investors (external business owners willing to inject dollars into the business) or venture capitalists.
2. There is a clear vision
Being big requires thinking big.
Getting your business to scale will require vision, leadership, teamwork and a certain amount of bravado. People associated with the business want to know what the plan is to take the company to new heights. Business leaders must assess opportunities to work with other companies, enter new markets, recruit top talent, and think beyond the balance sheet to cultivate their unique vision and ambition.
3. You have an experienced management team
You can achieve scale by playing to your strengths and delegating your weaknesses — acknowledge what you do best and where you’ll need help. Though you may be the company founder and no doubt did an admirable job guiding the new business through the startup phase, you may lack the skills, experience or education required to scale the business further. A business with revenue of $500,000 is quite different from one selling $100 million; involving more complex rules, different competitors, more compliance and internal structure, and much higher stakes. Getting to that size will probably require an infusion of management talent with advanced skills in such as areas as opening international operations, developing products, supervising complex technology based systems, and raising venture capital.
4. You don’t require specialized labour to deploy
There’s a reason why McDonald’s restaurants succeed anywhere in the world: anyone can work there. McDonald’s doesn’t require electrical engineers to work the fryer. They don’t hire PhDs to wrap the burgers. Their systems are so easy to follow that a franchisee can hire inexpensive and inexperienced workers. Affordability of their labour input has allowed the company to scale to its impressive size.
Certain technologies require little labour input to achieve significant output. A mobile app only needs to be programmed once, marketed and downloaded. Unlike analog business models, additional labour isn’t required to run the app as it grows in popularity — even if a million people use it.
The same applies to ease of use. The best businesses are those where you don’t need to train the customer. If you don’t need to read the instructions during assembly, chances are the supplier has spent considerable time making the process intuitive. A business that isn’t labour intensive, doesn’t require expensive or skilled people to deliver, or has a model that the end user can implement themselves is primed to scale.
Next steps
Scaling is risky, hard work. There are plenty of moving parts to manage and the dollars at play may be large. But the rewards are worth it for your company, including improved operating efficiency, greater market value, widespread brand-name recognition and, of course, a chance to introduce your fabulous product or service to a larger audience.
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This content is for general information purposes only. It is not to be relied upon as financial, tax, or investment advice or guarantees about the future, nor should it be considered a recommendation to buy or sell. You should consult your own professional advisor for specific financial, investment, and/or tax advice tailored to your needs to ensure that individual circumstances are considered properly and action is taken based on the latest available information.
