As a freelancer, entrepreneur, or small business owner, you dream of scaling your business to the next level. This means more revenue for your company, a more successful sales strategy, and more recognition in your industry.
This guide will help you learn what scaling a business is, when it's time to start scaling, and tips to help you with team task management, resource allocation, employee productivity, and more.
What is Scaling a Business?
Scaling your business requires a calculated analysis of your business's overall long-term potential. This requires you to open your financial books and create a strategic business plan based on your current performance.
Scalability means a slow, steady growth that can sustain itself over time. If your business can manage the demand of new and existing customers without exceeding a set budget, you're ready to start scaling it. However, if the opposite is true, you may find it more challenging to scale your business.
When Should I Start Scaling My Business?
Timing is a crucial element when deciding to scale your business. New businesses have so many worries and steps to figure out that scaling doesn't make sense.
A newly established company doesn't have an accurate gauge of new or retained customers nor a steady cash flow. Deciding to scale your new business will likely cause it to miss deadlines and ruin your reputation.
However, if your business is well-established and has generated a good cash flow, you're likely ready to start scaling. How established your business needs to be will vary according to your industry and its overall growth potential.
For example, a company in the technology industry that mainly focuses on delivering electronic goods may find it easy to scale its business early on.
As a primarily tech-based company, your overall expenditures while maintaining growth are minimal. You may only have to add a few new servers and hire one or two additional staff members.
However, if you own a writing, consultancy, or marketing agency, you may want to hold off on scaling your business quickly. Companies that require a time-consuming service in exchange for money may find themselves swiftly bottlenecked with scalability.
This doesn't mean you can't scale your business. Instead, it requires more time to gather the appropriate resources and cash flow to expand. The more employees you need to scale your business, the more costly the process.
You should consider how scaling your business impacts your overall cash flow and if you have enough accessible work to distribute to employees to justify hiring them.
9 Ways to Help Scale Your Business
You can take several steps to scale your business without losing control.
1. Assess your business plan
If you don't have a business plan, you will want to make one before scaling your business. A business plan gives you achievable timelines and goals. It also allows you to measure your business' long-term scalability.
If you do have a business plan, see where your company's current progress measures. Do this by pulling budget reports, logs, and other information related to job performance, client numbers, YTD sales, and more.
Use the information to make a sales growth forecast. The goal of a growth forecast is to strategize what you need to increase your sales and generate more revenue.
Make the report as detailed as possible, including the number of new customers and orders needed to complete the job and the revenue you expect to bring into the business.
Be specific to the week or month with your numbers. It helps to keep the information in a spreadsheet to keep everything organized. Doing this also allows you to go back and adjust as needed as you grow.
Follow up the process by making a sales expense report detailing your expenses for added services, marketing, and sales. Your expense report should include any new infrastructure plans, the technology required for the additional workload, employees needed for different positions, and the software and systems to handle an increase in workload or sales.
A more detailed report with statistics and numbers increases the success of scaling a business. Consider every possible sales opportunity and expense to make your estimates as close as possible.
2. Make a Mission Statement
A mission statement is as important to you as it is to your customers. People want to know your purpose, and you should be able to answer that. This instills a sense of trust in your customers, especially when they relate with your company.
Over time, this trust converts them into loyal customers, guaranteeing long-term revenue for your company. Scaling your business relies heavily on generating as much long-term revenue as possible to ensure financial security.
3. Build Employee Loyalty
Having customer loyalty isn't the only important aspect when scaling a business. Employee loyalty is equally important, as a motivated work team is likelier to succeed at individual tasks. The more successful they are, the more revenue you sustain over time.
Create a work environment that is comfortable for everyone. While it's essential to keep everyone on task, being overly critical or denying your employees open communication can diminish work performance.
When you make employees feel comfortable and allow upward feedback, they are 16% more likely to stay at your company.
Foster an environment filled with recognition and respect for your employee's contributions toward different projects. Known as positive reinforcement, this leadership style helps retain short- and long-term employees.
Your employees are twice as likely to start job hunting if they don't feel appreciated compared to those who do. In fact, studies show that 79% of people cite "lack of appreciation" during their exit interviews when asked why they quit.
Don't forget to discuss promotion opportunities regularly with each team member.
Gauge who wants to move up in the company and make a plan so each employee has a roadmap to internal promotions. Taking on new responsibilities while getting a pay increase helps incentivize employees and makes them feel valued.
Showing appreciation also increases motivation. Over time, employees who feel appreciated and incentivized will develop loyalty to your brand. This translates to high employee engagement, making your company 21% more profitable.
4. Hire Staff with a Strong Onboarding Process
When you scale your business, an increase in clientele and sales means you'll need new employees to keep up with them. As you plan, see how many new employees you'll need by setting milestones on when you'll need to start hiring based on overall sales, number of customers, or orders processed.
A concrete employee growth plan ensures a smooth transition during the scaling process. You will know precisely when to hire new employees before you get overwhelmed with tasks.
However, employee retention is as essential as employee acquisition.
Replacing an employee costs your company an estimated 33% of that employee's annual salary. This can hit your cash flow considerably, especially for a small business, and stunt your scaling efforts. This is where a robust onboarding process shines.
Creating a reliable onboarding process for new hires increases employee retention by up to 82%. It also improves overall productivity by over 70%.
Be thorough during your onboarding process. Add a structured system where employees go through a course of steps to understand their role in the company better. Avoid swamping them with paperwork and be more actionable within the hiring process to help them get acclimated.
5. Consider Your Supply Chain
Scaling your business means revenue streams are increasing at a steady rate. If you're in sales or contracting, you'll need to know your supplier can keep up with demand.
Ask your supplier what's the most they can handle. Take note of this, as you may have to switch suppliers once you reach a certain point in your scaling strategy.
Price may also be a determining factor for you. Your supplier may meet your scaling demands, but their prices may not. A contingency plan for this helps your business quickly adjust to a new supplier when transitioning through various scaling milestones.
6. Decide When to Outsource
Hiring employees for short-term work may not make sense for your business model. Outsourcing tasks and positions can help streamline your company's scaling effort by reducing overhead costs.
This is especially true for specific areas of your business, such as marketing, shipment, and order processing. These often bottleneck early, so you'll need to concentrate on finding solutions. Outsourcing gives you the needed expertise without stressing over the hiring process or getting the job done.
7. Automate Your Workflow
Investing in the right technology can reduce costs and decrease labor demands on your existing employees. Automation tools help reduce manual work, increase efficiency, and lower cost by grouping tasks and streamlining most processes.
Consider CRM, marketing automation, sales management, and accounting systems. Gazingle covers all of those and more. Check out the free demo.
8. Expand Your Marketing Efforts
Every business requires efficient marketing to scale correctly. Marketing efforts that regularly attract customers include running social media pages, commercial and digital advertising, and employing strategic content marketing efforts.
Establishing your business as an expert leader in your field makes it easier for your business to bring in new customers in the age of technology. You accomplish this through mostly digital methods, but some offline methods can also help.
This is where outsourcing tends to occur most for companies. You want an expert to work on maximizing your visibility to assist with your scaling strategy.
9. Invest in Capital
Scaling your business doesn't come cheap. Your growth forecast calls for hiring new employees, getting new equipment, adding new systems, and more. On average, your small business needs around $2.2 million to have a successful and working scaling plan.
Searching for capital ahead of time ensures you have the cash flow to meet your expenses.
Small business loans help bridge the gaps in cash flow issues. Shop around to find loans with the lowest interest rates.
Compare your loan offers with your expected growth revenue to ensure it covers more than the amount you'll need to pay back each month, along with all other business expenses. Ideally, your business will scale enough to be profitable, even with the added cost of paying back the loan.
Other sources of capital come from business credit cards, business cash advances, crowdfunding, and invoice financing. Each has its benefits, so it's worth looking further into each to see which best fits your needs.
If you have difficulty securing funds, consider holding off on scaling your business. If your business cannot meet cash flow demands, you risk potentially ruining client relationships and damaging your brand reputation.
It's best to wait until you either save up the necessary cash flow to initiate the scaling process or funding from another source becomes available.
Gazingle Helps You Scale Your Business
Scaling a business is no easy task. It requires a significant investment of both your time and money. Gazingle can help ease some of the stress by offering a CRM platform for small businesses specializing in restoration.
Gazingle offers a product for team task management, project management, lead conversion, accounting, and more. Streamline different areas of your restoration business into one centralized place with a reliable CRM platform.