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by Jean Moncrieff
March 15, 2018
by Jean Moncrieff
March 15, 2018
So you’ve made the decision to grow your business – congratulations! Now get ready for the next challenge: how to scale your business for growth. Even if you manage to sell like crazy, you’ll soon have another problem: you have to be able to deliver to all those new customers.
Scalability is about capacity and capability. Does your business have the capacity to grow? Will your business systems, infrastructure, and team be able to accommodate growth?
If growth causes your company to stumble because of confusion, orders falling through the cracks, insufficient staff, miscommunication, not enough manufacturing or delivery capacity –you’re going to have unhappy customers. The manual processes that were fine when you were small but now won’t let you move fast enough. You’ll either be putting out fires or desperately trying to keep your head above water. All of which is stressful.
Scaling a business means setting the stage to enable and support growth in your company. It means having the ability to grow without being hampered. It requires planning, some funding and the right systems, staff, processes, technology, and partners.
Take a hard look inside your business to see if you are ready for growth. You can’t know what to do differently unless you take stock of where your business stands today.
Strategize what you need to do to increase sales. Then assume your orders doubled or tripled overnight. Does your organization have the people and systems to handle those new orders, without failing or getting a big black eye? This is where a good plan is essential.
The best planning in my view starts with a detailed sales growth forecast, broken down by number of new customers, orders, and revenue you want to generate. Include a spreadsheet that breaks the numbers down by month. The more specific you are, the more realistic your sales acquisition plan can be. Then do a similar expense forecast, based on adding technology, people, infrastructure and systems to handle all those new sales orders. Look at every item on your current P&L to see how it might be impacted. Expenses will go up — you have to anticipate where and how. Again, include an expense spreadsheet that breaks down expenses needed to meet your sales forecast.
Try to think of everything. You’ll need to do some hard thinking and research to come up with proper cost estimates, but doing so will make your plan better.
Scaling a business doesn’t come free. Your growth plan may call for hiring staff, deploying new technology, adding equipment and facilities, and creating reporting systems to measure and manage results. How will you find the money to invest for growth? I’m a huge proponent of bootstrapping, but it typically takes years to grow through bootstrapping alone. There are also small business contests with cash prizes such as the FedEx Small Business Grant Contest which starts taking entries Feb. 21, 2017. If you have a great story to tell about your business and could use a $25,000 grant and $7,500 in FedEx Office® print and business services to boost your business, this is an amazing opportunity. It’s also helpful to identify potential bank funds to accelerate growth such as a loan or a line of credit to draw on – start with how much you’ll need. And get started applying.
Scaling your business obviously assumes you will sell more. Do you have the sales structure in place to generate more sales? Look at sales from end to end. Do you have:
Technology makes it easier and less expensive to scale a business. You can gain huge economies of scale and more throughput, with less labor, if you invest wisely in technology.
Now’s a good time to evaluate new products on the market that save time and money, yet accommodate much higher volumes in every part of your business. Look at CRM, marketing automation, sales management, inventory, manufacturing, accounting, HR, shipping and other technology systems.
Evaluate not only software but also networks and hardware such as servers, computers, printers and telephony equipment.
Last but certainly not least, are the hands needed to carry out the work. Technology gives huge leverage, but at the end of the day, you still need people.
Sometimes the answer is to outsource or look to partners, rather than hire internally.
Scaling requires that you make tough choices. What functions can and should you perform — or not perform — internally?
Third parties may have the staff and investment in systems that enable them to be much more efficient in handling a function than your company. Trying to replicate that function internally may take too much time or money. Instead, find a reliable partner to outsource, thus positioning your business to scale better, faster and cheaper.
These are five factors to consider in scaling a business. Have you encountered any issues in scaling your business?