Every entrepreneur begins a business with the hope of growing it into something bigger with time. However, despite a successful start, most business owners struggle with steering the business into scaling safely.
As a result, businesses that were doing well at some point may slow down or collapse altogether due to mistakes made during scaling. Mistakes are inevitable when running a business, but it matters more how the owner deals with them to prevent a growing disaster.
The following are tips on how to safely scale your business.
How to Scale Your Business Fast and Safe
1. Scale Based on Data
Scaling up a business is a move that should be made based on data and demand. While it is an entrepreneur’s dream to have a bigger business and offer more products and services to more customers, doing so based on imagination and dreams will hurt the business’s chance of survival.
For instance, just because a restaurant has more room outside, does not mean the owner should buy more seats and tables to fill the space. Instead, the owner should judge based on the number of customers the restaurant is receiving daily. Is the restaurant filled to the brim daily or are there just a few people per table each time?
Scaling based on imagination could result in the business having to chase demand which should not be the case.
2. Take Time to Understand the Status of the Business
Understanding the business is especially important for a venture that has already been in operation for a certain period of time to meet the suddenly growing demand. It is easy for the team to lose itself trying to keep the business running and customers happy without thinking about the actual operations.
In the beginning, there are processes that are key to the survival of the business. While these processes can stall for a while, keeping them on the side for too long could cause the business to suffer.
It is therefore important for the business owner and executives to take time and break down the business, into its components and processes in order to understand its current status. This allows them to clearly see what is working and what has not been working for a while.
It also allows them to charter a clear way forward ensuring that all things are at par and all key processes are well taken care of.
1-10 Growth Phase
Your primary objective in this phase is to validate your offer. You need to offer/build something the market ACTUALLY wants. You also need to have your ops & fulfilment down to a T so you can actually provide your offer.
You need to be:
1. Good at hiring
— Marco Staal (@iammarcostaal) July 21, 2023
3. Hire Managers as You Hire Other Staff
The most natural move for scaling businesses is usually to hire more workers or more people to offer service to the client. Most businesses, however, neglect managerial roles and business owners are eventually unable to manage all the workers. You may think that you can manage them all yourself and maybe you can but a skilled manager with dedicated time to make sure his or her employees are working at full tilt is absolutely vital.
Scaling businesses need managers to ensure quality hires, onboard the hires, and monitor performance. Failure to have more managers results in lesser quality execution which could drive customers away and hurt the business.
4. Measure the Team’s Performance
Fast-scaling businesses often require an increase in the number of employees. As such, business owners tend to make desperate hires in order to meet the growing demand. Unfortunately, these hires can end up costing the business more than they help it.
To keep a business competitive, it is important that every member of the team delivers their best performance. This can only be determined if there are metrics to measure performance per role.
Entrepreneurs need to define key performance indicators (KPIs) which will accumulatively determine the business’s performance. These metrics will also enable the owner to make data-driven decisions in terms of hiring, rewarding, and many other factors.
A performance management system is a process that helps organizations set goals, measure progress, and provide feedback to employees. It is an essential tool for managing employee performance and ensuring that employees are meeting organizational goals and objectives.
— Memory Nguwi (@memorynguwi) March 21, 2023
5. Delegate Processes
A fast-scaling business has many new processes that are necessary to enable growth. These processes could include hiring, sourcing new suppliers, or even catering to new clients. In small businesses, the business owner is able to oversee all processes successfully.
On the other hand, fast-scaling businesses become too complicated that attempting to be hands-on in every process results in the neglect of some areas. By delegating, an entrepreneur is able to leave some tasks in the hands of trusted employees.
This allows them to focus on the newer processes that still need closer monitoring and more decision-making. It also provides the traditional and foundational processes with enough attention to ensure that they remain running successfully.
6. Test Before Committing
Before adding new components to the business, it is important to test them. These components could be new hires, new products, new services, or even new marketing strategies.
By testing them, the business is able to evaluate whether the person is improving the business or the product has enough demand for it to be listed permanently. Committing without testing results in negative discoveries along the way which sometimes are difficult to reverse. For instance, if a new marketing service does not drive more sales yet the marketing agency has already been paid in full, the company suffers unnecessary expenses.
Therefore, despite the desperation for new hires for a scaling business, owners could put new employees on probation to have them prove their ability to perform. They could also pay for a marketing service for a month before committing to six months in order to test its benefit for the business.
7. Optimize Operations
In the process of increasing workers and resources to serve the growing demand, fast-scaling businesses end up increasing their expenses. However, it is crucial for the business owner to ensure that the new expenses do not cancel out the additional revenue such that the business sees no additional profit.
Therefore, when increasing operations, businesses should take measures to manage expenses so as to maximize profits. Such measures include reducing the waste produced by processes, unsubscribing from services that no longer benefit the business, and reducing products or services that no longer have substantial demand.
Owners should also monitor inventory more closely and keep proper records which helps with tracking both expenses and profits.
8. Work with Mentors
Having mentors offers entrepreneurs validation that they are on the right path. It also offers guidance when they are not doing things appropriately. By seeking those who have had businesses and have gone through scaling before, one is able to learn from their mistakes and do better.
You also gain insights from the things other business owners wish they did during their first scaling which places the business at a better chance of success.
In conclusion, the key to long-term success lies in understanding how to scale a business effectively. To achieve this, it is crucial to establish business advantages that foster enduring client relationships, continuously strive to identify your competitive edge, understand employee capabilities, and fully grasp the potential of anticipation.
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