Scale and growth are two exciting terms in the eyes of a business owner. And while they mean the same thing, they represent two different ideas.
You want your business to grow. But you don’t want to curb it with rapid growing pains. So, you need a scalable business strategy that sets your company up for long-term success. While the ideas of scale and growth are different, a successful business can’t have one without the other.
Here’s the importance of scaling your business and four tips to help you get started.
What Does It Mean to Scale Your Business?
Broadly speaking, scaling a business refers to its growth—both in size and operational scope. When you scale your business, the idea is that you grow your revenue faster than you bring on new costs. This can be an incredibly valuable place to be. And when it’s done right, it can give you a serious leg up.
Technology companies provide some of the best examples of successfully scaled businesses. Microsoft and Google both put a significant amount of capital and resources into building their products. But once the initial concept is established, they can attract new customers at a rapid rate without taking on a significant amount of additional expenses.
What Happens If You Grow, But Don’t Scale?
Say your company is ready to grow. That’s great! You’re selling services or products like crazy, and you’re raking in more revenue than ever before. Now the question becomes,
”What happens next?”
Before you accept more business, ask yourself questions like:
Do I have enough staff to handle a higher demand in orders?
With higher demand, will quality suffer?
Is our customer service up-to-par?
Can my manufacturers, vendors, and shippers handle higher demand?
Are there cracks in my current system that you must address first?
Can my current operational model handle an influx of new customers, or will it need to change?
Growth without scale means spending equal to or greater than the amount of new profit you’re receiving. This outcome is, of course, not sustainable over the long run.
Without a plan in place, growth could actually cut profits and client relationships, making it critical to establish systems, processes, automation, team alignment, and more to prepare your business and its employees for growth in a scalable way.
Scaling your business means establishing a process that supports, not hinders, growth.
4 Tips for Scaling Your Business
Understanding the why behind scaling your business is important, but next, you need to determine how you’ll make it happen.
Below are four tips we find helpful for business owners as they plan for growth and scale within their companies.
Create a Big-Picture Strategy
To implement a scalable strategy, start by outlining the bigger picture. Take a look at your current sales and how much you’d like to grow. Consider your timeline for growth. Are you and your staff well-prepared for growth now, or do you need to get more people onboarded and established in the right positions?
Before making any significant moves, assess your potential staffing needs. Hiring new employees or changing your staffing structure takes time, and you should account for that time in your planning sessions.
Additionally, you need to look over your operating procedures and processes. Make sure you’ll be able to increase demand on your third-party vendors, if necessary. With current supply chain shortages, it’s possible your manufacturers may not be capable of ramping up production right now. You must ensure your delivery and shipping expectations for clients won’t suffer.
Identify any potential areas where you can streamline and automate operations. Doing so will be especially important as your business grows. The less manual attention something needs now, the easier it will be to scale when the time comes.
Just like automating your finances can give you a leg up—consistent saving, paying off debt, regular investing, etc.—automation can be transformational for your business. Even removing one or two manual steps can make a massive difference! You might find it beneficial to work with an industry operations specialist to identify areas of improvement and help you implement them to keep your business running more efficiently.
Find the Right Funding
When you’re ready to grow, you’ll need the upfront capital to make it happen. Now could be a good time to tap into your business’s savings and reinvest those savings into this new venture.
If dipping into the company’s wallet isn’t an option, start searching for relevant grants and consider taking out a loan. Financing a new business venture is a big decision, and we recommend talking to a trusted advisor before doing so.
At Toberman Wealth, we specialize in helping business owners establish and grow their businesses. We’d be happy to help you determine the best way to fund the expansion of your business.
Invest in Technology and Automation
As we mentioned before, tech companies offer some of the best examples of successful scaling. That’s because the use of technology in a business is paramount to scaling growth in sales with little rise in production costs.
Invest in the right tech stack for your business now to help automate as much as possible when growth begins, including bookkeeping software, scheduling platforms, a CRM, invoice and billing, inventory, etc.
Setting up a repeatable process through automation ensures that you or your team members don’t have to manually perform the same time-sucking task over and over again.
Hire or Outsource Strategically (and Be Prepared to Delegate)
Being an involved member of your team is excellent, but there becomes a tipping point in the scales when your involvement causes more harm than good.
Put the right people in leadership positions across your business, and empower them to manage the day-to-day tasks of running your company effectively. Being too involved in the minutiae of every process or client interaction can actually hinder growth and stunt your business’s ability to scale.
Grow With Toberman Wealth
Growth is exciting, but it can come with plenty of questions and concerns. If you’re thinking about scaling your small business, our team can help with family business financial planning.
Craig Toberman is the Founder of Toberman Wealth – a fee-only financial advisor based in St. Louis. He assists families and businesses with strategic financial planning and long-term wealth management. He has over a decade of experience in financial services and has crafted custom financial plans for hundreds of families and businesses.
Craig received a Bachelor of Science (B.S.) degree in Agricultural and Consumer Economics from the University of Illinois and a Master of Business Administration (M.B.A.) degree in Finance from Saint Louis University. He is a Certified Financial Planner (CFP), Chartered Financial Analyst (CFA) charterholder, and Certified Public Accountant (CPA).
Craig is a member of the National Association of Personal Financial Advisors (NAPFA), Fee-Only Network, and XY Planning Network.
Craig lives in the greater St. Louis area with his wife, Ally and son, Hank.