Growing your business is one of the most exciting, yet most uncertain parts of running a company. As you enter into new markets and acquire new customers, it can be very rewarding. However, if the move to scale is made too soon, it can be the complete opposite – a disaster.
What does it mean to scale your business?
Scaling a business essentially refers to the expansion of its current operations. This is typically executed to support an increased demand and expand the current customer base. There are many ways to approach this, which we will discuss later on. First, let’s talk about when is the right time to scale your business.
When is the right time to scale your business?
There are a few conditions that should be met to help determine whether or not your business is ready to scale. Consider each of these factors:
The necessary demand exists. This requires that the current level of demand is steady and sufficient in the sense that your business operations are stable. Steady or even exponential growth can also be a good indicator, so long as the influx is sustainable. A final indication would be in the form of excessive demand to the point where you cannot meet such levels with your current operations.
Finances are in order. Scaling a business requires no shortage of cash and financing options. Having a cash reserve, as well as continued future cash flows is necessary to support expansion efforts. You may even notice that your cash account is accumulating at increasing rates. This is a sign that you should put it to use – perhaps through expansion.
Solid infrastructure. Without the foundation in place, you can’t expect to scale your business. This involves having key teams, technology, systems and procedures in place to support expansion efforts.
Defined competitive advantage. When it comes to scalability, you need to have your core competencies and competitive advantage defined. This will help to guide you in the process of scaling to ensure that you don’t lose the advantage that defines your business.
Minimal risk exists. Ideally, you will scale your business when it is a no-brainer to do so. This could mean that you’re currently at a point of having to turn down customers because you are too busy to meet orders. It could also mean that demand exists in other markets for your products where locals are simply waiting for you to enter the region.
Here are some different ways to scale your business.
At this point, we’ve discussed the different conditions that should be in place before you scale your business. Now let’s talk specifically about the different ways to scale your business.
Developing new products and product lines: Here you can simply introduce new products or extensions of previous product lines. Ideally, customers will be encouraged to purchase products from multiple product lines, or in the case of extensions, upgrade from previous versions.
Entering new geographical locations: If your products and services are only available in certain geographical markets, looking to new regions in order to tap into new markets. This is one of the quickest ways to scale your business.
Targeting new audiences: This involves positioning your product or service in a way that it appeals to new target markets. Sometimes there can be multiple uses of a product, so be sure to identify all consumer segments that could benefit from it.
Expanding the size of your operations: This can be as simple as hiring more people so you can better serve more customers. There are times when a business simply just needs more staffing to get things done.
As you can see, there are a number of ways to scale your business. Just remember, the key is to not execute too early or too late. If you’re too early, your business could be stretched too thin and end up collapsing. In the case that you scale too late, you may miss potential opportunities and it’s possible that your business could be labeled as a small operation by high profile customers.
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