Your guide to the best ways to scale your business, without breaking the bank.
Have you established a thriving business and are eager to make use of this initial momentum and success to scale up your business? You may be wondering what your best next step is.
Business owners in this lucky position may be considering potentially opening up a new store, expanding your workforce, or increasing the supply levels of your product or service. Understanding whether or not you’re ready for this growth is a matter of due diligence and patience.
Too many businesses have fallen into the trap of trying to grow too quickly without taking the right precautions. You need to know that you have the effective systems and resources in place to ensure smooth scalability, and you need to be confident that space exists within your target market for you to capture a larger position.
Here are some helpful steps that will assist in setting your business on the path to growth, without breaking the bank.
1. Get Your Accounts in Order
Financial diligence is the key to any successful business, especially as your business grows. Before you make any kind of move be absolutely sure that your revenue levels are solid, and your accounts are clean and tidy.
You should pay particular attention to any operating costs, or overheads. These include wages paid, rent for shopfronts, utility bills, debts incurred and more. Expanding your business and increased operating costs and overheads usually go hand in hand.
Typically, it is essential to have a healthy net income to green light the next stage of growth. Even more ideal is to have high liquidity (cash in the bank). Also, look at any areas of potential overspend, as these can scale up with your business if left unchecked.
If you can look at your accounts and feel confident that costs are being minimised and profits are healthy, then the future looks good. Getting your accounts in order can be made easier with tools such as invoice financing and CRM solutions.
2. Do Your Research
So, your business has seen success following a strong Ecommerce product launch, or at your first shopfront. That doesn’t mean that your business is guaranteed to carry that success into other locations or a larger market.
To work out if your business is ready to expand, consider demographics of your current customer base. Are you catering to a niche market? Do the kinds of people who regularly use your shopfront exist in a wider basin? Are there other businesses that dominate your particular market in a separate location?
Competing may mean a higher marketing spend and you want to be sure that your corporate image aligns with these new customers.
Initial success can be very exciting, but to ensure costs don’t balloon, it can help to take a deep breath, especially if a physical shop is involved. Scout out a low-cost solution in an area or market that you are confident is unsaturated and aligns with your corporate image and ethos.
3. Consider Economies of Scale
In its simplest terms, Economies of Scale refers to increasing production whilst minimising costs through efficient business practice. If you open up a second shopfront, for example, does that mean you need a separate management team? Extra machinery or a doubled sales force?
Consider if you can cater to some of the needs of your expanding business with the tools already at your disposal. If you can amplify your supply levels through use of existing capital, then you will be in a stronger position.
Keeping your ambition in check and working systematically can sometimes be one of the hardest parts of scaling up your business. However, knowing the capacity of the tools and workforce that you have right now, and working out any efficiencies you can make in these areas, can be a good place to start.
4. Draw Up Your Plan
Now that you have a keen understanding of your accounts, target location or market for expansion, and capacity of your existing workforce, write it all up into a plan of attack that focuses on the key activities. Creating an expansion pitch that justifies and provides evidence for the next steps of your business.
Then, present your pitch to an investor/investment fund. It doesn’t matter if you’re seeking additional investment or not. Regular investors will have seen these kinds of plans before and may be able to alert you to any potential pitfalls or dangers in advance.
More importantly, they may be able to identify areas of cost efficiency. If you can generate a healthy amount of confidence in your plan, then you can proceed with optimism.
Scaling your business is an exciting, yet daunting prospect. Keeping it all within budget requires maintaining low costs and managing the process patiently, step-by-step. With the right amount of preparation and planning you can be hopeful of greater success for your business in the future.