Many business owners try to scale too fast. If you’re not ready to scale, growing quickly will lead to burnout and most of your time will be spent on putting out fires.
We understand. Once you’ve had some success and the Rands are rolling in, you’re starting to think bigger and you’re getting excited to hire new people, to up your marketing spend, or to buy in bulk so that you can sell more products.
However, if you’re trying to scale before you’re ready, this can lead to the downfall of your business.
Here are the four most important signs that you’re ready to take your business to the next level. If any of them is absent, spend some time to put them in place and perfect them before you try to scale.
1. Your Foundations Are Solid
You need to know who you are and what you stand for. You need to know exactly who your target audience is, and they need to know that as well. You need to know what your customers need and give it to them.
If you have a small, but strong customer-base who are loyal and are returning to do business with you over-and-over again, you may be ready for the next step. But if you have to work hard to get your clients – spending a lot of time and money on sales and marketing – and people only buy once and then never come back, you’re not ready to go big yet.
It’s expensive to sign up new customers. Build customer loyalty and create a buzz first; otherwise, it’s going to be very expensive to scale.
2. Your Business Is Running like a Smooth Engine
You cannot scale if you have constant hiccups in your business processes, if there are bottlenecks, if your staff constantly run to you with questions about normal day-to-day transactions, or if you still do transactions manually that can be automated.
Before you try to scale, make sure you have a handle on these:
- Implement standard operating procedures (SOPs) for every single task and transaction. These should be documented and tested, and all relevant personnel should be trained on them and follow the procedures to the letter.
- Set policies on how to handle both ordinary and irregular transactions. For instance, how do you deal with unhappy clients? Do you maybe give them a discount, and who needs to authorise these types of transactions?
- Your accounting should be kept up-to-date on a daily basis. We often encounter businesses who want to scale – or already started to scale – but with their accounts in a mess or constantly behind. The owner has no idea how the business is really performing and are often surprised a few months after investing in something big (new equipment or employing new staff members) that they’re actually doing much worse than expected. If you don’t consistently get an up-to-date report every month from your accounting staff about your business performance, then don’t try to scale yet. Instead, come and talk with us so that we can help you to get and stay up-to-date and help you to get the right reports so that you can know how your business is performing. This way you can make the best decisions possible for your business.
- Automate. Technology can make your life easy, but many small businesses still don’t utilise the right programs and apps to streamline their business processes. It’s acceptable when you’re still small, but not sustainable if you want to scale. Go through each process and consider what you can automate so that you don’t drown in unnecessary tasks. Doing this will not only save you time and money, but your staff will also enjoy their work a little bit more.
3. You’re Working on Your Business, Not in It
When you’re working on your business, and not in it, it means that you, as the owner, partner, or director, are focusing on the key strategic and growth activities in the business – that 5% of core activities that brings in the money – and not on the nitty-gritty details.
For those tasks, you need to have a team in place that can run with it or at least service providers to whom you can outsource the work and these processes need to work correctly, as discussed in the previous point. If you still have a finger in stock taking or you’re authorising day-to-day expenses, you’re not ready to scale yet.
Someone needs to lead the change, and that person needs to be you. And your attention should be on those activities 100% of the time.
4. You Have a Solid Business Plan and Growth Strategy
If points one to three are in place, then you’re ready to start thinking about scaling. But don’t jump in yet. You have to make sure that you have a solid business plan and growth strategy in place. And no, the business plan that you’ve put together back when you started the business – even if it was just six months ago – is outdated.
A scaling strategy is vastly different, and you need to prepare properly. Refer to this blog to see what goes into creating a business plan, but remember to take your strategy for scaling into account.
You may need more capital to invest in equipment or stock, or you may need to update a system or e-store that’s outdated and unable to handle the increase in traffic. So remember to take these possible capital requirements into account. You may also need to employ more people, so make sure you understand which skills and how many people you’ll need and start the hiring process in time.
If this is your first rodeo, consider employing a specialist who has experience in scaling a similar business to yours – either on a permanent or consulting basis. Don’t be afraid to ask for help. Scaling your business is a decision that should not be taken lightly, and without the right strategies your business may have a difficult time scaling the way you’ve anticipated, or it may even fail.
If you need any help with one or all of these stages, get in touch with us. We’d love to help you prepare for scaling and hold your hand throughout the process.