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When you're a self-employed owner-operator, scaling your business can seem like a daunting task. But with the right information and planning, it can be a smooth(er) process.
In this post, we'll outline what scaling is (something Giggle Finance can help you achieve), what to consider when doing it, and some steps you can take to make the process as easy as possible. Whether you're just starting out, or looking to grow even more, read on for everything you need to know about scaling!
Scaling Your Business – What does it Mean?
Scaling your business means generating more revenue while achieving improved efficiency. Simply put, your generated income should be more than what you invest (in money and time) to bring customers through the door. A key concept to remember is that scaling isn't just about physical growth (like a new location or car, for example). It all comes down to the golden ratio: more money in, less money out.
Growing your Business vs. Scaling your Business: What’s the Difference?
Growing and scaling may seem the same, but they aren't (at least, the way we’re defining it). While both concepts drive companies in the right direction by increasing the bottom line, they are fundamentally different in meaning.
Growth is defined as the rise in capacity and operations, together with an increase in revenue. However, this increase is accompanied by increased costs to generate more income for the business.
Meanwhile, scaling involves increasing income while managing to keep costs down, and it all comes down to how your business prioritizes efficiency.
Should You Scale?
Before you scale your business, determine why you want to do it in the first place. Specifically, consider the life that you envision for yourself to see if it requires a scaled business.
For example, if you're a consultant who earns enough to support your ideal life without working long hours, scaling your business may not be necessary. Instead, you could be better off keeping your business small, lean, and easy to manage.
Before diving into planning, you might want to back up a little to formulate a clear idea of what you want out of life, and out of your business. Do you really need to scale your business? Scaling presents unique challenges — there’s no need to undergo them if your business is already working for you.
However, if your dream life or goal business state requires you to scale, you'll want to do so in the most efficient way possible. To accomplish this, try following the steps below.
Step One: Start With Your Systems and Processes
The first step towards scaling your business is identifying and prioritizing all the challenges you need to tackle. These challenges could include:
- Areas where things regularly get slowed down
- Labor-intensive and repetitive tasks
- Thing you’re doing that are outside your “genius zone,” such as bookkeeping
Then assess whether the challenging tasks really need to be done. Are they in line with your strategy? Can they be further improved? If yes, how? Or, can you just get rid of them instead?
Once you optimize said tasks, develop them into systems that will guide the rest. Scalable businesses learn to organize complex operations by developing repeatable processes and workflows. Automation really helps here (more on that later).
Systematization frees time and lets you focus on strategy, growth, market and customer understanding, and innovation. It also increases the value of your business if you ever decide to sell it. Potential buyers appreciate having established systems in place to guide the work of the team.
Step Two: Automate
After organizing your tasks into clear, repeatable processes, the next step is to automate as much of them as possible.
Using software and technology to your advantage is the best way to get more work done and serve more clients. Tools like Zapier, ClickUp, Quickbooks Self-Employed, and social media schedulers can all help you automate processes and save a lot of time doing repeatable tasks for a relatively small fee.
Though “time” seems free, it’s not. If you automate, you'll have more time to focus on your overall strategy, business growth, and developing new ideas. Doing all those significantly enhances your productivity and the value you’re adding while requiring no additional resources (which is the key to scaling, remember?)
You also can turn to automation software to provide access to advanced analytics for measuring your team's performance. This information isn't usually available when you perform work manually. For example, an automated lead generation funnel can tell you exactly how effectively your landing pages and offers are doing.
Step Three: Focus
Many entrepreneurs suffer from “shiny object syndrome” — it's easy to get sidetracked by new people, opportunities, and ideas when you're growing your business. After all, this same trait is probably what led you to start your business, and what makes you a great entrepreneur!
At times, you may be tempted to develop a product just because one buyer guaranteed a purchase, even if you're unsure you'll be able to sell it to others (and maybe you’ve already done this). You may also consider offering a consulting service to generate extra money today, even if you know it will not scale.
Attempting to move in too many different directions almost never ends well, and is unlikely to help you scale. If anything, it diverts your attention away from key projects and processes, increases your cognitive load, and forces you to spend resources on things that are irrelevant to your business’s primary goal.
Step Four: Make the Right Hires
It’s not just about hiring more people — it’s about hiring the right people. This is especially crucial in the early days. You want to look for those who perform well consistently and care about their job and the company. In short, find people who invest themselves in their job.
Hiring individuals who will help you scale might prove challenging because their job usually changes as the business evolves. For example, you may need to hire someone who is skilled at managing schedules. The best fit for a scaling company could be someone who is more of a project management generalist. For example they could also be capable of automating your calendar management system and then finding other ways to add value to the business.
It's not easy to find people with the appropriate skill set, dedication, and work ethic to help your business scale. So once you do, hold on to them. If you must, pay them in equity (company ownership). Invest in their growth and development, so they can continue pushing your business forward.
Step Five: Look at Your Leadership
The final component of scaling your business is leadership. The person in charge should be someone who envisions a scaled-up version of your company and can lead the rest of the team toward that goal. You probably want to be this person (at least for now) — if so, having healthy self-awareness and knowing if or when you need to seek out help (such as by hiring a business coach, or even a CEO) is vital.
Leaders should be able to remove themselves from the company's day-to-day operations to work on the business rather than in it. They should come to work every day to build a greater and more efficient workforce than the previous one. They should motivate the team to look for ways to automate and streamline their own tasks.
Most significantly, leadership requires patience. Even if it helps the company make this week's payroll, today's opportunity can be a diversion from the ultimate goal. This is where the focus that we mentioned previously comes into play.
Tips For Scaling Your Business
Evaluate your Strengths and Weaknesses
Growing to scale will put your company under tremendous pressure than ever before. It's not the time to cover up things and hope everything will just sort itself out as you grow. Spend time looking closely at every variable: your team, infrastructure, operations, product, services, human resources, and, most importantly, your budget.
If there are flaws in how your company is currently operating, scaling will amplify them. Set aside time to examine your company from the inside out and ensure you can handle abrupt expansion. Before you ever consider scaling, your company should be running like a well-oiled machine.
Create a Strategic Roadmap
After thoroughly evaluating your business, it's time to develop a scaling roadmap. It should help you identify which goals you hope to achieve, when, and how each key aspect of your business is expected to contribute.
Establish your scaling roadmap at the forefront of all decisions you'll make. If a new move or decision doesn't help you meet the strategic milestones you set, don't spend the money just because you can.
Remember that every move you make as you learn how to scale your business should be geared toward long-term growth. Check in regularly to see if revenue is on track, operating costs remain low, and teams accomplish critical goals.
Ensure your Finances are in Order
To make money, you must first have money. But how much makes the difference between plain growth and strategic scaling?
Scaling should be a smart investment that your business can support—not merely break even. Consider if there's enough demand to justify scaling right now. Will you be able to bring in the leads you require without going over budget? Can your budget sustain the increased infrastructure or people required to support your expansion?
The main reason why a huge percentage of businesses fail is because of cash flow problems. You will need financing to scale successfully. Show lenders you have a strategic roadmap enabling your business to scale up, with measurable milestones connected to profit and revenue along the way.
You can also scale faster by exploring financing options other than a single lender, such as a combination of credit cards, banks, investors, and entrepreneurship grants.
Last Word on Scaling Your Business
Scaling a business doesn’t have a one size fits all solution. The important part is to take the time to assess where you are in your business journey and what needs to be done for your company to grow.
From there, follow these tips on scaling your business to continue making an impact in your industry without running yourself into the ground.