If you’re new to the startup world, you’ve probably heard the terms ‘scaling’, and ‘growth hacking’ quite a lot. So what does it mean to ‘scale’ a business? Well, essentially it means to grow - and grow quickly - while the term ‘growth hacking’ refers to the methods and techniques you use to do this.
It’s worth pointing out that not all businesses are looking to scale. There is absolutely nothing wrong with staying as a small business or SME. Many entrepreneurs are happy with this lifestyle, and plenty of businesses aren’t suited to growing into multi-million (or even billion) dollar enterprises. However, if you want to become a household name and make serious big bucks, then scaling is what you need to do.
You also need to think about the fact that only 50% of start-ups make it past five years, and less than a third of start-ups see their tenth birthday. There are lots of teams out there with great ideas, but few who are able to see those ideas through to the big time. It’s a difficult world for a fledgling start-up, so the faster a company can power itself up, the better its chances of long-term survival.
However, the need for speed doesn’t mean that you should hurtle towards scaling recklessly. As with anything in business, scaling properly means developing a well-researched strategy and plan.
Read on for our eight steps towards successfully scaling a business:
- Have a scalable idea. This may sound obvious but scaling a business won’t happen if your business model is closed-ended. So, what makes a business scalable? A scalable business needs to be capable of expanding rapidly and increasing revenues without increasing costs. This has been made infinitely easier in the last few years due to technology, which minimises the need for expensive overheads such as people and real estate. It’s also worth noting that totally unproven ideas often look unscalable to investors. If you’re coming out of the gates with something completely new, make sure that you’ve got plenty of market research to back up its potential.
- Know your business. Understand your product, study your cash flow, be well acquainted with your target audience, and know your business inside and out. Not only will this look impressive to investors when you come to pitch at them, it will also give you a greater understanding of your strengths, weaknesses, and what you need to do to scale up rapidly.
- Draw up a business growth plan. What is a business growth plan? It’s like a business plan, but with an emphasis on scaling. Where would you like to be in five years time? How will you get there? What are your USPs, which markets could you potentially engage with, and what are your business’s most scalable points? How could you make the most of all this? Growth strategies in business are essential for fast scaling.
- Diversify and upskill your team. Scaling is all about building out the key areas of the business that will support your product and service as your customer base increases. That applies as much to your team as to your operations. A strong, diverse team with a growing range of skills is the best asset you can have when scaling your business.
- Seek investment. If you don’t have a solid funding strategy, get one sharpish. You can’t hack your growth without the investment needed to diversify your product range, market yourself, take on new staff, invest in technology etc. However, it’s important to have your business growth plan and strategies for scaling drafted out before you seek investment. Great growth potential is one of the things that investors are looking for in startups, so being able to demonstrate solid business growth strategies is essential.
- Automate and outsource as much as possible. The most scalable businesses are lean and trim, with high profit margins and low overheads. Outsourcing what you can on an ad-hoc basis will cut down your ongoing staff costs, and automation (while expensive at first) can bring huge ROI. Outsourcing and automation allow you to run a highly productive business without too much drain from the company coffers. It will also allow you to focus on keeping your core team strong and skilled.
- Watch your competition. Keeping a close eye on your competition gives you insight into the prevalent currents in your market. It also helps you to avoid their mistakes and keep your ideas fresh. When it comes to scaling, study those competitors which are growing and flourishing. You could even ask their advice. It’s a mistake to isolate yourself totally from your competitors – they’re not your enemies.
- Play to your strengths. An obvious point, perhaps, but worth repeating. Establish what your USPs are and play to them. Do some research, get feedback, find out what you’re doing well and what your customers want more of. Then craft your growth strategies around these things.
There’s a thrill to scaling which fires many entrepreneurs on. But there’s also a skill to it. It’s very important to do the groundwork when scaling, because once you’ve started, you may well find that you can’t turn back. The only options from this point on are scale or fail. So, lay yourself some solid foundations before you start building.