Guest post by: Joe Peters
Few companies start big. If you want your startup or SME to grow, you must begin with a scalable business model and invest in the kind of technology that supports growth without adding to cost.
What Makes a Business Scalable?
Scalable businesses are those that have the infrastructure in place to manage exponential growth. It takes a laser-sharp focus and the foresight to prepare even if you're not ready for expansion today.
Scalability can be maximized at any phase of the business life cycle. But, when you begin with a growth mindset and a clear vision, you create a sustainable foundation for success in the future.
How do you know if you're positioned to scale?
A little self-assessment will demonstrate your level of preparedness and identify areas where you need to make changes now to point you in the right direction.
- Determine your fixed costs from the outset. How much will it take to start your business or at least cover your operating costs until you become profitable?
- Forecast ongoing expenses. How much will it cost to run your business over the next year? You should make projections based on month-to-month and yearly expenses. How are these likely to change as you expand your customer base or add new products?
- Visualize your economic end game. What is your economic picture going to look like at each stage of growth? How about your end state finances as you reach business goals and milestones?
- Determine the steps needed to reach your goals. How much revenue will you need to break even? You should also try to determine how long it will take to significantly improve cash flow and how much funding you'll need. How will these metrics and outcomes change if you have to scale quickly?
How you answer these questions will decide how ready your company is to scale, and how fast you can do so without going off the rails or taking your eyes off the prize.
Preparing Your Company for Expansion
In the beginning, it's easy to go for the cheap and easy fix. You're excited, optimistic, and chomping at the bit.
Don't fall victim to fast, inefficient solutions.
Preparing your company for expansion means planning strategically now for sustainability in the future. Do you have any idea what will serve your company best if business doubles within the next year? What will happen, and what will you need in place if it triples or blows up to 10 times its size?
Start with a forward-thinking mindset and invest in the right processes and people to help bring your vision to life.
Scalable processes are those that help you manage growth to a desired outcome regardless of the pace your company grows. They work the same for each person on your team, and that won't change as you add new team members.
Scalability implies that your processes will not only support exponential growth but also perform consistently regardless of the rate or scale of growth.
Here's how it's done right.
#1 Create an Efficient System
Businesses rarely grow based on your talent alone. It can be done, but without an efficient system in place, it will be a struggle at every step.
That's simply not conducive to growth.
All solid business practices begin with a plan and the right tools to put it in motion. Scalable companies incorporate systems and employ standard best practices that are documented and proven to improve efficiency and lower cost without sacrificing quality or performance.
Keep core processes as stable and predictable as possible and allow other parties and components to grow around them. Identify success gaps and determine where you can make adjustments to improve scalability.
For example, are current processes too slow? Is the opportunity cost too undesirable? Do you have the right technology and tools in place?
#2 Obtain and Leverage Capital
Unless you have a bottomless well of cash, you're going to want to attract investors to your enterprise. In fact, this is how real estate investors leverage opportunities: they use other people's money to fund their acquisitions and maximize ROI.
Investors are only interested in businesses that demonstrate the potential for growth and high returns. Talk is one thing, and it can generate enthusiasm.
But, if you want to attract capital, show them a solid business plan and a valid financial model that supports growth and sustainability.
Can your business scale globally with a minimum of support and staff? What is your profit outlook, and what processes do you have in place to reach your potential?
#3 Leverage Automation
Automation is one of the keys to scalability. Having a solid asset management system in place helps you manage workflows and improve overall productivity. Assets can be fixed, long-term items like equipment or temporary, such as raw materials or inventory on hand.
The smaller your business, the more important it is to know what assets you have and their role in your financial viability. Not only will this improve scalability, but you'll also:
- Prevent theft and the cost of asset replacement
- Avoid high maintenance costs by knowing the whereabouts and condition of each asset
- Keep staff happy and on-task by having the tools and equipment they need and ensuring that it's in good condition
- Reduce risk and legal liability
- Keep your budget intact
- Offer better products and services
In addition to asset tracking apps and systems, a good customer relationship management (CRM) will improve efficiency by guiding customer interactions, tracking leads, and identifying trends that will help you attract new business.
#4 Build a Solid Foundation
In modern business, efficiency and scalability are built on the back of technology. Investing in apps and software that provide the proper foundation to support growth means less investment in the future.
Look for automation and processes that can scale without increasing acquisition or production costs.
Examples would be choosing a SaaS service rather than a standalone platform that needs constant maintenance and updates, or a pay-as-you-grow platform. That way, you can manage growth and limit major disruptions.
#5 Recruit and Nurture Top Talent
Strategic asset management is about more than just leveraging tools, equipment, and other tangibles. One of your most significant resources is of the human variety.
What kind of talent will your business need to fill roles that are created with the expansion? Do you have a viable business model and the technology to support it?
The right technology frees you to focus on attracting and developing leaders rather than becoming mired in day-to-day minutiae of running your company.
Does your company have growth potential?
The secret is to make it profitable as it grows without increasing cost. That means leveraging assets and creating processes that will work no matter how fast and to what extent your business grows.
When you want to manage growth, it takes planning and patience. Investing in scalable business processes will help you get there without disrupting your business or losing your way.