The need to scale your small business is a positive sign that tells you your company is on the right track. However just because you are now looking to scale doesn’t mean you’re safe, as there are plenty of risks involved with doing so. As an entrepreneur, you must be willing to take a gamble from time to time, but there are certain things you can do to steer clear of losing money and customers when expanding.

Before you move forward with your expansion, here are some of the most common mistakes to avoid.

Innovating Unnecessarily or Prematurely

You’ll often hear that innovating unnecessarily is a common mistake for small businesses looking to scale their companies. Business consultant Rhett Power notes that while small businesses may have people they consider as ‘innovators,’ they may not be the best people to scale your company. Your plans of scaling up have a greater value and more opportunity for success when handled by those who have strategic leadership skills and competencies.

Sometimes, the task at hand isn’t necessarily about differentiating products or services; it’s about improving your existing customer service and operations. Your core members can instead focus their energy on this area, and crowdsourcing can come in when you deem yourselves ready for involving more people, or introducing new services.

Even companies that are already relatively established can still reap the rewards that this provides. Those who are on the cusp of growth or new business opportunities can look into crowdsourcing as a means of carefully scaling according to external demand, until more positions arise. Similarly, if you are expanding your repertoire, crowdsourcing can help you make more calculated risks as you will be getting insightful feedback in the early stages. This consequently cuts down on resources and secures your place for growth in the market.

Mismanaging Change

When scaling up, the key components of your strategy and operations will be altered. This may include core positions, essential technologies, company culture, major initiatives, project objectives, and organizational structure. One point business leaders need to be aware of is that this could create friction in your workforce, as change in an established system can disrupt the workflow — leading to poor performance and productivity.

This is why it's important to create a change management plan before you scale up. Change management is a planned approach to tackle any obstacles you might face while transitioning to a workplace that's undergoing expansion. This is especially important for your employees, as easing into a new work culture may be difficult for them.

To help your employees embrace, adopt, and utilize a change in how they work, be sure to analyze the potential impact of the changes you want to implement — as well as explain to them that these transformations in their day-to-day work is to their benefit. Stan Garfield writes on Medium that change management plans should evolve from two major components: people and processes. Gaining input from team members, shifting the company culture, documenting what’s expected from teams, and communicating about the progress of the initiatives are all examples of the people component of change management. For the process components, new policies, and established rules and techniques should be aligned from both internal and external sources to give teams a repeatable reference as they act on change management initiatives.  

Furthermore, being able to communicate clearly is also a crucial part of any change management plan, so be sure to enlist the help of your managers to better explain to your employees your plans for scaling up. Additionally, your stakeholders must understand why change is crucial to your company's success, so you receive financial support in developing your business. By covering all your bases and managing change in the workplace, you eliminate potential roadblocks to a successful expansion.

Pursuing the Wrong Foundation

You might have started out as a sole proprietorship, but as you scale your business, it’s important to remember that this is not the only path available to you. Expanding your startup gives you the option to have your business stand as its own distinct entity. The FastLane Group states that one disadvantage of a sole proprietorship is that you may be limited in terms of capital. Opportunities for growth or expansion may be hindered if the source of capital is the sole proprietor’s personal finances.

With a limited liability company (LLC), you and other members will not be personally liable for its debts as this classification distinguishes between personal assets and the business’ financial liabilities. As such, an LLC can grant you a form of protection from lawsuits and creditors. Depending on the state, there are certain requirements for starting an LLC. However, do note that the process has similar steps regardless of your location. ZenBusiness outlines the steps to creating an LLC, from naming the company to reviewing your tax requirements. When you decide on a name, you can move forward by choosing a registered agent, filing the articles of organization, and creating an operating agreement. It may sound like a lot, but an LLC will give you more credibility as you continue to grow.

Taking Data for Granted

Small businesses often make the mistake of creating a vision without first checking their data. While  testing out different strategies can be enlightening, you must also think of the lasting consequences that can occur as a result of this. There is no harm in trying new things, but you must ask yourself how this will affect your long-term plans. An article on says that tapping into value of analytics will prove useful in creating actionable changes. Let the numbers speak for themselves – they will tell you what works and what will not.

Data analytics is so crucial to businesses that following what these numbers dictate could be a matter of success or failure. In fact, studies have shown that companies who value and use data are three times as likely to claim that their decision-making has gotten better. This is reflected in a study commissioned by Google which found that companies that adopted data-driven marketing strategies increased their revenue by 20% and reduced costs by 30%. Data can also help you create more realistic goals based on previous performance and trends. It encourages you to build on your previous accomplishments and pay attention to other areas that need improvement.

Additionally, the information you compile through data analytics helps bolster your CRM automation strategy. In a previous post, TAI highlighted how CRM automation can help you save time by taking over menial tasks like organizing information and facilitating quick data analysis — giving you and your team more time to focus on important tasks related to scaling your business. To further maximize the success of using CRM automation, it's best to have the proper training for adopting CRM software, so teams can learn the skills necessary to build automated processes.

Any information gathered can also teach you a lot about your customer demographic⁠ — something that bears more significance when scaling up. This is because you can use it to offer a more personalized service. What's more, eConsultancy reports that 74% of marketers agree that personalization drives up customer engagement. Incorporating analytics at every business stage allows you to trace developments incrementally, while making consistently informed decisions. When it comes to something as monumental as scaling your small business, you will be equipped with the technical prowess and ability to execute your plans effectively and successfully.

Take some time to thoroughly think about your decision to scale your business. Scaling up doesn't come easy; you must be prepared and first understand how to manage change. Your goal should not necessarily be growth for the sake of it, but growth that has a purpose. Ensuring that you circumvent these common mistakes is already a step in the right direction.

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