When you’re a small business owner, the struggle begins on day one. You make do with any office or retail space your limited budget can afford. You tackle everything from marketing to bookkeeping to sales, and you fight for each and every customer that isn’t a friend or relative.
Then one day, things begin to change. Word of mouth begins to spread and suddenly you’re experiencing growth beyond what your current systems and processes are prepared to manage. You want to take advantage of these new opportunities, but first, you need to scale up everything from office space to staff headcount to your operating budget.
This pivotal moment in a small businesses journey is as exciting as it is terrifying. Taking the company to the next level requires a strategic approach that can help set you up for future success. Here’s what some of the experts have to say about scaling up your startup.
1. Make sure you’re ready
In the excitement over some success, many entrepreneurs fall into the trap of overestimating their growth trajectory. Scaling up is neither easy nor inexpensive, and jumping the gun too quickly can jeopardize an otherwise healthy startup.
“Please do not attempt to scale your business unless you’re truly sitting on a thriving second-stage business,” advises Forbes contributor and the founder and CEO of virtual entrepreneurship educational program Mighty Wise Academy, Eric Wagner.
“Too many entrepreneurs believe they just need ‘more awareness’ to ace business success, when in fact, they have nothing of value to bring to the market in the first place.” Wagner writes that entrepreneurs need to consider they are in a unique position to be successful and define their “secret sauce” before attempting to scale.
2. Define your goal
In a recent article in Entrepreneur Magazine, entrepreneurs Allen Brouwer and Cathryn Lavery relayed some of the advice they received directly from author and public speaker Tim Ferriss. In order to scale effectively, it’s important to get a sense of what a successful version of your company might look like.
“We talked with Ferriss about the importance of our big picture scale strategy — in particular figuring out our endgame,” they write. “Ferriss stressed the importance of understanding the ultimate goal for our business, and in particular, understanding what company we need to be if we want to do an exit.”
3. Clear your plate
Though entrepreneurs become accustomed to wearing many hats in the early phases of the business, their role typically evolves to focus more on the bigger picture as the company scales. Inc. contributor and co-founder of Crazy Egg, Neil Patel, recommends automating as much as possible, and outsourcing non-essentials in order to free up time and energy.
“Your graphic design firm doesn’t need a law department. Your SEO consulting firm doesn’t require a full-time PowerPoint designer. You just need to focus on what you’re good at,” he writes. “This lean approach is what allows a startup to break into the big time. When you’re nailing it with your core competencies, you’ll start to scale up.”
Patel adds that founders should spend a lot of time setting up automated services before taking a step back from those nitty-gritty responsibilities, such as establishing a training process for new hires and setting up payroll and bill pay functions so they can operate without direct oversight. “In order to be truly scalable, your business should be able to function just fine without you,” he says.
4. Find some capital
Though some companies are able to finance growth and expansion through revenue alone, few have the luxury of being able to scale on their own dime. “There are very few big businesses that are self-funded,” according to Jeri Harman, a founder and managing partner of Avante Mezzanine Partners, who has almost 30 years of experience as an investor.
“Whether you want to expand your employee base, buy a new facility or develop a new product, one of the key elements in taking a company to the next level is knowing the kind of capital you need to support that growth.” Though it may mean giving up some equity, she explained, “It’s better to have a smaller piece of a bigger pie than no pie at all.”