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4 Steps to scaling your business

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Scaling is one word every entrepreneur loves to hear. After playing in the small league, it’s exciting to envisage your business starting to catch investor attention by making a big impact in the market. That said, it’s important to have your feet firmly in the ground. Not every business is scalable and those that are don’t necessarily follow the same growth path.

Even within the same industry, there’s no guarantee that how one business scaled can be replicated on another business. There’s that unique combination of factors that will determine the when, how and what of scaling for each company. Nevertheless, there are certain common principles that have successfully guided many businesses preparing to move to the next level.

1. Define your target market

You already have an established business so the need to define your customer could sound a little odd. However, your customers at the current size of your business may not be of the same demographic profile as your potential customers at scale.

Of course, it is through your current customers that you’ve managed to test the market and proven the value of your product. However, if you want to dramatically expand your revenues and customer base, you’ll likely need to tap into audiences you haven’t sold to before. Once you have identified your ideal present and future customer, develop a sales funnel around them.

2. Define milestones

Scaling means taking your product to the masses. Still, there are levels of scaling. If you sell 50 items per month, scaling could mean moving to 500 items or 5,000. Since no company has a bottomless reservoir of capital, it’s important to define clear milestones. Don’t be afraid to set ambitious targets but don’t be unrealistic either.

One way to make sure your milestones are achievable is to tie your targets to the amount of cash you currently have. Develop a roadmap with milestones you can realistically achieve before you run out of money. That way, you’ll have a fully-funded growth plan that gives you sufficient time to look for additional financing from lenders and investors.

3. Mitigate against potential risks

Scaling your business comes with a similar growth in the magnitude of risk. It’s much worse to fail 500,000 customers than to disappoint 500. You can easily pick up the pieces after the latter but it can be much harder to bounce back and rebuild your reputation after its been damaged in the eyes of a large number of people.

Due to this greater risk, investors and lenders who can fund your growth will want assurances that demonstrate how you’ll lower the likelihood of implosion. You could for instance give potential investors the contacts of your largest customers who can vouch for your product. You could also provide reports and charts that show growth in revenue and customers over time.

4. Tread cautiously on hiring

This is perhaps the most common mistake founders make when planning to scale their business. Since the payroll is one of a company’s biggest expenses, hiring too early can have catastrophic results. Just having a good growth plan and hiring additional salespeople will not necessarily translate to business growth.

Instead, take time to drive sales using your existing team and then gradually add new employees as market sentiment demands it. Even when you do hire, consider doing so through a professional employer organization (PEO). The best PEO companies can shield you from employee costs and compliance risks while allowing you to make maximize use of extra hands.

Scaling takes planning. Nevertheless, the most important component of a successful scaling plan is your product. Your product should be so attractive to your target market that it acts as a salesperson itself. That will allow you to spend less money on sales and marketing and more in setting up the back office operations needed to keep up with demand.

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