Launching an expansion initiative can be exciting, and it’s the wise entrepreneur who is well prepared to manage their small business growth strategically. Scaling a business requires careful planning, and it is essential to put the right systems, staff, technology, partners, and financing in place to support steady, sustainable growth.
Scalability is the ability of a startup to grow without compromising performance or losing revenue. While this requires processes, people, and plans, it begins with having a growth mindset. To put it simply, entrepreneurs need to think big and have the desire to see their business grow. Although this sounds obvious, many small business owners do not have the intention or the drive to scale.
Ambitious entrepreneurs have a clear vision of the ultimate goal for their business. When you have determined your destination, you can develop growth targets, a scale plan strategy, and concrete actions to get you there. For example, building a company to sell requires a different approach than growing a business that supports a certain lifestyle. Growth-minded owners should also work to develop partnerships with people and organizations outside the business. Focus on building a network of partners including service providers, sales channel partners, suppliers, and other established companies that can support your expansion objectives.
Focus on the Fundamentals
Before you can consider scaling your business, you need to have solid fundamentals in place. According to a survey by StartupGenom, scaling prematurely is the most common reason for startups to perform poorly. Entrepreneurs get ahead of themselves by scaling their team, product line, or their customer acquisition strategy before they have a foundation in place to support growth.
In order to invest in focused growth, small business owners need to identify and emphasize the core competencies that drive the company’s ability to compete. You need to be clear about your target market and end-users and make sure your core products are a fit. Find out which marketing channels provide the biggest return on investment and offer scaling potential. Perhaps most importantly, determine whether or not you have the resources to scale without running short of time, expertise, and/or money.
Standardize and Automate
Standardizing and automating your systems and processes will make it easier and less expensive to scale your business. This typically requires investing in technology and support systems including management and staff training as needed.
Automation can help you run your business more efficiently by minimizing manual work. Now is the time to evaluate your systems and technology. Systems integration is essential to saving time, improving communication and operations management, and accommodating higher volume in every area of your business.
Consider CRM, marketing, sales management, inventory, shipping, accounting, HR, and other technology systems. Evaluate not only software, but also networks and hardware. Switching to cloud-based systems will help ensure that information is accessible anywhere, anytime.
While this process may take considerable time and resources, it will streamline operations, so you and your staff can access data faster, hire faster, pay easier, and market better.
Build a Deep Bench
Technology will give your small business leverage, but to be truly scalable you must have the right people in place. While business owners often have specific expertise, growing a business requires building a team with complementary skills to handle every aspect of the operation. These employees not only need to have the desired expertise, but also need to be dedicated to working together to see your business succeed.
When you scale up, your staff must be able to deal with the increased demands that typically come with expanding. It’s essential to plan for delegating extra responsibilities to your best people, make sure they are ready for the challenge, and provide the support they need to perform. Growth-focused entrepreneurs are not afraid to hand off even the most critical business responsibilities. They understand that in order to be truly scalable, their business must be able to run smoothly without them.
Keep in mind that there may be functions you cannot or should not perform internally. Consider outsourcing non-essential roles to third parties that have the skills and systems to be much more efficient. Consultants, high-level professionals, and service firms can save you time and money, positioning your business to scale faster and at a lower cost.
Have Access to Working Capital
Small business owners looking to expand need to be on solid ground financially. Regardless of your scale strategy, you will need cash to implement the actions necessary to take you to the next level. However, cash flow can be a challenge as increased demand for products and services results in greater expenditures for production, inventory, and payroll.
Having access to working capital financing can help you cover expenses as you grow rather than relying on existing cash flow. You can use the funds to invest in more space or another location, pay for employee training, launch a new marketing plan, or buy additional inventory to fill future orders. Summit Financial Resources offers custom financing solutions that use your accounts receivable and other assets as collateral.
Because we are not regulated like a bank, we can structure more flexible deals, take more risks, and make funding decisions more quickly to help you move beyond any financial hurdles. Following a path of careful, calculated growth is smarter than pursuing expansion prematurely. This includes making sure that when the need arises, you can boost cash flow immediately to keep your scale strategy moving.
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Summit Financial Resources specializes in working capital financing for small to medium-sized businesses that need increased cash flow. We provide working capital financing through invoice factoring, asset-based lending, inventory lending, and equipment financing.