Scaling & Expansion
Mastering the Art of Scaling and Expanding Your Business for Sustainable Growth
By Dennis Bluthardt, Namaste Studios
This is a harsh truth: 70% of small businesses don’t make it past their first decade, and they fail primarily for a reason that is hard to stomach: They don’t have a good plan for scaling. Of course, that’s not the whole story, and I plan to cover some other key reasons that small businesses fail in this chapter. But this part emphasizes just how important it is to have a strategic plan for surviving and thriving in the growth phase of your business.
The small business success rate may be low, but this fact only underscores the ample opportunity for success. Think about it. A small company may not be a small life-changer in most cases, but it has not just the potential for innovation in its chosen field but also for serving as a model for how to live a not-so-small life. For instance, you may not need much seed money to start doing something valuable. Your company could be an important example in that field.
Today’s fiercely competitive business world demands that just establishing an enterprise is insufficient; it must flourish and expand. Founders must continually ask themselves these basic questions:
How can I grow my business?
What new markets can I access before my rivals do?
How can I more entirely and effectively innovate within my organization’s product line?
If those sound like impossible feats, these business tips for entrepreneurs have covered you!
Consider the questions above along the lines of:
Remember, a business can’t grow meaningfully without a solid, actionable plan. Strategy is the backbone of your business’s growth trajectory.
Market research: You can’t identify growth opportunities without continuously studying your marketing and audience behavior.
Product development: Stagnant product offerings are the fastest way to kill a brand, business, or company. If you have one good product that sells, great, but it’s not enough.
Understanding the Concepts of Scaling and Expanding Your Business
Scaling a business means you have developed a sound system to become more profitable as you sell more. In other words, you can increase your output and number of customers while keeping the cost of selling that product the same. For example, a software company that develops an app can repeatedly sell it to thousands of people without spending extra money to develop the technology to allow more people to use it. Scaling is optimal in terms of profits and business models. With this model, you can see the benefits of becoming more successful. Rather than figuring out what procedures, inventory, or marketing campaigns you need to do, you can invest in the infrastructure you have that is already working.
On the other hand, expanding a business would mean opening more locations, hiring more people, or adding more products. Expanding a business revolves around expansion techniques and not reducing the cost of goods sold. There is also some crossover as well. Expanding into a new type of business with a similar product or tools. This way, you are making more revenue, but the industries are so close that you aren’t increasing your marketing budget.
Deciding between scaling and expanding a business gives you a different flavor of growth.
Key Strategies for Scaling Your Business
To scale a business, you must determine the strategy via one or more. For many companies, this strategy will be a mix of:
Technology: Most businesses I know that have scaled to 7 figures and beyond have done so by figuring out what combination of software and tools would allow their teams to get their work done more effectively and efficiently. For example, specific customer relationship manager (CRM) software might help the Sales team increase their sales, while specific order management software might help teams communicate more effectively about their orders.
People: Even with the right strategy, scaling at most businesses will be difficult unless you can effectively hire, fire, and manage new hires. Rockstar C-Suite executives can sometimes more than double a company’s customer base, thus making it easier for those businesses to scale over the long term.
Ready to fill a need: There have been other cases where an entrepreneur noticed a new problem created by this, planned an opportunity, and then decided to act on it, even if that company wasn’t necessarily positioned well in the first place. Less of a concern to them was the problem of COVID-19. More of a concern was their willingness to entertain various ideas and their approach to business, which was very open-minded.
Remember, there’s no universal solution to this problem. The virtue of these strategies is their adaptability. What works best will differ based on your unique business situation. You have the authority to adjust your way of doing things to meet your needs.
Expanding Your Business: Opportunities and Challenges
When you think of expanding a business, it means doing so either via entering new markets, diversifying your product lines, or enhancing the list of services you offer. New markets can mean looking outside your geographical landscape, seeking different clients than you’re used to, or finding industries you never thought possible as customers. Introducing new product lines might attract more clients than you thought possible, while diversifying your product lines can do the same while increasing how you make money.
Each of these avenues, though, presents its own unique set of challenges. Of all the above challenges, though, understanding the dynamics of the new markets is likely the most difficult to do successfully, considering these new ones might be different landscapes. You must do the proper market research. Why? You must know the customers you want to target and who your competition is, plus know any possible obstacles that might prevent you from entering in the first place. Regarding your company’s operations (and where it should go), you might have to redesign your supply chain, look for new sources of the products you need, or set up entirely different manufacturing operations.
In conclusion, do some strategic planning in advance. By that, look at a handful of these considerations, make an educated guess as best you can about what’s best, and then go from there. There are ways to have your business expand. However, the best way to do so is to have a solidly written business plan.
Why? The plan should discuss where you are today, where you’re heading, and how you will get there. What are the keywords contained in the previous line?
Where are you heading? Only those three words tell you where you will be, which customers you will have, and how you will add each. Now go out and do it.
The Role of Small Businesses and Startups in Scaling and Expansion
Keeping several plates and spinning requires planning and coordination. What you don’t want is to find out that you’re all financed up without anywhere to go, or vice versa.
Take growth: One method we are familiar with is technology. Get a coffee shop and install an app. Orders go from being received by an already-overworked cashier (the barista) to being satisfied by the kitchen even before the customer reaches the store. When marketed well, this will increase the number of orders. Ensure your kitchen can cope. Maybe now it can deal with 20 covers. Have you visited your frazzled chef to tell him that with the new technology platform you’ve got, this will soon be 40? Your technology better enables you to cope with success, but your staff might react differently!
Or, again, add a whole layer of paperwork (digitally). Make the world of contractually a consideration. Get it wrong, and your long-awaited handing over of a key piece of real estate could be delayed by weeks, months, maybe once and for all. Get the legals sorted long in advance.
Measuring Success: Key Performance Indicators (KPIs) for Growth
Knowing and tracking the correct Key Performance Indicators (KPIs) is essential in scaling and expanding a business. When I refer to KPIs, I’m talking about customer acquisition cost (CAC), customer lifetime value (CLV), and churn—all of which tell a story about your business. CAC indicates the health of your marketing efforts. CLV demonstrates whether you’ve made much money off a customer in the long run. Churn tells you whether customers are happy and sticking around. In an ideal world, you want a future-facing, scalable business that repeats successful processes repeatedly.
You can use data to track the success of your organization. You may need to pivot or change strategies in your SaaS business completely. You can also use this data to set goals and benchmarks.
This article is about creating a repeatable way of doing things that guide your decision-making.
A business strategy is non-negotiable for any company looking to scale and expand. Having a strategy in place will provide a specific route to increased business growth and assist in making sense of scaling in the context of your market. Here is a very brief overview of some of the things you should be considering:
Market trends
Customer needs
Competitive position in the market
From planning to execution, make business strategy an ongoing discussion within an organization. Entrepreneur Derek Thompson emphasizes company culture as a key part of a winning strategy. Firms should create a culture that accepts only winning, where bold goals, peak job performance, and aggressive growth are the norm. There is plenty of talk about investment right now. Some say to invest in shares, some to buy investment property, and then there is the talk of gold or cryptocurrency.
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