We’ve all seen or heard of at least one business that experienced a short but brilliant lifespan: one that burned brightly in its early days, surprising everyone with how quickly it became a success story, and then burned out during the scale-up process. Whenever we talk about those businesses, the same question is always asked at one point or another: “Whatever happened to them?”
Usually, the answer is pretty simple. A small, agile business that knew its market attracted a lot of customers and early hype. It needed to spend more and grow faster to keep up with demand, and when it experienced the inevitable plateau of interest, its costs outstripped its incoming cash flow. It’s the age-old tale of boom and bust, and it can happen all too easily.
When we launch a startup, we want to be successful – after all, you didn’t get into business for a laugh; you did it to realize an aim. So you want to burn at least a bit brightly – but how do you avoid the bit where your business burns out? Below are some tips on staging your growth to ensure you scale up utilizing flexibility and stability.
Build a flexible business plan
In many businesses, the scale-up plan is to make a profit by Year 3. Realists know that the early days can be challenging, and they prepare for the worst. But even when you prepare for the worst, you’ll hope for the best. So your business plan should consider three potential outcomes: the worst-case scenario, the best-case method, and the middle ground. If your business starts to make profits early on, you must know how you will react. What would you do if you’d hit all your targets twice as fast as you intended? You need to know if moving to Step 2 of your plan is viable or needs more time.
Look at the money side
You’ve got to look at the money side properly if you scale up your business effectively. We already mentioned paying yourself a worker’s wage, but it will take more than this. You will need specific pieces of equipment, and you’ll need to hire more staff to take on the additional level of demand. You must ensure you can afford all this comfortably if you scale up your business properly. For example, you might need to look into c-store foodservice equipment if this is relevant to your business, but can you afford it without breaking the bank? If not, it’s not time to expand.
Analyze the benefit of investments
One key aspect of business growth is building your team. If it comes off, it’s a virtuous cycle: You do well, you add more people, those people help you do even better, and so on. However, while you may need more people to fulfill demand, you must be sure you can afford that workforce in the long term. If you’re in a period of unexpected growth, you might consider business process outsourcing – BPO for short. This allows you to access a larger talent pool but shrink back to standard size when the frenzy dies down. You will want to scale up to add more people, better tech, and possibly new locations, but analyze whether you can afford them long-term before paying out for them.
Invest in the right tech
Investing in the right technology is essential to scaling a business because it can help you increase efficiency and productivity. The right technology can offer automated solutions to tasks that would otherwise require hours of manual labor, such as financial tasks, customer service, scheduling, and communications. You could even hire a UX Specialist to help you build a user-friendly website that can boost sales and increase exposure.
With the right artificial intelligence software program or machine learning algorithm, businesses can improve organizational processes and save valuable time on mundane tasks. In addition to time protection, new technologies like data analytics can provide incredible insight into customer trends and preferences, allowing companies to create personalized products and experiences for their customers.
Provide unique products/services.
Another important aspect of growth is creating unique products and services. Offering unique products and services is an excellent way to help your business stand out in a competitive market. If your competitors offer the same thing as you, it can be difficult to distinguish yourself from them. This means that customers looking for a particular product or service will likely pick one of your competitors over you. To stand out from the competition, you need to provide something different. Take a look at E Squared; they provide EIA/KEE Coated Fabrics and a wide range of creative and unique products such as Retro Reflective Coated fabrics.
Get the right insurance
Every business is legally required to have some insurance. That doesn’t mean settling for the first appropriate policy you come across. Think long-term when you’re getting your insurance to ensure it isn’t restrictive when scaling up. Thankfully, there are many ways to find and compare different policies, such as KeyPersonInsurance. By looking around and actually spending the time comparing them, you’ll be in a better position long term. You shouldn’t have a problem scaling up in the future.
Pay yourself a worker’s wage
In most companies, the most significant salary is earned by the person running the company – and that’s no surprise, as they have the most considerable risk. In the early days, and even as the business scales up, it’s sensible to pay yourself the same as you’re paying the lowest earner in the company. After all, you should be earning a wage – but you’ll be putting the source of that wage at risk if you take more out of the company than you put in the long term. Of course, once you’ve established a stable level of success, you can always give yourself a raise.