Acceleration – Scaling
A startup cannot continue to stay a small entity. It must be made to grow. Once the decision is taken to make it grow, the next challenge is how. Scaling your business is what you have to think about. Even if you do manage to sell like crazy, you’ll soon have another problem if you don’t manage scaling, that is, how to deliver to all those new customers, not to mention being on time. So how does one manage scaling? It’s all about correctly estimating if you have the capability for a particular capacity. A question you must be ruthlessly honest and answer is whether your business does have a capacity to grow or not. And, if it does, then will your existing systems, in terms of infrastructure, processes and manpower be able to handle that growth. If an increase in orders causes chaos in your company due to lack of sufficient manpower, lack of clarity on processes, rampant breaks in communication, inadequate production capacity, or faulty delivery systems, then you are not scaled for growth and stand to lose face with customers. You have to ramp up from the short-chain process enough for small orders that are typical of a startup. If you don’t, it won’t be smooth sailing. There will be a lot of worries in trying to get orders to go through. And most of the time, you’re not likely to meet targets either. So, scaling a business essentially involves rearranging things to give more elasticity to grow bigger without stretching at the seams. You would need to do some general planning, set your financial channels, figure out manpower needs, and set all your technology and system processes to allow for expansion. You also need to set up logistics and delivery.
Steps to scale your business
Assess before planning
Keeping aside all sentimental reasons, objectively and clinically look at your business inside out. Is it ready for expansion? Is there room for growth? If not, how would you make that room? For your planning to be fruitful, you’d have to gauge your correct baseline first and then build upwards. Ask and answer questions like, what if my sales increased 10X, how would it go? Are there enough resources and manpower to handle it? Will the current technical setup be enough for the increased numbers?
Do some number crunching. Deliberate on market demand for the particular category. What is the sales forecast? What does it mean in terms of new customer numbers? How much sales revenue are you looking to generate? What does it translate to in monthly figures? How accurate your assessment is will determine how effective your planning will be. After this, work on the expenses forecasting, factoring in the added changes to infrastructure, technology, systems and manpower. Examine the profit & loss sheet in detail. Carefully estimate possible areas that expenses could increase and how it will impact the revenue forecast. Include worst-case or contingency expense scenarios as well in your assessment spreadsheet to bring about better planning.
Money Matters
Expanding the business by scaling it means expenses too. You’ll have to loosen those purse strings a bit. Hiring more people, upgrading technology, increasing facilities, investing in a better management information system (MIS), all cost money.
So, if you don’t have it, how exactly do you score some cash for the business expansion, legitimately, of course?
Here are some options:
Bootstrapping means relying on yourself and improvising, but this obviously could take a very long time. You could find someone in your personal circle willing to fund you. Entering some kind of cash contest to support small business owners that is organised by your local chamber of commerce or private parties is another option. Partnering with some startup incubator program is a path taken by many. But you would have to examine the clauses as to how long they would incubate you. A line of credit from the bank or taking out a business loan is another path you could explore.
Sales Team
If you’re taking the pains to scale the business, it is obviously so that you can make more money by selling more. So, you would need to take a look at your existing sales channel.
- Can they generate more sales?
- What is the process in place to secure lead generation, tracking and managing those leads?
- Do you need to increase your sales force to collect and manage orders?
- Will the current invoicing system support the increased orders quickly and efficiently?
Technology takes you there faster
Investing in the right technology is one of the best investment decisions you can make. Automation and smart processes bring down costs and keep manual manpower requirements to a minimum.
Integrating systems cohesively can cut costs significantly as well as making management of communication and processes through the organisation hindrance-free. Shop wisely for innovative solutions that will bring you savings on both the turnaround time as well as overheads as you expand capacity. Marketing automation, accounting, inventory, CRM, manufacturing, sales management, payroll are some areas where you can consider. Phase out unwieldy hardware in favour of more efficient ones where digitalisation is concerned. In other words, buy better computer systems, printers, servers, storage, etc.
Managing manpower
Having the best technology can only get you so far. At the end of the day, you also need to have the right people to manage it, and more. Check out competitor setups. How many people do they have managing their sales or customer service efforts? What about other processes such as inventory, manufacturing and delivery? What is the industry standard for each of these functions? HR recruiting, competitive pay and benefits need to be according to established industry benchmarks so that you can find the right kind of staff quickly and retain them.
As your business grows, you can’t be the one-point contact for everything that you could have been when you were a fledgling startup. Managing the business might have to be delegated so that you can focus on the big picture. A consultant management team or partnering with experts could be the way to go if you don’t want to hike up on high-level employee overheads.
Some difficult decisions also include assessing what can and cannot be accomplished internally. When it makes more sense to outsource, go for it. Think of the time and resources you could save by doing that rather than taking the onus on yourself for a particular function or functions. This will help you scale the business more cost effectively.
So, once scaling is underway, your startup is on its way to becoming a corporation.