Scaling your business: 5 steps to success

The difference between scaling and growth

Usually, growth refers to an increase in sales volume with a corresponding bump in infrastructure to manage the additional market demand. For example, professionals who charge by the hour often need to employ more people to do the additional work for each new client they bring on. Construction companies that want to grow usually need more heavy machinery. Growing retailers will seek to open more stores. Manufacturers may need to move to larger premises or upgrade equipment to improve capacity.

Scaling a business, however, often involves taking on an increased workload in a cost-effective manner. To do this, you need a strategy to scale, one that focuses on new revenue and efficient systems.

 

Five steps that can help you build your scaling strategy

1. Check which products or services are scalable

Audit your business to determine if scalability is viable. It sounds obvious, but if you're a local café with limited seating, your company won't increase its revenue by tenfold with its current setup. However, it does present an opportunity to investigate different profitable business models that won’t cost as much as securing a larger location. For example, your company could wholesale coffee to other cafes, license recipes, sell online to shoppers around the country, or sell franchises.

Here's a few more examples of how this can look across different industries:

 

• Manufacturing businesses can scale by introducing automated production lines and robotic systems to handle repetitive and labor-intensive tasks, increase production speed, reduce errors, and increase hours of operation.

• Wholesalers and distributors use supply chain management software to optimize inventory levels, reduce lead times, and enhance overall efficiency. Further benefits include reduced carrying costs and fewer production delays.

• Agriculture businesses add new crop varieties to expand margins and bring efficiencies to their processes to increase yield. The main idea here is to get more revenue out of the land that you have.

• Automotive businesses may diversify with services like leasing, rentals, and accessory sales. Not only does this expand revenue streams, but it also helps mitigate risks associated with fluctuating vehicle sales.

• Building or construction companies can adopt production systems that are modular, with standard components and processes that can be replicated or expanded as demand grows.

• Retail businesses that shift into online e-commerce are another great example for their ability to reach a global customer base without the need for extensive physical infrastructure.

It’s also important to check if you’re ready to scale. For example, in the automotive industry, assessing readiness to scale involves a thorough analysis of financial metrics, such as performance in vehicle sales, parts, and service revenues. Banks can play a pivotal role in plans to scale an automotive dealership by offering specialized financing solutions that are tailored to the capital-intensive nature of these expansions.

 

2. Adopt the right technology

Technology will make scaling easier, more efficient and less costly, as it tends to remove the need for extensive human intervention to deliver an immediate return. Some things you can do include: 

 

• Use software for invoicing, managing cash flow, sending receipts, tracking delivery, customer queries or complaints, FAQs, and inventory management.

• Integrate processes so you have one primary to track your operation. List all the software, physical inventory, job costs and ordering procedures you currently run and find a way to cut down the clutter. For example, you might benefit from investing in accounting software that covers the needs of your business from end to end instead of relying on separate siloed systems.

• Look at your manufacturing, HR, shipping and other tech systems, including networks and hardware such as servers, computers, and communication equipment. Energy-efficient equipment and cloud-based solutions introduce efficiency that can create more seamless scaling, so consider switching to them. Start with the areas of your operation where such changes would make the most impact. 

 

Agriculture businesses have always been early adopters of innovative solutions because they tend to be constrained by the amount of land they have available. Doubling the size of the farm’s operations does not double output, and it is hard to get the return on your investment in a reasonable amount of time through the added yield.

Instead, focus on looking for better seed varieties, equipment, and processes. It’s possible to increase yield using smart technology, automated picking, robotics for precision planting, drones to monitor livestock, software to regulate feed, sensors to monitor soil moisture and water delivery and fertilizers to enhance growth.

As the tight labour market, public misconceptions about farm as a workplace, and all the challenges and opportunities that face the next generation of farmers continue to impact the industry, it is especially important for farmers to stay on top of the scaling solutions available. However, not all tools are created equal, so it’s crucial to invest into those that make sense for your specific situation.

 

3. Staff up or outsource

Technology can provide new production leverage, but you'll still need sales, post-purchase service, and support to accommodate your plans to scale. Identify your industry benchmarks to determine a general rule for how many customers one sales or service rep can handle. If your people are taking on too much, you may have to outsource or look to partners to help meet the added demand.

If vital skills are missing amongst your staff, look at upskilling through training or hiring someone with the right knowledge, ability and experience you need. With scalable business growth comes the need for advanced skills such as dealing with data, delivery and supervising complex computer-based operations.

Scaling in the automotive sector often includes acquiring new dealerships. This approach allows the businesses to leverage existing resources across multiple locations, such as accounting, marketing and human resources teams, to achieve operational efficiencies.

4. Measure what matters

Scaling a business often requires instant data to know when to quickly adjust plans, especially if growing pains emerge, such as a drop in customer service quality or sales volume that outstrips your operational capacity. Decide what key performance indicators (KPIs) you need to monitor, such as your revenue growth rate, customer growth or customer satisfaction scores. Consider your industry and any sector-specific metrics you need to track.

One universal KPI for all industries and organizations is your net profit. If you look at every decision to invest in scaling opportunities through the lens of your bottom line, the answer will be clear: prioritize the option that has the best chance to create the most income for your business.

 

5. Check if you have the capital or resources

The final step is to ensure that you have sufficient capital to support your fast-expanding business or possess the internal ability and resources to meet greater demand. Many companies simply don’t have the capacity to meet demand when their sales volume increases ten-fold. Before you begin scaling, calculate a cash flow projection for various growth scenarios. A good banking partner will work with you on the potential paths ahead, then customize financial solutions that help you reach success.

Summary

Scaling your business isn’t without risk, but the reward of greater productivity and a more profitable bottom line can be significant. Wider profit margins don’t happen overnight.

Successful businesses work to enhance their operational efficiency, increase their market valuation, expand their brand presence, reach more customers and ultimately drive more sales.

Next steps

• Speak with your professional network to learn about how they’re incorporating new technology. Consider how technology adoption can be a scaling strategy for your business.

• Consult with your finance and legal advisors, along with your banking partner, to gain a comprehensive perspective on your strategies for scaling and growth.