5 Signs It’s Time To Scale Up
“You never know with these things when you’re trying something new what can happen—this is all experimental,” – Richard Branson
The “things” he refers to are the numerous variables associated with starting or building a business. Many of his quotes involve working hard, making mistakes, never quitting, and following your passions. This couldn’t be more true than in the world of startups.
Small businesses accounted for 99.3% of all private sector businesses at the start of 2016 in the UK and 60% of all private sector employment. In order to achieve the successful growth it takes to become the one percent of publicly traded UK businesses, startups must have a competitive edge and must take a healthy dose of risk. It’s about the business, the drive, and the risk it takes to succeed.
However, last year, 50% of small businesses failed within the first four years of existence. Moreover, Forbes discovered earlier in 2013 that only two to three businesses out of ten will survive fifteen or more years.
Richard Branson may be right about the unknown, but the odds are stacked against you and don’t necessarily allow you to experiment, especially when it comes to scaling.
However, there are signs to watch for that signal when it’s time to take the next step, and grow outward in search of more customers, greater revenue, and more brand recognition.
- Turning down potential business
If you’re turning away clients or customers due to a lack of inventory, lack of employees, or simply not enough time in the day, then it may indeed be time to scale.
As a growing business, building a customer base is crucial to longevity and stability. Your customers are the support on which expansion and income are founded. It is only natural, if not necessary to accept every client you can to increase your foothold in your marketplace.
Over time, your business should be creating a larger client network as well as nurturing the ever-growing baseline. Eventually, the network will begin to overwhelm the business’s workforce, and rejections will become inevitable.
Knowing that it is time to grow is not really about your business rejecting opportunities because of its success, or about limiting opportunities because of its size. It’s more about whether or not your business is profitable, stable, and using a proven model. If more people have been showing interest in your offering and want your business, this is a good sign that you should prepare to reinforce the infrastructure, set new goals, plan next steps, and scale.
- Exceeding previous goals
Start-ups and smaller businesses usually don’t possess enough data that can forecast future events, revenues, costs, and other variables that objectives are built upon.
A business can estimate what the future of their business may hold, and accordingly set goals using borrowed statistics. The goals may not be met when expected or happen according to plan, but at the same time, these goals can be overshot due to your business’s success.
If you are meeting or surpassing your objectives, then reevaluation is necessary and scaling up could be the answer. Instead of meeting expectations and comfortably reaching goals, challenge your business to be the most it can be. The objectives must be difficult but at the same time within realistic reach, so that they can truly force your growth. Set high goals, establish the proper growth to resources, and start expanding.
- Strong cash flow and repeatable sales
Profitability isn’t enough. While “profitable” is a qualitative measure, the data that represents profit quantitatively can be a deciding factor. These numbers are crucial to predicting revenue, which can be just as important as the revenue itself. They also help predict future profits, costs, and stability.
When you have a strong understanding of the business model and its performance record, a more accurate and trustworthy forecast can be created. A forecast for one month, two months, a year, five years, and so on will be a more reliable representation of your business’s potential. The golden rule is to work towards the best, but plan for the worst.
If the gap between best results and worst results is narrow, your business probably has a healthy client base and evidence of repeatable sales. These signs are indicative of prosperity and suggest it’s time to scale.
- Proven concept and reliable infrastructure
Before growth can occur, you need to ask questions that will help you identify easy pitfalls such as weak infrastructure or a premature product. Proper staffing is critical to a small business, as everyone’s roles are vital and lackluster performance can be absolutely detrimental. Employees are an integral part of the company’s foundation as they reflect the mission and vision. Without employees who possess reliability and loyalty, failure is a strong possibility.
You will know when your team is ready for a change because of their attitude. They will be interested in more than just their job; they will be interested in the future of the company. They work day in and day out to achieve the company’s mission and communicate effectively as a team. They will also be proactive in their duties, jumping at opportunities to do more than just their share. If you have confidence in your team after close inspection, you may be ready to scale.
- An atmosphere of minimal risk
Scale up only when you are ready. Don’t create unnecessary risk in your business just because profits are up one quarter or you have a trustworthy team. It is important to note that you can’t achieve a few initial goals and then set out to attain an impossible one. Risk is inherent in business and there is no “sure thing,” but minimising risk should be a priority before growing.
The signs telling you to scale up are not concrete, but if your business exhibits more than one of these signs, it might be a good time to evaluate your options. It is your decision as a business owner to manage, lead, and—when the time is right and risk is minimal—scale up your business and achieve new heights.