2016 was a very volatile year with sequences of challenges and turbulent terrain, but we all tried to pull through. For most of the businesses I abetted in various capacities, I am so glad we all came out profitable.
So now, you have started your business, broken even, steadied the ship, and made decent profit. Hats off to you, but what’s your next move? Taking your business to the next level is a brave decision, but now could be the right time to do it.
Talking about next level, I do not mean delusional daydreaming and unrealistic goals, but if you have a N1 million company, why can’t it be a N10 million company? Or better yet, how can you strategically go from N10 million to N100 million? This is what I am talking about.
I have seen many small businesses struggle to attain significant growth, staying pretty much as they were when the business started, while on the other hand, I have seen many small businesses move to the big league, often very rapidly.
So, what is the key to achieving significant growth and can your business actually make that leap? Building a successful company isn’t just about growth – it’s about scale. You need to scale up to achieve significant growth. Joining the big league—successful business growth depends on a scalable business model.
If your passion is to change the world, or even dominate an industry, scalability is the only way to multiply your arms and legs, and the hours in your day.
Let me sound this warning first! please do not try to scale your business unless your business is a profitable second-stage business i.e. a business that have past the startup stage, but not mature, and ready to go beyond one owner to a management team.
Now, do not confuse growth for scaling. Growth means increasing revenue at the same pace at which you are adding resources. Scaling means increasing revenue with minimal incremental cost.
Scaling Up focuses on the four major decision areas every company must get right: People, Strategy, Execution, and Cash. True scalability allows for expansion and revenue growth while minimising increases in operational costs. Even if you’re not ready to grow right now, there are things you can do to set yourself up for scalable growth and success.
So here are some pragmatic tips on how to scale up your business.
Create a clear value proposition.
To grow your business, it is important to identify a clear value proposition. Is there room in the market and do people want more of what you want to sell them?
Identify core competence
Without knowing your core competence it’s difficult to create strategies. Many start-ups have evolved by doing certain things without articulating their core competence. You need to identify and emphasise your business’ core competencies — the unique knowledge that underlies its capability to compete and to invest in focused growth.
Articulate competitive strength
Many entrepreneurs fail to look at their business through the eyes of their customers, and so they have a distorted self-perception based on their own definition of the quality of their interactions with the customer.
Entrepreneurs aspiring to grow their business need to develop a clear articulation of their company’s competitive strength in the eyes of the customers, and how this strength is related to internal processes and knowledge. This will drive an identification of the relevant growth path in a way that allows scaling without leading into a complexity trap.
Are your products/services still as attractive as they were? How can you enhance them? Perhaps your competitors are leaving you behind.
Conduct fresh market research. It doesn’t have to be expensive or complex. Simply chatting to customers can reveal much valuable information. It might also be time to reassess your prices. Maybe you could even put them up.
Increase profitable sales
Sales and profit need to grow for any scale-up to occur. Greater sales volume is tremendous, but it is the additional profit that allows for the increased structure to support even more sales.
Get a good accountant to make monthly checks on where the company is financially. To grow, a company needs to generate more profit on its sales.
Maintain healthy cash flow
Profit is no good without available cash, and this is why small companies fail. They lack cash. Solid finances underpin healthy growth; so, examine your cash flow projections for the year. Are there any potential problems that could hinder your ambitions or threaten your survival. You need measures in place to cope with any likely cash flow problems. You also need to make a list of one-time expenses and ongoing expenses, then figure out how much money you’ll need to operate on a day-to-day basis.
Earn more from existing sales and Target new customers
Try to sell more to existing customers. It’s cheaper and easier than selling to new ones. Could you extend your product range or sell bundled goods?
Your customers buy from you because they recognise the value you provide, so the hard work is already done. Add value to the relationship. Always try to up-sell – but subtlety is advised. However, too many businesses rely too heavily on a few loyal customers. This is dangerous. The more customers you have, the less the risk.
Think about which new customers you should target and how. Set monthly new sales targets and track your progress. Learn which marketing methods work and those that don’t. Tactics such as introductory offers can help to attract new customers.
Hire the right people
It takes more than a founder to build a successful business. You need a strong team to take yourself out of the critical path. Yes, you have a valuable expertise, but growth requires an expanded skill set. As such, you should build a team with extensive and complementary skills. Hire the right people to run the scaled business without you being everywhere and making every decision. Determine the criteria for the job. Consider what employees need to bring and what can be taught, remember to look for the “can-do” attitude employees.
Work on your business, not in it
If you are still spending most of your time working in your business, rather than on your business, then you are not yet ready to scale. While you must get the work done inside your businesses and it’s important to focus on the details, if you don’t focus on the key activities which move your business forward in a strategic way, you will likely stagnate.
Get clarity on what core activities you need to be directly focused on, and then protect your boundaries around these activities. In other words, the house better be burning down for anyone to interrupt your actions of working on your business.
Open up new channels
Most businesses focus on one or two sales channels, but using others could make all the difference.
Establish standardised processes
A business that is labour intensive is not scalable. Managing every operation without clear process will limit growth. For your business to scale, you need to implement standardised and repeatable processes, with proper delegation Start looking at automation, proven process technologies, and minimum staff approaches, before you begin scaling. Document processes and build online training videos so new people can come online quickly and consistently. This may require investments in purchasing support systems including IT and personnel.
Building and fostering critical collaborations will help in scaling. The growth approach needs to extend to partnerships with people and organisations outside the business. You should build a network of partners, such as service providers, sales channel partners, suppliers and customers.
Evaluate Financing Options for Expansion
There is no way you can grow from a N10 million to a N100 million company without additional capital. You need capital to fund your growth. Most of the time, you will need outside capital to grow your business to its true potential – there are very few big businesses that are self-funded. Thus you need to know the kind of capital you need to support that growth and you will need to get an experienced Investment/Finance expert to assist you on this.
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