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‘Tale Means Business: Is Your Business Ready to Scale?

Tale Alimi

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I want to scale my business!

This is a common statement I read from emails, DM’s and form submissions we receive at Tale Alimi Global.

Statistics show that 70% of businesses find it hard to scale their business; this is because scaling is not for amateurs.

Most people who say they want to scale their business, are really more concerned with growing their business.

Are they not the same? Not really.
Growing your business is what I call Arithmetic growth. For example: if you made five million in 2016 and seven million in 2017, then we can say your business revenues have grown.

Scaling up your business is exponential growth; so if you made five million in 2016 and fifty million in 2017, then that is scale! That was a big jump or like some people say, a quantum leap between the two years.

The primary focus of a business should be to maintain steady growth and if you are in a mature industry, maintaining steady growth is a feat in itself and will ensure that your business remains a going concern.

So why should businesses scale?

Economies of scale
Do you remember this term from your secondary school economics class? This is when a business produces higher volumes at lower cost per unit.

During a strategy session with one of our clients who is into paint manufacturing we came to a conclusion that he would be able to reduce cost per unit by 25% percent if he could increase his monthly production from 1,000 gallons of paint to 10,000 gallons of paint.

This is the competitive advantage large companies have over small companies and why they can get similar raw materials at lower prices because they can buy larger volumes.

High growth industry
If you are in a high growth industry like technology, it makes sense to scale your business to meet up with industry demands.

A typical consumer-focused technology company can grow from 10,000 users to 100,000 users in three months because of the ease of adoption of their services.

Some industries like telecommunications were forced to scale up fast in their early days because of the cost of buying additional infrastructure to support new users.

Bigger attracts bigger
I coined that statement as a way to explain that when you want to scale a business, especially when it has the capacity to scale, you are most likely going to attract bigger funds, bigger infrastructure, bigger customer volume and bigger staff strength.

With the right mix of all these factors, you actually reduce the risk of failing more than if you were growing your business on a normal rate.

As attractive as scaling a business is, it comes with its fair share of problems if it is not managed well. Some of which are: hiring wrongly, improper business structures to support scale, increased and unmanageable overheads and even managing company culture in a fast growing prganization.

To scale or not to scale?
This decision is something you have to think about critically and examine your business and industry to see it is scale ready.

Take our ‘is your business ready to scale’ quiz HERE to find out.

'Tale Alimi is the Co-founder and current CEO of Owoafara, a fund matching and business support platform for African MSME's. She is also the Lead strategist of Tale Alimi Global; a strategy consulting boutique focused on working with visionary and forward thinking SME's to take their business from small to scale. She is the author of Uplevel and her latest book Small to Scale. She has a Masters in Business Administration from Lagos business school, a certificate in personal coaching from the coaching academy UK. She is a social innovation fellow with the startingbloc institute in the United States. When she is not thinking about innovative business models, she is an avid fitness enthusiast. Learn more about her new startup Owoafara:( owoafara.com/join). Get daily business inspiration when you follow her on twitter (http://twitter.com/talealimi) and get an insight into her life on Instagram ( www.instagram.com/talealimi)

2 Comments

  1. Kkay

    March 26, 2018 at 4:56 pm

    I had a meeting with a business owner recently and I think the problem he had was scaling up his business from start-up. He had challenges getting financing to sustain the supply of raw materials mid-way. I guess he thought with the population his product (FMCG) was guaranteed to make good returns in the short-term.
    This problem could be seen with some other start,-ups where entrepreneurs commence business operations on large scale based on just a few factors of production.

    • 'Tale Alimi

      March 26, 2018 at 9:11 pm

      FMCG as with most manufacturing businesses will take some time to gain traction especially as it can be capital intensive if you want to do it at a scale that the returns will make sense. However if he has a good product with proven market acceptance, he could approach Organizations that offer longer term facilities like LSETF and Bank of Industry, He could also consider going the equity route to raise funds.

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