How to Scale a Business
The only way to TRULY scale a business is to have simple & repeatable processes. This is achieved through automation & efficiency, but that can only be done once we fully understand where we're at and where we're going.
If you're thinking about how to scale your business, you need a bit of routine in the way you analyze operations.
Scaling is the process of increasing the size and capacity of a company. It's different from growing because it doesn't necessarily involve adding new products or services.
Instead, think of scaling by quickly improving existing ones or making them more efficient. The goal of scaling is usually profitability - making more money per unit sold or invested in labor costs.
The only way to scale is to have a better understanding of your business operations, which begins with analysis.
Conduct a SWOT Analysis
A SWOT analysis is a tool to help you identify the strengths, weaknesses, opportunities, and threats that you face. It is a simple and effective way to determine the critical areas of your business that need attention.
Strengths are things that are going well in your business right now. They may be related to products, services, or people.
Weaknesses could include things that aren’t working as well as they could be in your business.
Opportunities are any internal or external areas that would allow you to quickly grow, scale, or improve your business operations.
Threats could be a new competitor, an increase in production costs, or difficulty maintaining a staff.
One of the quickest (and most efficient) ways to identify primary needs within your business is to conduct a SWOT. To know where to go next, we need to know where we're at now. Use this tool to do so every year.
Identify strengths, weaknesses, opportunities, and threats. Then, use that information to implement the TOWS strategy to best optimize all aspects of your results.
This involves:
T: Target your audience. Identify what you want to do and the people benefitting it. The more specific, the better.
O: Optimize your systems and processes. If there's a way to streamline a process or cut out waste, do it! Also, look for ways to automate things like email and phone calls when possible, so you don't have to spend time on them later down the road when scaling.
W: Work with your team, so everyone knows their role in the bigger picture of how things work together. This can be accomplished by starting off small, with one person at a time, until all members know how everything works together before expanding.
Examine Who You’re Serving and How You’re Serving Them
This crucial step involves identifying the needs of your customers and filling those needs. You also need to understand the problem your business solves for these customers, as well as what information they would like to have about it—before and after making a purchase.
Small business owners need to take time at this growth stage because it helps them refine their product offerings, discover new ways of reaching potential customers, and develop more effective marketing strategies based on customer research (and not just intuition).
In any given business, there are typically 2-3 primary audiences targeted by the services/products offered. These are different than Ideal Clients, as those usually exist within each archetype.
The archetype is a profile we have for those best suited for our services (what works for them, what doesn't, what they're inclined to, what they're motivated by, etc.).
Identify the primary characteristics of those you serve to better understand how to target them by discovering where they're at and where they want to be.
Your customers are not just people who need to be served. They are individuals with unique needs, desires, and preferences. You must know what makes them tick so that you can tailor your business to suit them perfectly.
To begin with, you need to understand the general characteristics of your target audience and their purchasing habits, demographics, and psychographics (the way people think).
This will help provide direction when determining how best to reach out and connect with them through various channels, such as social media platforms or email marketing campaigns.
These will help to develop the types of services/products delivered, as they should be a direct solution to the problem each client type experiences.
Develop Services that Create Seamless Upsell & Downsell Opportunities
To effectively scale, we need to spend less on client acquisition costs and keep customers purchasing within our business as much as possible. We can only achieve this by having offers at different price points, different mediums (virtual v. in-person, done for you v. DIY, group v. individual, etc.) that meet various client types of needs.
This can be accomplished by minor improvements to both sides of your funnel: client acquisition and retention.
On one side, we need to be more specific in who we're attracting so the likelihood of them being a good fit for our offer increases. On the other side, we need enhanced client experiences combined with a service suite that moves them along in their journey, so we can continually sell to them.
Create offers that meet clients where they're at, low-cost resources or tools that solve immediate problems. And that helps them move toward where they want to go with advanced techniques or ongoing services.
The goal for how to scale a business is to maintain low customer costs by continuing to sell the next best service/product/ tool to serve their need. In an effort to not continually have to find "more" people to purchase from you, sell more to the same people.
Examine Costs & Project Forward
Now, it's time to look at each cost as it relates to your business. Are you paying for a service, product, or tool that isn’t pulling its weight?
Can you reduce the price of an offer because you're getting more value out of it than before? Have you been charging clients too much for what they're receiving in return?
Understand what each offer/service/product will cost your business. This could be the cost of goods sold (COGS) or workforce or outsourced needs. Also, know what the operating costs of your overall business are (what it takes to keep the lights on).
Before you scale, it’s essential to understand the costs of each offer to your business. To do this, you need to identify all the costs associated with each offer—recurring and one-time.
Start by creating pricing that is accessible to your audience without sacrificing your business viability. You need to continue to cover the operational costs of your business while making adjustments that make sense to your customer's value points.
When you're trying to scale your business, it's essential to know how much you need to charge for your offer. We always want to ensure that your pricing is in alignment with the value you're providing.
Look at what needs to be sold monthly, quarterly, and annually to reach your revenue and profit goals. When doing this, consider the upsell and downsell opportunities inside your service suite.
This is where the rubber meets the road. If you have a consistent cash flow stream that allows you to operate on a month-to-month basis (or even better) then this may not be an issue for you. But for many businesses, it's an important piece of information that needs to be considered when scaling up.
Map Everything Out
Look at the components required to deliver a quality customer experience (learning about your offers, signing up for them, paying for them, experiencing them, and finishing them).
Assign a value to each component. For example, let’s say that your company’s customer experience begins with a visit to your website. You first need to look at the components required to deliver a quality customer experience (learning about your offers, signing up for them, paying for them, and experiencing them).
Next, identify the software and project management tools necessary to effectively deliver a quality experience.
Lastly, see where there are redundancies and what could be eliminated; think about ways in which processes could be simplified or automated.
Write Standard Operating Procedures for all areas that are clearly identified. Writing down the steps involved in each task, the tools needed to complete each task, and how long each task takes will help you standardize your business.
This includes what happens when a task is completed, any contingencies that may arise during the completion of the task, and anything else that could be relevant for future reference.
This can also be helpful when training new employees on how to do something correctly or even just checking off items from a list yourself.
Conclusion
All of this planning helps you understand how to scale a business. It’s exciting to have a flexible, well-organized plan of action so that when demand grows, so does the scale of your operations.
It’s easy to get caught up in the day-to-day operations of running a business but taking some time to really think through where you are and where you want to go can be extremely valuable.
In addition, there are many other aspects of your business that may need attention as well. You may want to consider hiring a business coach to help you move through this process together.
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