Education

Growing your business is one thing — but building it to scale is another by managing increased capacity (hopefully in response to user demand) and profit without adding heavy and costly infrastructure.

It’s the reason we are seeing so many online businesses. Their business model allows them to scale fast, as once software is developed, it’s almost $0 to add new users, compared to traditional businesses which could involve adding production lines, equipment, employees, raw materials or products when expanding.

Evolving your business to scale requires careful planning and preparation to make sure appropriate resources and systems are in place at each stage of growth.

Make sure your business is equipped with these elements necessary to achieve scale.

1. You Have Horizon Money

Horizon money is having enough capital to be able to invest in the business (possibly making short-term losses), usually covering overheads for a period of months or years until you have enough customers to start making a profit.

Funds can come from your own savings, cash reserves of the business, or you may wish to seek external funds from business colleagues, friends and family. Other financing may involve angel investors (external business owners willing to inject dollars into the business) or venture capitalists.

Be aware that raising money takes time and money.

2. There Is a Clear Vision

Being big requires thinking big.

Getting your business to scale will require vision, leadership, teamwork and a certain amount of bravado. People associated with the business want to know what the plan is to take the company to new heights. Business leaders must assess opportunities to work with other companies, enter new markets, recruit top talent, and think beyond the balance sheet to cultivate their unique vision and ambition.

The ability to clearly articulate what the company does and where it will go is essential to rally support of investors, customers, vendors and employees.

3. An Experienced Management Team

You can achieve scale by playing to your strengths and delegating your weaknesses, acknowledge what you do best and where you’ll need help. Though you may be the company founder and you did an admirable job of guiding the new business through the start-up phase, you may lack the skills, experience or education required to scale the business. A business with revenue of $500,000 is quite different from one selling $100 million, involving more complex rules, different competitors, more compliance and internal structure and much higher stakes.

Getting to that size will probably require an infusion of management talent with advanced skills in such as areas as opening international operations, developing products, supervising complex technology-based systems and raising venture capital.

A willingness to bring in more experienced management is a sure sign the business will scale.

4. Doesn’t Require Specialized Labor to Deploy

There’s a reason why McDonald’s restaurants succeed anywhere in the world: anyone can work there. McDonald’s doesn’t require electrical engineers to work the fryer. They don’t hire PhDs to wrap the burgers. Their systems are so easy to follow that a franchisee can hire inexpensive and inexperienced workers. Affordability of their labor input has partially allowed the company to scale to its impressive size.

Designing your business to operate with unskilled labor (or little labor at all) is a good sign (though there are exceptions of course) you can achieve scale.

Technology, for example, requires little labor input to achieve fantastic output. An app for a mobile phone only needs to be programmed once, marketed and downloaded. Unlike analog business models, additional labor isn’t required to run the app as it grows in popularity – even if a million people use it.

The same applies to the ease of use. The best businesses are those where you don’t need to train the customer. If you don’t need to read the instructions during assembly, chances are the supplier has spent considerable time making the process intuitive.

A business that is not labor-intensive or requires expensive and skilled people to deliver (or the end user can implement themselves) is primed to scale.

Summary

Scaling is risky, hard work. There are plenty of moving parts to manage and the dollars at play may be large. But the rewards are worth it for your company, including improved operating efficiency, greater market value, widespread brand-name recognition and, of course, a chance to introduce your fabulous product or service to a larger audience.