9 Crucial Factors that aid Scaling a Business
A scalable business is one that has the potential to multiply revenues without causing a corresponding increase in the operating costs. Whether you are starting a new business or looking to take your existing business to the next level, scalability is an important factor to consider. In today’s world, growth of the business largely depends on how scalable the business model is. A scalable business model lets you increase the profits through constantly improving the rate of revenue but keeping the overheads under control.
A business cannot said to be scaling when its operating costs increase with the same rate as revenue. For instance, if a company is earning $ 1 million of revenue with $ 1 million of costs, then we can say it is not using a scalable strategy. To create a scalable business, you need to start preparing for growth from the beginning. So don’t wait for your company to expand before you consider scaling.
Below are the 9 Best Practices that companies should follow in order to effectively scale their business:
1. Start with a Scalable Idea:
The best example of scalable product is a software application. A hosted software application is scalable because companies need not spend money on producing something new every time they sell it. Once the software has been developed, companies can produce its unlimited clones, without having to incur additional costs. Similarly, you can begin with a scalable idea and find out any gaps in the industry where there is an opportunity for your business to grow.
2. Concentrate on Big Picture:
If you start with a small idea, your progress will not turn out as expected. So step back, concentrate on the bigger picture and think long-term. Remove yourself from the daily grind of running your business. Even if your idea is compelling but your targeted audience is small or you are not able to produce in scale, it will not work. Either you will not achieve complete success, or your business will not scale effectively. Thus, you are required to see the bigger picture when working on scaling your business.
3. Keep Improving:
It is not always feasible to scale your business based on original product or pricing model. You must find out additional ways to provide your business with multiple revenue sources. Sometimes, it just takes a while before you come up with the perfect solution and an ideal business model. All you need to do is continuously work on improving both. You may have to experiment with several business models before you find out the right one for you. Have the patience to go through different processes and learn from each. Find out what works and what doesn’t and understand how you can improve it.
4. Start with a minimum viable product (MVP):
Identify your MVP . Don’t just waste your money and resources working on a product or service that no one would be interested in buying. Market research during the initial stage is the best way to know if people are finding your product useful and are willing to pay for it. Once you have reached all your target audience and they have approved your product, then you can operate on a larger scale to meet the demands of multiple paying customers.
5. Develop a Scalable Business Formula:
To build a scalable business, you need to develop a scalable formula. And so, it is important to find out metrics that are crucial for your business model to prepare for growth. The best example of a scalable formula would be spending more on marketing to bring in more leads that keep converting at an increasing rate. It’s easier to scale when you have a core scalable formula like this, and you just need to invest resources into it to multiply the growth exponentially.
6. Choose the Right Funding Strategy:
It is prudent to select the right financial partner, in order to effectively scale your business. Always think about future needs when selecting your source of funding instead of immediate business requirements. Consider your long term strategy and find out the right funding option that works best with your approach. Seek investors who can meet the needs of your high-growth scalable business idea.
7. Build a strong network of outside Resources:
Build a strong network of experts like consultants & advisors who can help you to scale better. Always stay in touch with specialists who have the experience of working in different business streams. With their insightful tips you can easily improve and grow your business. At the same time, you should also establish a network of partners and tech providers you can work alongside and leverage for ideas. Being part of an environment like this is likely to help you scale more efficiently.
8. Listen to your Clients:
Your customers have a lot to say if you are listening. Customer feedback and suggestions should be taken seriously when you are considering scaling and reintroducing your products. You should conduct periodic customer surveys and make sure you include a method for direct feedback into your products. Most of the scalable businesses use customer data and feedback to create their products, build their brand, and improve the customer experience. They constantly iterate based on what customers desire.
9. Cultivate a good Organizational Culture:
In order for a business to scale, the internal organization should be ready to scale as well. You should strategically work on improving overall company culture that can support the current business needs and adapt to future changes. A dynamic organizational culture where employees have the power to take appropriate actions is more likely to scale effectively. This is because employees become more innovative and responsive to company’s needs. Motivated employees will be constantly looking for strategies to improve the company’s revenue, instead of sticking with the way things have always been.
To sum up, building a scalable business takes a lot of preparation and planning since the inception of business. All you need is a scalable idea and have to put forth efforts to iterate and improve both your business model and your product. It will help increase your revenues, with minimal incremental costs.