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How To Scale Your Small Business

As a small business owner, you’ve probably encountered this scenario before: your business’ current resources and infrastructure are tapped at capacity and cannot keep up with its own growth in the wake of increasing consumer demand.

The easy fix for this problem is to just put in longer hours and pour more money into more resources, right? Not quite. At this point, you need to take a careful approach to your business’ growth and make adjustments that help you grow efficiently to avoid wasting capital. Not doing so could bankrupt your business in the long run.

Doing so, on the other hand, is what’s called “scaling” in the business world. To reiterate, scaling up your business is the act of allocating and optimizing resources and infrastructure to drive a proportionate increase of revenue in relation to cost. It is the optimization – not duplication – of your business efforts that will allow you to quickly and effectively match your growth demands, and continuously adjust to those increasing demands in the long term.

So, how should you scale your business? Where should you focus your efforts? Is your business even scalable?

Focus on Your Processes

The processes in your business, defined as collections of activities and tasks that accomplish specific organizational goals, are almost always the easiest targets when looking for optimization in your business. A small business isn’t as likely to have nearly as many nor as complex processes as a larger company would, so it should be easier to both identify opportunities and execute on them.

There are many examples of processes that can be optimized. If your business sells a product, you could focus on your distribution or manufacturing process, as well as any of the sub-processes within those. Small and large businesses alike utilize core infrastructure offerings from specialized organizations like Amazon, which offers an order fulfillment platform and distribution service. This allows those businesses to more easily fulfill large-scale orders, as they don’t have to spend the incredible amount of time and money needed to create the same capabilities themselves.

Even the optimization of internal processes can be a big step toward reducing your overall costs. For example, investing in the implementation of better technology, like cloud-based services, can increase the speed, power, convenience and efficiency with which you do business.

Change Your Pricing Strategy

The way you approach the pricing for the product or service that your business offers will likely need to change as you scale up. If your market allows the ability for you to increase your price without significantly diminishing your growing demand, it might benefit you to do that. You will be left with more available cash, allowing you to invest it back into resources that will help you scale your business.

You can also benefit your business by optimizing your pricing structure. If, for instance, you offer a complex, diversified set of prices for services you offer, try trimming the fat and cutting it down to a pricing model that is simpler and more profitable for your business at a large scale.

Know If Your Business Lacks the Ability to Scale

Companies that scale generally have a high level of operating leverage, meaning they can increase sales and revenue without proportionately increasing the total costs for the business. If the product or service model of your business isn’t adaptable enough to accomplish this minimization of time, effort and capital, then your business isn’t scalable. You must be able to increase your profit margins if you want to sustain quick growth.

Here’s a simple checklist to see if your business model is scalable:

Repeatability of Solutions – Are your processes consistent, standardized and easily repeatable for the development, manufacturing and distribution of your product/service?

Level of Market Focus Clarity – Do you have a well-defined “ideal customer” and do you strictly limit your targeting efforts to people who meet certain criteria?

Adaptable Sales Process – Is your sales and marketing process agile and dynamic, and can it consistently and quickly be refined to accommodate changing market conditions?

Market Differentiation – Is your service/product and overall brand unique, and are you able to effectively portray that differentiation from your competitors in the eyes of the customer?

photo credit: Pez-tastic Candy Aisle via photopin (license)

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