Scaling a business is a lot harder than most people think because it means adding more resources, such as staff time and money, to help build results. This is often confused with simple growth. However, when someone looks to scale a business, they are talking about creating a system where revenue increases without increasing the costs at a similar rate.
A good example would be a car park in London, as more vehicles are on the road, a car park needs to be able to have space for these cars, without having to completely redesign/ reconstruct the car park. This is the same as a business model. The business cannot be restructured every time the company is going through expansion, as this is not an efficient and effective business model. So, let’s take a look at how to build a scalable business model that works.
Identify The Scalable Idea
It is important to note that not every business model is scalable. For example, if there is only one person in a consultancy firm, they are limited by the hours they can actually work. An effective business model will be able to scale beyond the founder. To ensure you have a scalable business, it needs to have these three common traits.
Repeatability – The product or service can be delivered consistently
High Demand – There is a growing market for this business
Leverage – This specific business model can utilise modern technology, systems and people
There are many industries that have proven to scale well over the years. This includes e-commerce, SaaS platforms and franchises. Before you start a business, you should always ask whether it can grow without you working harder.
Build System and Process
Something else that needs to be carefully considered is building a stable system. If you don’t, then it is easy for your business to bottleneck. Ensure that you document how the work should be completed in order to train future employees. Make sure to maintain a level of consistency throughout your business so new employees can follow it.
Examples include: customer onboarding workflows, standardised sales scripts, clear communication channels, automated invoicing, reporting and much more. This is to ensure that if you are not in the workplace, everyone can still function effectively whilst you are away.
Maximise The Use of Technology
Something else that certainly needs to be utilised effectively is technology. A good system in place that uses technology allows you to serve more customers without increasing your costs. Automation is key to a business’s success, so consider using Mailchimp, Zapier, and HubSpot.
If you have an e-commerce business, using websites such as Shopify and WooCommerce on WordPress can help you process transactions easily. Furthermore, you will need a cloud service to store all important information, along with cybersecurity to help keep data protected. There is a lot of time that can be saved when using technology, so it is important that this is utilised.
Create a Scalable Revenue Model
This is one of the most important steps for creating a scalable business. At the end of the day, you need a product or service where the demand continues to grow and doesn’t require a complete reinvention. Effective approaches include: Subscriptions, memberships and even retainers. These can help offer a more stable revenue stream, which is essential for business growth.
Hire The Right Employees
The people who work for the business are arguably the most important aspect of a scalable business model. These are the backbone of the workforce, and they need to be hired strategically. At the end of the day, the more people you hire, the more wages you need to pay, so it is important you hire when you need to and when you can afford it.
If there are special tasks that need to be completed, then you can consider outsourcing them. Additionally, you can hire people who make the everyday tasks easier and help manage systems. Ensure you hire people who thrive in specific environments because you need a team that adds more value to your business rather than just adding more hours to the business.
Common Pitfalls
There are some pitfalls that you must be aware of, especially if it is your own business. For example, scaling a product/service that doesn’t have a market is only going to cost you. Additionally, you want to avoid overcomplicating your systems as this can cause mistakes, which can lead to more expenditure. Additionally, you should never ignore cash flow, as running out of cash can affect your scalability. Finally, your customers are what matter to your business so you focus on them, ensuring they are happy with the service or product you have provided.
To Conclude
When you are scaling a business, there are a lot of things to consider, but as long as you have the demand, the right employees and technology/infrastructure in place, you are on the right path. Without these three things, you are going to struggle to scale your business.