7 Steps To Scale a Business for Sustainable Growth

By Indeed Editorial Team

December 5, 2021

Scaling a business means achieving lasting growth in sales turnover while enhancing capability and cost-effectiveness. To effectively scale a business, you need to understand scalability and capacity. Whether you're a manager or a human resources (HR) professional, it's important to know how to grow a business slowly and surely for the long term. In this article, we look at what it means to scale a business, discuss its importance and list steps and tips for effective business scaling.

What does scaling a business mean?

Scaling a business refers to actions taken to ensure your business has projected growth without sacrificing quality or increasing costs. A successfully scaled business has the infrastructure to handle increased sales volumes while steadily reducing costs. It means having the ability to support growth by planning and preparing systems, staff and processes for sustainable growth and profitability over the long term. Scaling is a growing company’s ability to ensure cost-effective production and an effective workforce.

Managing a small startup with a few employees working from the founder's home with an annual net sales turnover in the thousands of dollars isn’t the same as managing one with multiple locations, hundreds of employees and turnover in the millions. Both are different from managing a national or international business with thousands of employees and turnover in the hundreds of millions. Management, processes and HR techniques that work well in one environment may not be well suited for another environment, so it's important to adapt and change as the business grows. ​​Scaling is increasing a company's revenue without increasing its resources.

Scaling up a business is not just about increasing sales or inventory turnover. It’s also about adapting to a different way of doing business altogether. For example, an HR manager in a small business may interview all prospective hires personally while in a larger business, the HR manager delegates interviews for entry-level employees. The company’s leaders realized that as the company grew, the HR manager’s duties increased. Interview processes were updated to share the task of hiring the best candidates.

Why is scaling a business important?

Scaling a business is important to grow sales, reduce costs and maintain customer satisfaction. Sales growth doesn't automatically equal profit growth. If you're adding sales staff as quickly as you're adding new customers, you're expanding costs as quickly as revenue. Improving and standardizing sales processes, however, allows the same number of staff to make more sales while investment in infrastructure ensures all orders are met. The goal is to increase revenue, not costs.

Anticipating what your company needs to grow efficiently and effectively can lead to more sales, profit and customer satisfaction. Planning ahead will help ensure that expansion goes as smoothly as possible. This is true not just for small businesses but also for larger incorporated businesses looking to expand to the next level.

How to scale a business

Scaling a business takes time as you work through a process to ensure lasting, long-term and profitable results. The most important stages include:

1. Planning properly

In addition to sales growth, it's crucial to consider your product offerings, marketing, funding sources, internal processes, staffing, business premises and infrastructure. You want to look at how to grow your company’s operational capacity and handle more sales or work without disrupting ongoing processes. All departments must be ready and your processes robust. The goal is to devise a strategy that is well-organized, sustainable and adaptable.

2. Securing financial support

Scaling up a business in advance of sales growth can be expensive, but if you've developed a sound business plan, you should be able to secure the financing. Seek new finance options. Consider a range of options, such as equity financing via angel investors or venture capitalists, crowdfunding, debt financing via loans or a line of credit. The most important thing is to know in advance how much investment is required and how it will be allocated.

Related: Equity Vs. Debt: Definitions, Types and Advantages

3. Setting realistic and clearly defined targets

Be sure to set goals for all areas of the business such as sales growth, cost management, staff recruitment and staff training. Carefully consider how scaling and growth will affect your company. Each team should be able to see the role they will be playing as well as the big picture. You want to establish goals that can be met over the long term. Consider using the SMART method to set achievable goals.

Build a business plan for growth with clear metrics for success. Don't be afraid to say no to some opportunities for growth if your organization's business plan can't accommodate them. Steady, sustainable growth is better than rapid over-expansion followed by missed promises and unhappy customers.

Related: How To Make a Business Plan

4. Considering the best options for growth

Take time to review all options for growth. You have set goals and now you must decide how to reach them. The fastest way may not always be the best way. For instance, sales may grow rapidly through expansion into a new market, but invoicing and accounts receivable processes cannot cope with the increased volumes. This may cause the business to suffer problems with cash flow. Consider the role that technology, consolidation or outsourcing might play in your growth plan.

5. Changing the internal culture

As you scale your business, you may need more staff. A very hands-on approach where you know all the employees personally is simply not possible in a larger company. The HR department may now need to deal with most employee issues. It’s important that employees participate in supporting the company’s business values. Promote a culture and environment where people want to be and want to excel. Make sure they are properly engaged, motivated, recognized and rewarded.

Establish and communicate the ethos of the business before bringing in any new hires. Get existing employees involved in the process of defining what is most important to them and make sure everyone inside the organization is clear on how the business does business. A strong sense of organizational identity helps the business scale up to the next level.

6. Standardizing the product

To scale effectively, your products or services need to be standardized and repeatable across different locations and parts of the business. A larger company may not be positioned to offer flexible, tailored solutions to each customer. It’s crucial to provide a quality and consistent product. If growth comes too fast, it may cost you in quality or service, forcing your customers to go elsewhere. Having the right processes, culture and staff is key to maintaining quality.

Another critical part of scaling a business is establishing structured, repeatable processes for the everyday operations of the business. This includes payroll, accounts receivable, training of new hires, on-boarding of new customers and dealing with complaints. Automate processes where possible to reduce the administrative burden.

Related: What Is Process Management?

7. Monitoring progress and adjust

Keep comparing your progress to your clearly defined targets and make adjustments as necessary. Scaling your business to grow with the right products, processes and people doesn’t guarantee a smooth transition. You may still experience issues along the way. Keep in mind that scaling a business isn't a one-off event but rather an ongoing process.

Five tips for scaling a business

Following these tips can help your company successfully scale up, no matter its size:

1. Rethink your brand

Optimize your brand offerings to ensure you're ready to attract new customers and retain existing ones. Do your market research and develop new products if necessary. Maximize the value you're offering to your customers via a value ladder of products with budget, premium and subscription-based options. A more diversified product portfolio can help companies scale up. Think about your marketing strategy, too. If you're heavily reliant on direct marketing in a local area, you may need to explore more scalable options like content-based marketing.

Related: How To Plan a Marketing Strategy

2. Seek advice

Before scaling, seek out advice from friends as well as from rivals. Think about other businesses that have scaled up successfully in related areas and consider what you can learn from them. Try reaching out to managers and HR in those organizations for advice. You may be surprised by how willing they are to talk to you.

3. Update your infrastructure

Consider your premises, website, IT systems and general infrastructure carefully. Do they meet not just your current needs but also your future needs? It may be worth investing in some extra capacity now before you actually need it.

4. Hire new talent

Hire new people to expand your team's capacity and capabilities. If you're struggling to attract talent, don't be afraid to outsource functions such as information technology (IT) support in the short term. It takes time to build a great team of employees and it's better to scale the business through outsourcing than to bring in new people who aren't a good fit.

Related: 11 Tips for Hiring the Right Employees

5. Consider restructuring

Build an organizational structure that works with your new level of business. You may need new layers of management and even whole new departments to handle IT, HR or other functions. It's important to establish a clear hierarchy and departmental responsibilities before the business outgrows its current structure.

Read more: How To Plan an Effective Organization Restructure

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