Growing from a small company to an enterprise is time-consuming and complicated. However, to reach success and increase profit, you need to scale your startup. That’s why, in this article, we’ll discuss if your company is ready for scaling and several useful tips on how to prepare.
Growth vs. Scaling: What’s the Difference?
First of all, let’s find out the difference between scaling and growth of a startup.
Growing stands for the process when the company’s revenue grows using the similar way. For example, you get a new client, so you should hire more workers. In this case, the company receives additional income but spends some money on new employees.
As for scaling, this process doesn’t need spendings to increase revenue. So, you get a maximum income with minimum expenses.
The Google enterprise is a perfect example of a scaling process. The company got a lot of new clients with low investments.
When to Scale Up a Startup?
Before starting the scaling process, you need to find out when your company is ready. According to the research, 74% of startups fail due to premature scaling.
So, the question arises — how to define whether your company is ready for scaling? We’ve singled out four signs that help you understand when to scale.
Your Company Fulfilled All Previous Goals
Starting a startup company, you set goals according to the statistics. As a result, you can predict possible revenue, expenses, and others.
When the company achieves such purposes, it’s high time to set new goals and scale up the business.
Your Company Has Strong Cashflow
Any scaling or growth requires investments. So, your startup should be not only profitable but also gets enough money for investments.
At this part, it’s essential to analyze the revenue sources and predict possible expenses carefully. For example, you need to create a list of income and expenses. Counting these numbers, you can single out the amount of money you can invest.
Also, you need to understand that you can’t get a high profit in a month. It’s common to wait at least three or four months to get your investments back.
There is one more way to get money for scaling. You can look for investors. However, you’ll need to prove to them that your company is stable and there are no risks for them.
Your IT System Works Well
Modern society requires a good-working business software to offer clients appropriate services. First of all, you need to make sure that your software is scalable. The company should be ready to expand its client base.
Also, scaling requires proceeding with a lot of data. If your software performs small tasks, you’ll face some difficulties during scaling. However, if your IT system works with various serious tasks and stores a bunch of data, you’re ready for scaling your startup.
You Have a Good Team
The team of workers is an essential part of your company. You need to analyze them carefully to find the answers to the following questions.
- Can your employees bring innovative ideas?
- Can they work with a more significant amount of data?
- Will your team be able to work with new tasks?
In case you are giving positive answers to such or related questions, you’re ready for scaling.
Steps on How to Prepare For Scaling
Now that you know when your startup is ready for scaling, let’s move on to the process.
How to prepare your company for scaling? There are seven vital steps you need to follow.
Stage #1. Create the Strategy
There is no doubt: scaling requires preparation. However, there is no need to make a big complicated strategy. You need to make a list of the strong and the weak sides of your company. Using this data, you can set goals for a quarter, half of the year, and year. It’s also necessary to add market analysis.
Stage #2. Invest in Technologies
We’ve already mentioned how essential the software is. However, several solutions can help you manage information better.
- CRM system. Custom Relation Management or CRM system assists in managing data about your customers. Such a system allows offering clients a better experience. There are many ready-made solutions like Salesforce and HubSpot. However, you can choose custom CRM development to follow your requirements and business goals.
- Cloud computing. Cloud-based solutions make your project more flexible and powerful. It gives access to the data from any device for your employees.
- ERP system. Enterprise Resource Planning assists in organizing information like reports, working collaborations, and more.
Stage #3. Outsource
These days, it’s common to outsource a lot of services. Outsourcing allows for saving money and getting qualified specialists.
For example, you can hire a reliable vendor for developing a mobile or web app for your company.
Stage #4. Build a Marketing Strategy
People need to know about your company. That’s why you need to develop a marketing strategy and follow it.
There are several marketing types that you can use.
- Direct marketing
- Content marketing
- Social media marketing or SMM
- Influencer marketing
Stage #5. Improve Reputation
Let’s face it — reputation means a lot. To gain clients’ trust and loyalty, you need to consider branding. For example, you can create a good-looking website.
An attractive website, along with a marketing strategy, can bring you loyal customers.
Stage #6. Create a Reliable Team
Scaling often requires hiring more employees. You need to find workers that can fulfill complicated tasks. Also, you can cooperate with multi-skilled employees. It’s common for a startup to have one person for several tasks.
Stage #7. Let the Company Work Without You
The more employees you have, the more complicated to manage them.
It’s better to onboard leaders of departments that help you manage the workers. In this case, your employees become more independent and can work productively.
As you can see, scaling is a time-consuming and challenging process. You need to prepare your company for growth carefully.