Your small business made it past year one – Now what? Part 7: Are you scaling efficiently?
Building your small business to the point that there may be potential for growth is certainly an accomplishment. But it’s one that conceives an entire new set of challenges. Scaling efficiently is one of the most difficult feats of the small business landscape. Move too slow, and you risk stagnating, or worse, tailing off as the competition advances. Move too fast, and you risk investing in new assets at a speed that outpaces your accelerating revenue stream. This can result in having to sell off these assets just to make ends meet, or lay off half your workforce.
Making sure that your business grows at a sustainable pace is a difficult undertaking.
Are your services and products replicable?
Consistent replicability of products and services is one of the most essential factors to consider for any business that is attempting to scale, according to Inc. contributor Jason Albanese. Are you selling a talent? A massage parlor and spa, a professional photography studio, a tanner, a cobbler and a localized graphic design firm are just a few examples of businesses that may have a harder time scaling than others. Part of the reason for this is that these services rely more directly hands-on skill that isn’t purchased at a small parcel. So do start by raising your prices? Do you just try to increase your customer base, and if so, at what point do you start hiring more skilled labor?
These are all difficult questions to answer, and according to Lifehacker contributor Lanre Solarin, a good place to start when answering them is by assessing the overall value of your creative or talent-based services. You may have gotten past year one simply by being one of the best in town, but if you want to scale, you’ll need to start assigning concrete, monetary value to your creative capabilities.
Retailers and restaurants are in a somewhat better position in the sense that their products are by nature, somewhat easier to reproduce and replicate consistently. Albanese provided the following example:
“If someone goes to McDonald’s to order a cheeseburger, they can expect an almost identical experience from any McDonald’s, anywhere on the planet,” Albanese said. “This is a major achievement in scale.”
If you’re selling a service or product such as burgers or clothing that can be replicated in ease, or purchased in slightly larger wholesale quantities, it’s a little easier to start stretching your business’s capabilities.
What does the market look like?
Circumstance and timing are hugely important when it comes to scaling. Even if you have oodles of cash burning holes in your bank vault, you need to make sure that there’s a sustainable enough market to grow into. And if there’s not, you may have to consider alternative ways to expand your services.
One way might be branch out to new geographical regions. Thanks to ecommerce, this doesn’t necessarily have to entail building a new physical presence for your business. If you’ve already hit a cap in the local market, you can branch out by bolstering your web presence with a new, easy-to-use ecommerce platform. For good measure, add in social media and email marketing.
Alternatively, you could attempt to expend your suite of products or services. Just because you’ve already won the local market for one offering, doesn’t mean you can’t do the same for another offering.
Regardless of what you choose to do, it needs to make sense with the state of the market you’re targeting. You need to be sure that any of your scaling efforts will have a strong enough chance of yielding return on investment in the market climate.
Put another way, you probably wouldn’t want to debut your new Chicago-based ice cream shop on December 1.
Do you have enough capital to seize scaling opportunities?
On the opposite end of the spectrum, you might end up in a situation where you have a golden opportunity to scale in a big way, but you’re lacking the merchant capital necessary to seize the day before someone else does.
Maybe your main local competitor recently shuttered its operation, leaving its customers with no choice but to go to you, but you’re lacking the operational assets you need to serve this new source of revenue. The planets have aligned, and you have to act now.
This is the perfect example of a time when the most efficient action you can take is to obtain more capital in the form of a small business loan. Efficient scalability is all about taking measured action, in when a scaling opportunity presents itself that is simply too good to pass up, the most sensible thing you can do is grab it by the reins, and ride it to success. Get a business loan, and get ahead of the competition.