Making the decision to move from growing to scaling your business can feel daunting but, with the right plan in place, it can transform your company without incurring hefty additional costs.
What does it mean to scale a business?
Scaling a business means increasing sales and revenue without incurring a significant rise in costs. It considers how a business can become more efficient at using its resources so that it can handle higher order volumes without a large increase in expenses. In other words, scaling supports sustainable business growth, by ensuring a company has solid systems and processes in place to facilitate accelerated expansion.
"Scaling can take your business to the next level," says Anthony Impey, CEO of Be the Business, a non-profit organisation supporting business owners. "It can mean moving from being a locally successful firm, to one that has a national profile and significant brand awareness."
Scaling versus growing a business
Growth means incrementally adding resources at a similar rate to increasing revenue. Scaling, on the other hand, focusses on rapid growth, where sales outpace the extra costs incurred in meeting higher demand for your products or services.
"When you think about increasing your business' profit, upping headcount or expansion, you're thinking about growth," says Impey. "On the other hand, scaling is all about increasing efficiency, optimising resources and handling increased order volume," he notes. In this way, it aims to unlock the capacity to meet rising demand so that your rate of growth exceeds the rate at which your expenses increase.
Why is it important to scale a business?
Scaling is an active decision taken by a business owner to accelerate growth and market penetration. It is a long-term investment that ensures your company can grow without being hindered by inefficient processes or a lack of resources.
The process of scaling can in itself significantly boost the competitiveness of your business, says Impey. "By growing your operations, investing in technology, or increasing marketing efforts, you can improve your business' brand visibility, product offerings and customer experience," he explains.
Practical tips for scaling a business
1. Find the right time
Finding the right time to scale your business depends on a number of factors, including demand, your finances, and whether you have the right talent in place.
As a first step, Impey suggests analysing your sales data, looking for evidence of consistent growth, positive customer reviews, repeat business and increased market interest.
Greg Wixted, a baker and entrepreneur, knew it was time to scale his bakery business, Cakery Wonderland, after witnessing a surge in revenue just four months after launching with a £10,000 loan. "It was profitable within four months and it's now on course to do £200,000, pay back its loan and open a kitchen in Manchester," he says.
It's also important to assess whether your business systems and processes are ready to support scaling, explains Impey. "Look at your current production capacity, supply chain management, distribution channels, and customer support capabilities," he says.
For example, if your sales transactions increased by 50% tomorrow, could your suppliers meet the demand? Would your eCommerce website be able to deal with the traffic? Do you have the staff and packaging resources to ship more orders on time? These are the types of questions business owners should be asking before they scale.
2. Put a great team around you
Scaling requires a high-performance team, says Impey, which means investing in hiring, training and developing skilled employees who can help you scale successfully.
"The days of wearing 10 hats and being all things to everyone are no longer in your job description," Wixted adds. "Put great people around you, hire the best Chief Operating Officer and someone who can say no to you," he adds. If you've never scaled a business before, consider a COO who can plug that knowledge gap. Recruit a top team of executives based on what you don't know, not what you do.
What's more, Impey suggests finding a mentor such as an industry expert or advisor who has first-hand experience in scaling a business. The right mentor can add much value, providing advice and guidance to help you make key decisions and overcome barriers as you scale.
3. Perfect your product or service
Before you scale, it’s important to feel as if you’ve perfected your product or service to the best of your ability. This helps build resilience when you do come around to scaling. By actively asking for and engaging with customer feedback businesses can identify and address any issues or shortcomings. This continuous feedback loop allows for constant refinement and enhancement of the product or service to meet and exceed customer expectations.
Additionally, conducting thorough testing, quality assurance measures, and incorporating industry best practices contribute to perfecting your offering. Ultimately, striving for excellence, staying responsive to customer needs, and continuously investing in product or service development ahead of scaling are vital.
4. Consider your competition
Considering a competitor's approach to scaling is vital when scaling your own business. Analysing their strategies provides valuable insights into what can work in your industry.
By studying their successes and failures, you can make informed decisions and avoid pitfalls. Assessing their customer base and market penetration helps identify untapped opportunities. What’s more, it helps set realistic goals and expectations for your own scalability. However, while it's important to draw insights from your competition when scaling, it's equally important to remember what sets you apart.
Challenges of scaling
Cash flow management
Managing and forecasting cash flow becomes even more important as you scale, giving you the insights you need to efficiently allocate resources to meet expenses and re-invest for growth. Ensure you review and forecast cash flow at least every quarter.
Access to capital and maintaining a healthy cash flow are crucial for scaling your business successfully. The extended payment terms of up to 54 days that come with the American Express Business® Platinum Card can help business owners unlock capital that can be reinvested for growth¹.
When it comes to scaling a business, access to reliable tech can make a huge difference. That’s why Amex Platinum Cardmembers get £150 annual Dell Technologies statement credit which can be used towards computers, monitors and other extensive tech solutions to help your business grow².
Memberships Rewards® points are also earned on every full and eligible £1 spent, which can be used across retail, travel and dining. These could be used to help your scaling efforts, for example by treating a potential investor to a business lunch or driving engagement on a customer feedback survey with a gift card prize using your rewards points³.
Quality assurances
One challenge of scaling is that it requires maintaining the quality of your products or services at the same time as you are making your business leaner and more efficient. This forces businesses to push boundaries and experiment with new strategies, notes Impey.
Keeping your employees motivated
Scaling can be a challenging experience company-wide and it may mean asking your current employees to change how they work and develop new skills. However, retaining top talent is important as turnover can disrupt operations and delay growth. "Your team will need to buy into the vision of where you are taking the business," Impey says.
As your business grows, new roles, departments and responsibilities will emerge, providing employees with opportunities for professional development and growth. Support your staff in up-skilling and re-skilling to take advantage of these opportunities.
1. The maximum payment period on purchases is 54 calendar days and is obtained only if you spend on the first day of the new statement period and repay the balance in full on the due date. If you'd prefer a Card with no annual fee, rewards or other features, an alternative option is available – the Business Basic Card.
2. Once you have enrolled your Card Account, you’ll get up to £75 in statement credits between January and June, and the same between July and December for United Kingdom purchases with Dell Technologies on your Business Platinum Card – up to £150 in statement credits annually. Terms and conditions apply.
3. Membership Rewards points are earned on every full £1 spent and charged, per transaction. Terms and conditions apply.
