How and when to scale

Whether it’s a job with more money, or a smart-phone with more memory, people are always looking for bigger and better – but it doesn’t always work out well.

If you’re a small business owner or enterprising startup, you’ve undoubtedly daydreamed about taking the next step to make it big.

After watching the journey of countless small business owners, I’ve found that while scaling would seem to be the natural course of progression for a business, it isn’t necessarily right for everyone.

It needs to be approached with caution so it doesn’t backfire.

Having worked with small businesses in the role of mentor, I’ve found the biggest mistake business owners can make when approaching growth is to try and scale too quickly.

They may have a great product, and it may even have scope to scale up, but as in love only fools rush in.

When it comes to scaling a business successfully, there are three things to keep in mind:


1. Size doesn’t always matter


Before delving in to when and how to scale, it’s important to pre-empt this bold and ambitious move with the cold and hard truth:

Your business may not be scalable – and that’s okay.

Not all businesses need to turn into multinational corporates to be considered successful.

Sometimes the smaller business model you have already developed suits the product you’ve created and the target market that your business is trying to reach.

On the flip side, there are certain businesses that, if they approach it correctly, could (and perhaps even should!) potentially grow and scale their business to great levels.

Scaling a business isn’t about what your product is, but about the target market you’ve identified.

The first step is to make sure you have a business model which is stable and you’re not feeling any cashflow issues.

How to get on top of cash flow in two minutes

From there, if you’ve identified a target market from market research, it may mean your business is ready to scale.


2. Don’t lose sight of the budget


When a business is ready to scale, they normally time their expansion after receiving an infusion of capital investment and are ready to start spending.

While this is an exciting spot to be in, money can very quickly disappear if there isn’t enough structure in spending it.

Take Choovie for example.

Choovie, a business that focuses on putting “bums on seats” at cinemas around Australia by creating a demand-based pricing solution, has been going through an expansion project of their own.

Shane Thatcher, the company’s CEO, believes that staying on top the budget is a really important element of scaling successfully.

“When you move to a real growth focus it is very easy for your pre-growth budgetary rigor to go right out of the window,” Thatcher told The Pulse.

“Often a growth phase coincides with much more capital available (through a raise or loan) than beforehand and the excitement can get to everyone.”

READ: 5 ways to woo an investor


3. Keep your eye on the prize


Most business owners are passionate about their business.

In fact, the main reason why people want to expand their business (aside from generating more revenue) is so that they can further grow their passion.

When it comes to business expansion, one of the biggest challenges is expanding the team and hiring the right people.

Sometimes, during the rush of expansion, the wrong people are hired and the passion and vision of the business become lost along the way.

“The vision and passion of the business is brought to reality by the people in the business.” said Thatcher.

“It’s easy to live the passion when the team is just the founders, but not so easy as more and more people join.

“The key is to really focus on hiring people who share the passion, maybe even at the expense of hiring the person with the ‘best’ skills. This is particularly important with your early hires – because they are going to be the ones who hire more people later on.”