You would think growing pains are a nice problem to have, but the challenges of scaling a business can trip up even the savviest of entrepreneurs. Sure, your store has grown forty percent in sales over last year, but you may not have the space to keep up with this growth next year. The increase in sales has helped cash flow, but that’s still not enough cash to open up a second location. How, then, do you scale?
In the business growth cycle, first defined by the Harvard Business Review a generation ago, this is called the “takeoff” stage for a business, where, after surviving and seeing some success, the key problems are how to grow rapidly and how to finance that growth. The answer comes down to addressing two key problems: cash and delegation.
Here are three tips on how you can tackle these challenges:
Understand available financing options
On its surface, borrowing money is a straightforward solution. Most business owners have already borrowed money to help get their businesses off the ground (and running) up through the takeoff stage, whether that’s raising cash from family and partners, or from alternative funding for startups. But many business owners aren’t fully aware of the types of financing options they have available to them.
Accounts receivable financing, merchant cash advance, traditional term loans, commercial real estate loans, and even government guaranteed programs through the SBA are lending products that address a number of financing needs. Unless you are experienced or particularly informed on the various lending solutions out there, your first steps should include exploring options with a trusted advisor or a lender that can explore your specific needs from a consultative perspective.
Make sure your IT infrastructure can scale
The digital age has provided business owners with quite remarkable and incredibly powerful tools that were, until recently, only available to Fortune 500 IT budgets. And while the term “cloud computing” is mostly an abstract term for most of us, it represents a revolution in computing over the past decade that has pushed information technology toward a utility model, allowing even the smallest businesses to consume powerful software and computing with relatively low subscription costs.
Most importantly, the business benefits of software and IT are automation & scalability. When the Harvard Business Review first wrote about the business growth cycle, back in 1983, it certainly didn’t address today’s technological tools, but we can apply these benefits to solve the same problems business owners have always encountered. So how do you scale and delegate core areas of your business using “the cloud”?
A fast-growing retail store can expand online with relative ease: the right ecommerce solution can sell a single product and scale to sell hundreds. Marketing automation software can transform your small sales and marketing team into an army without hiring more staff. Giving your restaurant customers the option to order pickups by app or online can shorten your lunch line and allow you to process more business each day. You can also address back office needs, including operational roles that don’t need to be managed manually, including accounting software and online payroll services that do much of the heavy lifting for you.
Outsource until you can hire
Staffing, of course, is typically the largest expense for most small businesses. While outsourcing may not be an ideal option for some business owners who prefer to keep tight control over their operations, the savings on time and overhead are worth the consideration, especially if you become comfortable with working with temporary or contract employees. Areas to look into include creative needs, including marketing and design; customer support operations; accounting and bookkeeping; IT services, including web development and ecommerce; and even human resources.
When it comes to scaling your business, the key to remember is that you can’t do everything yourself. And any funding you are able to raise or borrow should be spent with scalability and delegation of duties in mind.