6 Signs Your Business is Ready to Scale Up
Business owners are always looking at ways they can scale up their companies. Scaling up is by no means an easy feat - it can be expensive, disruptive and challenging. However, when the timing is right, many business owners do spread their wings and pursue new growth avenues that wouldn’t be possible without facing any risks head on.
Many company owners have different ideas about how to scale up; some may prioritise growth in revenue and the team while others may focus primarily on moving to more profitable sectors or industries. Every step has to be strategic and carefully planned. However, many are simply unsure of the right time to upscale. The age-old idiom of ‘being in the right place at the right time’ is all too true.
How do you know when the time to scale up your company is? It’s hard to anticipate or predict. What’s more, if you scale up at the wrong time you could risk throwing money, time and effort down the drain. Therefore, it pays dividends - literally and figuratively - to be as cognizant as possible and look for some crucial positive signs. That way, you’ll be more likely to scale at the right time.
Outlined here are six positive indicators for most business owners - regardless of sector or service offering - which suggest that the time to scale up might be closer than you realise.
Sign #1: You’re Constantly Exceeding Your Targets
The growth journey of any startup or developing business can be filled with obstacles and unexpected twists and turns. It’s always important to look back and remember your early days in your venture, and think back to what your initial goals were. Over time, you will have likely surpassed these goals, doing the same with any micro- or macro-conversion goals you set along the way. If that’s the case, this is a good indicator that you’re on a continual upward trajectory.
It’s always wise to retrospectively assess how your business is performing now versus how you predicted it would. While a comfort zone is nice to stay in for a while, it’s always important to strive forwards and plan for scaling up. This will involve potentially setting new business or revenue goals, acquisition targets, and profit margins, among others, which might only be possible once you’ve acquired more resources. Either way, it’s a good sign.
Sign #2: You’re Confident That Cash Flow Has Improved
Generating a profit in business is always an occasion to celebrate, but staying cash flow positive for a longer period is also something to behold. Whether this has come from outside investment, a surplus of new clients, or making a series of smart long-term business decisions, positive cash flow is excellent for your revenue projections.
Essentially, this means you have the financial security to cover the costs of expansion or growth, whether that’s acquiring more staff, investing in new resources or tools, or seeking business partners or suppliers that are more capable of meeting your business’s current goals. As an example, you may have implemented sufficient security procedures in your business, but might have sufficient budget to outsource your cyber incident response services to a trusted third-party supplier. You’ll know you’re ready to scale when you see your business cash flow remain stable and you can put that money back into taking your business forward.
Sign #3: You’ve Developed a Skilled, Trusted Team
A thriving business is only as good as its team, which takes consistency, patience, time and effort to establish and perfect. Over time, employees and suppliers will likely come and go, but a strong, professional team will have had the right amount of investment put into it, collectively and individually. Jobseekers are looking for specific perks and benefits with hiring companies, so when you hire, ensure that you have the facilities to meet these evolving demands.
You’ll know you’re ready to take that next crucial step when you know your team is capable of driving the company forward. If you are assured that your team can handle ongoing projects, delegate tasks, and resolve issues with complete confidence, while meeting their targets and overcoming their challenges, you might be ready to progress further forwards.
Sign #4: You’ve Built a Strong Customer Base
Acquiring new clients and retaining your existing ones takes a huge amount of hard work. It’s a whole new level of difficulty to ensure your client base is strong and reliable. Many startups fail at this hurdle just because they’re unable to establish a firm client base that they can rely on for revenue. Others simply scale at the wrong pace, taking a leap of faith too early in their ventures and suffering the consequences.
Each step you take in building your client base has to be meticulous. Depending on the products or services you’re offering, you’ll know when the time is right to scale if you feel reassured that your clients are loyal and coming back to you in spades.
Sign #5: You’re Turning Down Business
As a result of building a strong base of trusted clients, you may find yourself on shockingly shaky ground before you know it. Client management is incredibly tricky and volatile, which is why it’s crucial to ensure your business is actively delivering value to the clients that are entrusting you.
It’s also surprisingly common to turn new clients away once you find your business and teams working at capacity, seemingly unable to carry any more weight. If this is the case, you could turn the business down, or, alternatively, upscale with enough pre-planning.
If you have enough clients but insufficient resources to meet their respective demands, simultaneously, you might need to upscale. It boils down to supply and demand.
Sign #6: You’ve Established a Reliable Infrastructure
Risks are necessary to take in business, but only if they are necessary. Just because your team has smashed its targets and your profits are up in one quarter, that doesn’t mean you should set an impossible target for the next one. Risk is inherent in the business, but minimising them should be a priority before you set out the next growth milestone.
If you’ve ever thought about the long-term future of your business, you certainly aren’t alone. Every business has one-, five-, ten-, or even 25-year goals, and milestones may be more specific in nature. These will help to drive the company in the right direction while proving that the hard work you’re doing is paying off.
Before making that big leap, confirm whether you have a reliable enough infrastructure in place so that you won’t need to resort to drastic measures (e.g. imminent layoffs in the event of losing revenue unexpectedly).
It’s evident that scaling your business is impossible without setting the right level of expectations. Use this article as a checklist and reminder to yourself as you weigh up the risks and rewards of scaling your business. Ensure you scale up at the right time(s) and you’ll be setting yourself up for long-term growth and prosperity.
