Editor’s Note – Thanks Ivan Serrano for the infographic.
As a startup, you face many challenges in your day-to-day operations and may constantly worry about reaching profitability. The unfortunate fact is that many businesses do not become profitable due to a lack of knowledge or a willing ignorance. The biggest issue for many new businesses is knowing how and when to scale. It’s likely you have heard this term before, but do you actually know what it means?
What is Scaling?
In simple terms, scaling means your business has the potential to increase revenue while maintaining relatively low costs. Your business is ready to scale when you have a product-market fit and repeatable sales search and customer acquisition models have yielded positive data. When you are ready to scale, your business will start using more resources – generally money, people and systems – and attempting to grab market shares. It’s a dangerous time period for businesses and often is the leading cause of startup death for three reasons:
- It can be difficult to know when your business has the built-in customers and you might be misreading market readiness.
- In order to expand you’ll ultimately spend much more money and your cash flow might not be able to keep up with how much you are spending. If you cannot properly collect from customers your capital requirements might end up destroying you.
- It’s far more difficult to reposition or retool your company with a 100+ person business versus a 10 man operation.
Not all companies will need to focus on scaling their business for global domination, but many of the same strategies for successful large scaling apply to smaller businesses:
- Think big and take bold actions. Think strategically how you can take your business to the next level then make plans on how to reach this goal by surrounding yourself with the right team, mentors and connections.
- Build upon your public profile. This covers everything from information on your site to social platforms. Make sure people know who you are and what you and your company represent.
- Find and build key relationships and networks. You might have heard this a hundred times already but it is not what you know but who you know.
- Figure out how you will finance your expansion whether it’s through investors or bank loans.
The following infographic can provide you with more information on how to successfully scale and avoid common pitfalls.