How to successfully scale your business

So you’re wondering how to scale your business?

Congrats! We’re guessing you have a thriving business at hand and are looking to take your next steps forward.

But before you get too excited, this is the stage where you need to be honest with yourself. Is your company ready for business growth? Premature scaling is the number one cause of startup failures. A study by Startup Genome found that 70% of all tech startup failures were due to scaling before they should have.

So before we get into how to scale, let’s start with the most important factor: getting your business ready to scale.

Before you start implementing any plans for scaling, it’s critical that your business is prepared to deal with a surge in demand. Consider the following carefully: Have you achieved product/market fit? Are your team, systems, supply chain and cash flow ready for a sudden increase in work and sales? Do you have efficient processes in place that can be easily repeated by new team members? If not, your efforts to scale will crumble under pressure. Focus on having the right infrastructure in place first:

• A strong team that possess the skills, know-how and commitment to business growth. Your business is only as strong as your employees. You need the right people on board and a strong workplace culture in place before making new hires.
• Streamlined operations. Take the time to ensure your processes are efficient and that you’ve automated as much as you can. You want your team to be able to deal with increased output, but with as little input as possible.
• Positive cash flow. Growth won’t solve any cash flow problems, so you’ll need good cash flow management before scaling. Setting up projections will help you anticipate any potential setbacks and make strategic decisions once you’re growing by comparing them to your actual data.
• Consistently meeting targets. If you’re consistently meeting your business goals - whether it’s your CAC, increased revenue, customer retention, etc - it's a good sign that your business is ready for expansion.

If you think you’re ready for scaling, then it’s time to think about the finances. Expanding your product line, moving into new markets, and growing your team are all going to require an influx of cash. It’s important to be realistic when working out how much you’ll need; even the most profitable companies can burn through cash quickly when they’re growing. A long-term cash flow plan and a realistic financial forecast are key. Start with the number of new customers that you’re aiming for and incorporate the expenses that will occur to handle that increased demand. Keep in mind the peaks and troughs that you’ve previously witnessed in your company finances and apply them too. While estimating your growth can be time-consuming, it will pay off to be as accurate as possible.

Here are some useful metrics to consider when you’re working out how much funding you’ll need:

• Break-even point - running a break-even analysis will show you how much revenue you need to cover your expenses. You can use it as a guideline for the amount of money you’ll need to cover your projected expenses.
• Customer Acquisition Cost (CAC) - an obvious one, but knowing how much it currently costs to acquire a new customer will help you to predict future costs once you start growing.
• Lifetime Value (LTV) - pay attention to your LTV. Not only will it show you if your business will increase value as it grows, but it will help to inform your product, marketing and sales efforts as you scale.

Once you know how much you need, it’s common for entrepreneurs to look to VC’s for funding. But using multiple sources of income is a faster and more practical way to achieve business growth. Funding options can include bank loans, grants, reinvesting profits, crowdfunding and more. Consider the pros and cons of each option and find a combination that works for you.

• Loans - securing a loan from a bank or a government-backed scheme such as Startup Loans means that you retain more control over your business. However, interest rates and the repayment period will need to be factored into your business roadmap.

• Grants - business grants are highly sought over due to the fact that they’re essentially ‘free money'. But your business will have to meet certain criteria in order to be eligible. Do your research into UK grants and local neighbourhood grants to see if there’s any that your company could be suitable for.

• Angels - angel investors can be a great option for business funding due to the knowledge, network and experience that they’re able to share with you. Just keep in mind that you’ll be giving them a share of the business in return.

• VC’s - VC’s will also require you to give up a part of your business. But with huge cash injections, this is usually the most sought after route. Just remember that this funding process can take a long time, so if you do decide to go after VC’s, account for the time in your business plan.

• Crowdfunding - crowdfunding can be an extremely viable option for scale-ups who have already built a loyal fanbase of customers, followers and previous investors. It’s likely that you already have people who believe in your product and who will show you support. The only downside is a potentially lengthy process and the possibility of costs invested into the marketing campaign.

No matter your funding route, you need a compelling story that will inspire your friends/family, followers, VC’s or angels to invest in you. It’s most likely that you’ll be preparing a pitch deck - you’ll need a set of slides that clearly demonstrate what you want and what they’ll get in return. If you’ve already been through this with your startup funding, it’s important to know that pitching in your scaleup phase will be different. Your startup investors were looking to be inspired by your vision; your growth investors want to see the data that proves you can execute that vision. Rather than revamping an old pitch deck, create a new one that features these key things:

• Growth investors will need a closer look at the numbers. Be sure to include the metrics that back up your growth potential, such as the KPI’s you’ve been measuring, profit margins, ROI, etc. Providing concrete evidence will give you a much stronger case and will allow the investors to get a clear overview of the presented opportunity.

• Make it clear that you have a model in place that can scale sustainably. Your investors will be more interested in your scalability rather than your product-market fit (which you should have achieved already). You want to make your long-term objectives clear and realistic while keeping them excited at the same time.

• Know your competition - your investors may be keen to know how you’re going to tackle competitors in your market. Demonstrate what sets you apart from the competition and how you plan to overcome these obstacles. Your knowledge of the competitive landscape should be realistic and prove to VC’s just how well you understand your industry.

Increased output is going to require increased manpower. But if you’re trying to do it without spending too much, outsourcing part of your workload is going to be your best option. Not only will it free up your time from day-to-day management, but you’ll get access to expert talent for a fraction of the cost.

An area we highly recommend outsourcing is your growth marketing, which will be crucial in reaching your new audience. Your scaleup phase will demand results quickly, and it’s difficult to grow an effective in-house marketing team in a short time. The hiring process (and then the onboarding process) can take months alone. With an external team, you have the best in the industry instantly; growth hacking experts, designers, copywriters, PPC specialists and more. And you can flexibly upscale or downsize the marketing efforts to suit your business needs.

If you’re getting ready to scale and need a growth marketing agency you can trust, we can help. At Growthcurve, we’re experts in all aspects of growth marketing. We love combining innovative ad-tech with a thorough marketing strategy to create amazingly effective digital advertising campaigns for our clients. If you want to learn more about growing your business through digital advertising campaigns, get in touch.