How to Scale your Business

A scalable business is at the core of entrepreneurship. Scale your Business!

Business Hub one, 2020

The fundamentals of entrepreneurship does not permit you to be stuck as an employee in your own business, running helter skelter to attend to customers, manage inventory attend to feedbacks and make profits. It is a call to do much more.

A scaled business affords the founder the time to make more money, venture further out and create more value.

Basic Principles of Scaling your Business

Scaling is often times business-specific

The type of business you run, more often than not, will determine the things that will need to be put in place or changed in order to scale effectively.

Scaling requires you to be a manager

At the start of your Business, mostly the work might be so overwhelming that you feel like an employee in your own Business, hs is understandable in the very early das of your Business. However as time goes on , with scaling in yur view, you must look for ways to redefine your approach to your business and become a manager.

The process of doing this is very stright forward and starts with outsourcing those aspects of your day to day work that youonly did out of neccessity, not that you particularly enjoyed them.

Outsourcing these tasks will begn to bring out the manager in you and begin to set you on the path of building a scalable business

Becoming a manager will help you ensure hat you put systems in place to get things are done with or without your presence. This would help immensely when the business is ready to expand to other Locations.

Case Study
Scaling would mean opening more stores. This would mean the business has to have the ability to run even when you are not there as you cannot possibly be on all the stores at the same time!

Scaling, if not done properly, can hurt your Business

It is common to see businesses, go bankrupt or bleed customers when they attempt to scale. These can be termed Scaling gone wrong. While scaling your business, it is very important to build systems that are fail safe and ultimately very scalable.

Scaling is Capital Intensive

Scaling a business requires more employees, more expensive subscriptions to software’s, larger office spaces and more m1scellanous cost. All these will cause a significant increase in cash burn rate and can cause your cash reserves to be quickly depleted. In order to stay afloat a strategy to quickly beef up the cash inflow must be adopted pending the time the main business catches up with the new size of the business.

Example

E.g Consider a car washing Business.

Expansion would mean buying more sophisticated equipment, building more wash points to accomodate more cars, employing more personnel etc.

It is very possible that your main business model is unable to generate enough revenue to scale, and all these can put a strain on the current revenue model and can invariably cause the business to collapse.

In order to mitigate this, other services can be added to ensure the customer value is enough to pay for your more complex organization setup that would ensue and prevent putting too much strain on the current pricing.

These services will help increase the possible spending of each customer. Services such as paint waxing, vehicle diagnosis, servicing, tire gauging, wheel balancing and alignment etc can be adopted. These services increases the expected lifetime value of your customer and in turn helps you stay in business, sustain expansions and support further expansions.

Consider a delivery Business

The process of managing customer orders, deliveries, inventory management amongst others can be really time consuming. From the outset, investing in large enough systems would ensure that you do not witness breakdowns from time to time due to server overload, slow response time etc.

Amazon has within the hour delivery

Dominoes pizza once had 30 minutes delivery in some parts of the United states

These are examples of scalable systems put in place over time

These kinds of efficiency are known to drive growths organically.

How to scale your business

Scaling your Business can be regarded as easy with these

  1. Understand your Business Model

Your Business model represents the core of your business and defines the way you do business, make money and spend money. Understanding your Business Model is key to scaling your business. A well understood business model ensures that the methods adopted in scaling the business will not break the business model and cause the business to fail-

Point in Case

Pizza hut was essentially an eat-in pizza restaurant and had operated profitably for many years.When Dominoes pioneered home delivery pizza service, pizza hut failed to react to this move d^from domiones which set them back in the a delivery business by several millionsin profit. Why? They were in a dilemma as to whether delivering pizza to people’s doorsteps would affect their eat-in business, It took them several months to understand this and even longer time to convince their franchises to adopt home deliveries. Till today

  1. Adopt Scalable ways of doing business

In the early stages of your business when you are either bootstrapping or have very little angel/VC funding, ensure that you are not tempted to adopt strategies that are invariable difficult to scale. Adopt solutions that can take at least 10 iterations of your scaling. This will help ensure that you can scale rapidly as all the elements required were available 10 steps ago

  1. Identify the processes that can be outsourced to make your business scalable

There are many processes that essential to business, however, it might not make a lot of sense to have full time staff attending to them because of the frequency of doing them. These kind of processes can easily be outsourced and reduce the toll on your income if you decide to maintain employees to do those tasks.

  1. Automate your core processes 

Your core processes are a representation of the things you would most likely spend most of your time on and finding a way to automate them. E.g If your employees are beginning to grow past some benchmarks, it might begin to make sense to subscribe to payroll services to take care of the payments for you, this wouls most likely free up some of your employees from recurring clutter every end of month.

  1. Create a scalable organizational structure

Your organizational structure is a key part of your business and it determines how easy it is to make decisions and effect policies that can cause exponential growth.

  1. Invest in your Employees

The journey to scaling a business is not one that any founder can conveniently shoulder alone, he/she has to have a team of equally motivated people around him. In order to achieve this, the adequate investment must be made in the workforce, their opinions have to count and they must adopt the principle of ownership. Many Companies have principles such as ‘every employee a leader’ – This kind of mindsets helps instill the right attitude to work and the desired results are achieved and helping the business scale effectively.

Scale!

John Omokayode

Mechanical Engineering | Business Developer - I have a particular liking for the business side of everything. African businesses are capable of shaping the world economy!

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