[“Four Things To Consider Before Scaling Your Business” originally appeared on The Huffington Post and is written by Tina Mulqueen.]
“What a great problem to have.”
It’s the response I get whenever I tell people that the demand for my company’s services outweighs my capacity, and it’s time to scale.
While growth is an exciting and inevitable aspect of business success, and I’m certainly fortunate to be in a position to pursue it, this “great problem” is often a scary one for entrepreneurs like me. Investing in growth can be powerful and necessary to bringing a vision to fruition, but business owners often consider the allure of growing their businesses over the feasibility of it. Determining when and how to scale can be some of the toughest decisions for any entrepreneur to make.
Jia Wertz, co-founder of The Mastermind Exchange, a company dedicated to helping businesses scale, confirms the sentiment. “Founders often come to us with a plan of scaling their business once they realize they want a repeatable sales process that doesn’t require their day-to-day involvement” Wertz says. “But it’s not an easy transition. While they have one-hundred percent of the knowledge it takes to run their lifestyle business, they now only have sixty to seventy percent of what it takes to scale that same business.”
Understanding the conditions necessary to make that transition a success is a crucial first step to the scaling process. To learn how to navigate the transition, I sat down with Larry Jacobson, a sought after business coach and founder of Buoy Coaching, to talk about what to consider before scaling. Here’s what he had to say:
Consider Your Readiness
“Often, when entrepreneurs start out, they have all the time in the world, but none of the money,” says Jacobson. “You pour yourself into your work, until you can’t do any more. When you can’t do any more, and assuming you’re making money, that’s when it’s time to scale – if you want to.”
Jacobson emphasized that scaling isn’t an inevitability, and making the choice to scale deserves thoughtful consideration.
“Balancing growth and fiscal caution is an art, not a science,” says Tom Gillis, CEO of Bracket Computing. “Entrepreneurs need to be optimists, but that optimism can’t obscure true product and market readiness. As a start up, you only get to push the ‘go fast’ button once – it’s important not to push it too soon.”
Make Informed Decisions
“This should come as no surprise,” says Jacobson, “but in growing your business, as in life, knowledge is power.”
Take Christmas Tree Brooklyn, for example. Touted the Uber of Christmas tree delivery, Christmas Tree Brooklyn has grown by at least one-hundred percent every year since inception. Founders Dan and Morgan Sevigny credit their success, in part, to utilizing data to scale thoughtfully.
“Every year we have no idea how much more we’re going to grow,” says Dan, “but we try to use data to inform decisions on how much inventory to buy and how much cash to have on hand.”
By carefully tracking the previous year’s sales and other customer insights, the company provides an exceptional experience while maintaining reasonable margins and mitigating the risks often associated with growth.
Learn to Let Go
If you’ve determined that you’re ready to scale, Jacobson suggests it’s essential to do some introspection, starting with assessing your willingness to delegate.
“It’s a key question,” says Jacobson. “Many entrepreneurs are not willing to relinquish control. If letting go is difficult for you, it’s going to be tough, or impossible, to scale.”
According to Jacobson, this inability to let go is one of the most common barriers preventing a business’s growth. “It can be scary stepping out of your comfort zone,” confirms Sean Hopwood, founder of language services provider, Day Translations. “But if you want to scale your business, you need to get over your trust issues and learn to delegate. You have to accept that you can’t do everything by yourself and that, sometimes, others can do it better. We hire people who know things that we don’t know. It’s the only way to keep growing.”
Leverage Your Resources
“For clients that have scaled their businesses from small to medium, it’s been the hardest,” says Jacobson. “They raise their overhead significantly with employees, accept greater accountability, and don’t necessarily make more money. Profits that they kept before are being paid to overhead.”
According to Tom Villante, CEO of YapStone, efficiency is the key to mitigating the financial risks associated with growth. “It’s crucial to be efficient while growing your business and giving it scale,” he says. “And part of that is about leveraging resources to keep from being spread too thin. Without our ‘work smarter’ strategy, we could have easily gotten mired into the day-to-day running of the business and not been able to build the payments platform that we have today.”
If you’re making the tough and exciting decision to invest in growth, taking a pragmatic approach by considering your readiness, understanding how to delegate, leveraging resources and making data-based decisions can help to ensure success. Still, the pursuit of growth can be scary, so remember before you start pulling out your hair…it’s a great problem to have.