Most people who start businesses probably do so in the hope that the business can quickly be expanded; perhaps to a pre-planned size, perhaps infinitely.
And often, if the launch of the new business has been carefully planned, these expectations can be realized, to the delight of owners, managers and investors alike.
But rapid growth can bring its own problems, which may range from easily overcome “teething” problems, to potentially fatal systems or financial failures.
So how can you ensure that your business avoids these pitfalls and expands rapidly but safely?
Plan Your Growth Before You Launch
Most importantly, if your ambition is to create the kind of business that will run smoothly and profitably without you being available 24/7, you need to be sure that your operating model is inherently scalable to start with.
In essence this just means being able to increase your customer base faster than your costs. But this is not always easy for some types of business.
For example, if the manufacture of your product is a highly specialized or labor intensive process, it may be difficult to achieve the cost savings and extra profits which come from bulk production and distribution.
The same is true of advisory or professional consulting services. While you may be able to handle more clients by hiring or partnering with other professionals, your costs will likely expand accordingly so that your overall return on investment may grow only slowly, if at all.
Some technology products, on the other hand, can be manufactured very cheaply in enormous numbers, with a large proportion of costs being incurred in the research and development stage. These kind of businesses lend themselves very well to rapid and profitable scaling.
Get Your Timing Right
Assuming you have established the type of business which can in principle be scaled, the next critical factor is timing.
Trying to expand too soon may be disastrous if your systems struggle to maintain the quality of your manufacturing, distribution and customer service. On the other hand, delaying too long may mean losing potential market share if your competitors react more quickly to emerging opportunities.
Before committing time and money to an expansion program you need of course to be sure that there’s a ready market for your increased production.
The Green Signals You Need to See
But you should also be confident that –
- your supply, production and distribution lines are secure and able to cope with a significantly increased volume
- your marketing costs per lead/customer are stable or declining
- you have good indications that brand recognition and loyalty is developing, for example that the “upsell” elements of your marketing funnel are an increasingly important profit center
- you have managers and other staff in place who are committed to your vision for the growth of the business
- your balance sheet and, most importantly, your cash flows are healthy enough to withstand any short-term shocks that expansion may bring
Maintain Your Brand Story
But as important as these practical considerations are, it is just as important for the long-term health of your business to pay attention to less tangible factors.
To retain your “early adopter” customers as enthusiastic fans, you need to pay constant attention to the consistency of your brand story as you grow.
This is not just about maintaining the quality of your product, but also your marketing messages, social media interactions and customer service.
With all the excitement and stresses of rapid scaling it can be difficult to remember the reasons why your business came into being in the first place. But always keeping in mind the “why” of your business is as crucial in attracting new customers as it is in retaining existing ones.