Half of the small businesses in the US fail after the first five years, while two-thirds of them fail after the first 10 years, according to the Small Business Administration. One of the main reasons why small businesses fail is the inability or unwillingness of their owners to scale up properly. Scaling is vital, as it sets the stage to enable and support growth in small businesses. When done right, your scaling efforts will ensure that your business can adapt to an increasing workload without losing revenue or compromising performance. However, scaling can be risky, which is why you need to follow the right steps.
Finance your scaling efforts
Scaling requires some investment, whether you are hiring more employees, buying more production equipment, or increasing your stock. If you don’t have enough retained earnings to cover the cost of expansion, you will need to seek the necessary financial support to ensure that you don’t run out of funds when you’re in the middle of scaling. If your business is on solid ground and you have a good track record of paying debts, securing finance should be fairly easy.
Secure your assets
There are many risks your business will face as a result of scaling up. For example, if you invest in new production equipment, there’s a risk of losing it if there’s a fire or break-in in your facilities. As such, you’ll need to get insurance coverage or make changes to your existing policies to cater for some of the risks that will arise as you scale up. Start by upgrading your property insurance and liability insurance policies to ensure that all your assets, new and old, are covered. Cerity note the importance of creating an environment that supports workers’ health, comfort and success, so if you have hired employees, make sure that you get worker’s compensation insurance to protect them and your business if they suffer from work-related injuries or illnesses.
Hire the right people
As you scale up, you’ll need to hire more people to help you take on the extra workload. Depending on your budget and unique needs, you can hire on a full time, part-time or contractor basis. Since it may not be possible to hire someone for every task, you can consider outsourcing some tasks like cleaning, marketing and other non-essential tasks so that you can maintain focus on your core roles.
As a business owner, it is your responsibility to navigate your business through growth cycles smoothly without being hampered. To achieve success, do your homework and build an effective plan for scaling that minimizes risk and maximizes your success potential when you transition into a larger organization.