Whatever the reason you think it could be time to scale-up your business, taking the leap and making the decision is an important step. It’s not something to rush into unprepared.
Making changes on the scale seen by scale-up businesses is something you shouldn’t do until you’re ready. When are you ready, though? This can be much harder to figure out.
This article discusses some of the common signs that you and your business could be ready to take the next step. Whether you’re a start-up ready to progress to the next level or an established SME wanting to boost plateaued growth, scaling up could be the option for you.
What is a Scale-up?
A business that’s scaling up is one that isn’t content with just growing organically.
Scaling up is making the choice to grow rapidly and with purpose.
Understanding what a scale-up is can answer some readiness questions. If you think some parts of the process are currently beyond what’s realistic, then it could be best to come back later.
To create rapid growth, changes need to be made to the business at an operational level. You’re trying to quickly increase your business’s capacity to generate revenue. This also usually requires some physical growth to achieve.
How you do this may vary. It may involve directly improving the sales channel to convert many more customers. It may also mean completely diversifying into something new.
Either way, scaling-up is ambitious. It’s the difference between a small family business and a medium sized company. Can you think what changes could realistically be made right now?
If there’s a clear new product to create or you think it’s time to open a new office, this might be the time to advance. If you’re still taking things one day at a time, you can start your plan for preparing yourself.
Preparing for scaling up
There are preparations that need to be made before you scale up. If you have an idea of how you would approach each of these, you’ll be better placed for successful growth. This isn’t an exhaustive list, but these 3 are examples of what you should be considering.
1. Getting enough funding
Big changes tend to come at a big cost. It’s common for scale-up businesses to seek investment to make the changes they plan. The main route for such funding is still Series A.
In Series A, Venture Capital firms invest with amounts that start in the millions. If you can’t figure out how you’d ever use £2,000,000 for your business, this may be a sign you aren’t ready.
When your business was starting up and looking for initial investors, you pitched an idea. You needed to convince them you had potential and that people would want what you were selling. This isn’t enough for a VC.
VCs want proof of potential.
When scaling up, you should have the financials to show that you’re doing well and making money reliably. They’re looking for businesses that already have an established customer base and know how they’ll bring in more.
2. Outsourcing vs dedicated teams
Outsourcing isn’t limited to small businesses, but certain outsourcing is usually only done by smaller businesses. As an example, lots of small businesses use an external accountant that they see once a month.
Scale-up businesses have a much larger cash flow, and this is generally too much for a single freelance accountant. This means having a dedicated finance team working for the business. This doesn’t have to be a huge team, but something in-house.
If you’re outgrowing your accountant, this could be a sign you’re ready to take it to the next level. Consider if your business actually needs to hire someone to handle its finances. If it’s good business sense to add a new employee, this is a good sign.
Sometimes this means the creation of a team that your business has never had before. As your IT systems become large and complex, they need support staff. Marketing is an important part of sustaining growth, so shouldn’t be ignored.
Not having these teams doesn’t mean you aren’t ready. They’re things to consider when planning the scale up. If you want to know if you’re ready, honestly ask yourself if your business could easily grow to need them yet.
3. Space and staffing
Scale-up businesses tend to have more than just a handful of staff. Although not as important if your business works remotely, can you house the increased staffing and equipment your business will need?
If you run a cleaning service, how much space do you have to expand your stores? If you have a retail business, do you have the logistics and warehousing to support new locations? If you want to hire a new department, do you have the office space?
If you need to expand, that’s fine, but you’ll need to take that into account when looking for finance. If you don’t think your business is ready for a new store or a dedicated sales team, what’s needed so that you can come back ready?
Are you ready to scale-up?
In the end, there’s only one person who can answer this question: you.
If you can’t think of what you would do to grow, then return to scaling up when you’ve got your ideas sorted. Is your business stable as it is, or could you make your foundations firmer? What is realistically in your reach and what’s too much right now?
Only you know your business enough to know what’s right for it. That doesn’t mean you have to go it alone. The more experienced business leaders in your network will always be happy to give you advice, and mentorship is always an option.
If you have the funding for it, advisors can be hired that provide this support from within the business. Many successful business leaders choose to help new business on a part-time basis in Director level roles.
Using a Part-time Executive Director can help you grow your business without making a significant investment. If you think it’s time, contact us and talk to one of our Regional Directors to see if you’re ready for Boardroom Advisors to help you.