How to Scale a Business

Scaling a business is all about unlocking your company's full potential. At UK Business Mentoring, we recognise the importance of strategic scaling, and in this article, we will explore the best practices and strategies to guide you through this transformative process.

Have you ever wondered how to scale your business and propel it into a new realm of success?

Business Scaling Insights

Before delving into strategies, it's worth considering why the vast majority of businesses fail to scale, and why the number that do achieve it is relatively low.

Let’s look at the numbers involved:

• Micro business; 1-3 employees - 4.1 million (75% of all businesses)
• Small Business Up to 15 employees 1.1 million (20% of all businesses)
• Medium businesses 16-50 employees 220,000 (4% of all businesses)
• Large Businesses 50 + employees 55,000 (1% of all businesses)

We can see that only 5% of businesses manage to go beyond 15 employees. A large majority of the 95% who don’t scale beyond this are in what we call the ‘Existence’ stage - essentially, they are just surviving. So, what causes these businesses to merely ‘exist’ and what are the key characteristics that constrain performance?

There are many reasons, but in our experience, through working with thousands of businesses, the key factors are:

The ‘Busy Bee’ Owner

These are the owner(s) not focusing on growth but spending the majority of their time ‘in’ the business, fulfilling an operational role, being heavily involved in whatever the business does, and dealing with the day-to-day challenges.

This is without doubt the most common reason for not scaling up; very often because the owner doesn’t want to let go or because they like to work within their comfort zone. Alternatively, it can be because they have not built a structure that works without them resulting in a key person dependency and an inability to grow.

The ‘Comfortable’ Owner

They have reached a comfort point, earn a good income and are content at that level, often not wanting the perceived hassle or risk that comes with growth.

This is not necessarily a bad thing as long as the owner keeps a close watch on industry trends and external factors that could “rock the boat”.

The ‘Cash Strapped’ Owner

Lack of cash to invest in the business to trigger growth.

Sometimes this can be because there has not been enough time and focus on driving organic profitability to generate the required cash. This is commonly linked to the Busy Bee Owner mentioned previously.

The ‘Don’t Know How’ Owner

The majority of owners have successfully created their business, grown it to a certain stage and then needed to take on a member of staff because they couldn’t cope with the workload; almost a ‘forced growth’. However, what they are not confident in, is actually planning their growth strategy, and more importantly, implementing it.

Again this is typical and can go hand-in-hand with the other categories above.

On the flip side of the coin, what does a business owner look like who has scaled their business successfully or is well placed to do so?

The ‘Successful Scaler’

Typically, this owner will have a sound structure in place, will have delegated tasks to competent people, and will not be involved in the day-to-day running of the business, i.e. the business works when they are not there. They will also spend quality time considering future growth and will, in all probability, have an exit strategy in mind. The other aspect of these types of individuals is that they are prepared to learn and step outside their comfort zones.

The majority of owners here will become successful scalers, but the process does require discipline. As the late Jim Rohn, American entrepreneur and author said, “Success is nothing more than a few simple disciplines repeated every day”; a statement that very true.

If you are thinking of scaling your business, one of the first areas of research you can do is with yourself. Assess which category (or categories) you fall into.

Defining Scaling and Its Distinction from Organic Growth

Scaling a business involves a deliberate and planned effort to expand operations and increase revenue while maintaining efficiency and productivity. Unlike organic growth, which occurs gradually, scaling focuses on a more accelerated and intentional trajectory. Your strategy could be one or more of the following:

1. Selling more to your existing market
2. Selling to a new market
3. Developing new products or services
4. Diversification
5. Acquisition of another business
6. Franchising your business

Points three and four come with a higher risk than points one and two because of the element of the unknown, yet all are worth spending time considering.

Benefits of Scaling a Business

Understanding the advantages of scaling a business is obviously important for entrepreneurs to understand. Here are some of the typical key benefits:

• Enhanced revenue streams
• Increased profit
• Greater remuneration
• Increased market share
• Access to new opportunities and markets
• Increase in shareholder value
• Greater exit opportunity

Key Steps for Scaling a Business

1. Research and Planning

• Conduct a thorough assessment of your current business state and address areas that need attention pre-growth. (Any flaws in your business will be magnified as you start to grow).
• Spend time considering the best strategy for your business.
• Research, and ensure the appetite of your customer base, as well as the need for your product or service
• Construct a plan for your strategy covering all the areas in these steps and regularly review progress against the plan.

2. Operational Efficiency

• Streamline processes and automate repetitive tasks.
• Ensure you have the right people - invest in talent acquisition and employee development.

3. Financial Management

• Strong financial control and reporting of performance is paramount.
• How much cash is needed for the strategy, and how will it be funded? Explore funding options to support growth initiatives. Have a contingency for cash if plans do not proceed as anticipated.

4. Customer-Centric Approach

• Conduct market research and gather customer feedback along the growth journey – ensure service levels are maintained.
• Invest in automated scalable customer support systems.

5. Technology Integration

• Build a robust and scalable technology infrastructure.

6. Marketing

• Ensure you have a concise marketing plan in place which is reviewed regularly to track activities versus return on investment.

7. Risk Management

• Anticipate and mitigate potential risks.
• Embrace flexibility and adaptability.

Issues to Avoid:

Scaling a business is not without its challenges and some to be aware of include:

• Rapid scaling without operational robustness.
• Inadequate communication during the scaling process.
• Overlooking the importance of employee engagement and satisfaction.

In terms of operational robustness, it is important to check before scaling what the capacity is within your departments in order to ensure that increased orders can be dealt with without causing service issues or putting people under unrealistic pressures. Communication is absolutely paramount at all stages of the scale-up; any concerns or issues must be addressed promptly – ensure you listen to what your people are saying. Failing this, you run the risk of losing the engagement and goodwill of your team.

Are You Looking for Further Information on Scaling Your Business?

If you are ready to embark on the journey of scaling your business or have questions about the process, our team at UK Business Mentoring is here to help. Get in contact with us today, or call us at 0845 680 3434.