All businesses, including home-based businesses, go through certain stages of growth. The key is figuring out which stage your business is at, and if it’s ready to scale. This is especially important in the first two stages of business life.
Stage One - Existence
The first stage is the existence stage. This is when the business has first started. At this stage, you’re trying to make it viable, and it’s probably not going to be making a profit.
This is the stage when you should focus on finding and retaining customers. You’ll also want feedback from your early customers to see where improvements could be made.
Stage Two - Survival
The next stage is the survival stage. The key goal in this stage is to start making a profit. Your business now needs to become sustainable. Your revenue must be greater than your expenses.
You still need to focus on customer retention and finding new customers. However, you also need to look at other areas such as pricing, marketing, and cash flow.
How To Know If Your Business Is Ready To Scale
There are a few signs that can tell you it’s time to scale your business.
Turning Down Business
Every business needs customers to support their growth. You need to create a customer base and encourage new customers. However, if your business hasn’t scaled up to match the customer growth then it can become overwhelmed.
When you have to turn down customers because your business doesn’t have the resources, then it’s definitely time to think about how to scale. It may be that your business doesn’t have the inventory, employee workforce, or time to facilitate a larger client network.
Meeting Goals
New businesses don’t have enough data to provide forecasted events, revenues, and other variables. Many businesses borrow statistics to estimate goals. If you find your business is meeting and surpassing these goals, then you need to scale and set new goals.
Your business goals should be high, but they should also be realistic and attainable.
Concept And Infrastructure
Before you scale your business, you need to ask yourself some questions.
- Do I have proof of a working concept?
- Does my product or service sell?
- Do I have the infrastructure to scale?
The answers to these questions will help you identify and avoid any potential pitfalls.
When you look at the proof of concept, you need to think about your product or service. Does it match the quality standards you’ve set? Does it help your target market? Does it have an established consumer base? Can it scale up to improve your business?
You also need to look carefully at your infrastructure. Employees are vital to your business success, but they need to be reliable and loyal. You should assess if your employees are ready for growth. Are they proactive? Can they work and communicate effectively?
If you feel that you have the infrastructure, and product in place to scale, then you can start to consider your growth stages.
Cash Flow And Sales
Before you scale your business, you need to really look at your cash flow and sales. It isn’t enough to be profitable, you need to consider the numbers.
The figures can help predict your future revenue, future profits, costs, and your business stability. You need to understand your business model and the performance record. Consider forecasts for the next month, the next six months, the next year, and the next five years. Consider the best outcomes, and plan for the worst outcomes.
This can be particularly challenging for some business owners, as it requires some financial knowledge. In this case, you may be best to find an accountant. An accountant can help you forecast your financials. They can also keep track of your overall financial health, records and file your taxes.
It can be difficult for business owners to find an accountant they are comfortable with. This is why some businesses need a partner like Ageras. They can help you find the best accountant, who will give you advice on how, and when to scale your business.
Minimal Risk
You should only scale your business when you, and it are ready. Scaling too early creates a risky atmosphere, and can have devastating consequences. There is always a risk in business, but it’s important to minimize that risk as much as possible.
There’s no concrete formula that will tell you that scaling your business will be successful. However if your business shows more than one of the signs above, then you should think about scaling your business and aiming for more success.
Having read this do you think your business is ready to scale? Let us know in the comments below.
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