Scaling up your business or steady growth – Which is appropriate in 2013?

There will inevitably come a point when, in order to stay alive, you’ll need to expand your business.

But with the crowded market and the economy in its current state, which is more appropriate a strategy in 2013 – scaling or steady growth?

The key thing to remember is that there is no set checklist for whether your business should scale up or use steady growth – it’s all highly circumstantial, and crucially about timing, and trial and error.

For example, Steals.com and Groupon are both daily deals sites, with the former working on the steady growth model and the latter scaling up quicker. Groupon had a meteoric rise followed by a steep decline, whereas Steals.com enjoyed a steady rise in business and website traffic, and is currently the more successful.

“I’m all for scaling successful business models, but I wonder if our desire for immediate gratification and big payoffs is blinding us to more solid, long-term return on investments.”

“You want steady growth because you can measure it, you can repeat it. You want steady because steady produces a flow of data.

  • Steady lets you A:B test.
  • Steady lets you learn
  • Steady takes the emotion out of decisions and we all need that.”

On the other hand, entrepreneurs often build companies from scratch and over the course of years, build a massive business. Scaling a company to that size requires a few key components:

  • Risk and reinvestment of money
  • Attracting and retaining key employees
  • Sharing success with employees and contributing to their personal growth
  • Surrounding yourself with intelligent people who have great ideas and advice
  • Having incentive-based compensation in place to reward employees for hard work and dedication
  • Expanding your market to other cities and countries
  • Luck

So, with all that in mind, how do you know if your company is scalable, outside of trial and error?

Firstly, success isn’t about growth, which is adding resources at the same rate as adding revenue; it is about scaling, which is only making small increases in resources. That said, scaling is much about staying alive as is it is ahead, because your competition could find that silver bullet to scale their business.

In order to find scalable aspects in your business, you must first find aspects that can be replicated very quickly. If your next scale requires just as much time and effort as the one prior to it, then your business is not scalable.

Three common mistakes that are made are to not:

  • Realise that customers are not the same as users
  • Recognise that first users are not the same as scaling users
  • Anticipate that first products are not the same as scaling products.

Finally, to make the scale as manageable as possible, consider these points:

  • Document all procedures, and have an accountant to help keep everything under control and on-record
  • Learn how to measure – trial and error only works if you know where you are going right and where you are going wrong
  • Maintain a database – the less information stuck in your head the better off your business will be
  • Manage working relationships so that you can maintain a personal touch as you grow
  • Segment and delegate responsibilities
  • Prepare your family – there will be a reduction in leisure time

Above all, be mindful that scaling your company requires a very different skill set than what is required to build one from scratch. It’s a bit like building a skyscraper – you can’t get to 100 stories just by stacking single storey homes on top of each other. You need better foundations and infrastructure to make it work.

This article was taken from a discussion of the Business Exposure Group.

If you are a Director or business owner and would like to attend one of our informative round-table discussions – held across the North of England, please contact philipdrazen@bxgroup.co.uk

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