Business is thriving. Your clientele has increased, and more opportunities are opening up for you. To maximize your business potentials, you need to scale.
One common desire among entrepreneurs is to grow their business. But often times, this isn’t matched with the mechanisms for a safe landing. The lack of balance leads them into troubled waters. Rather than improve, things begin to deteriorate, making them wish they never scaled in the first place.
Here are four deadly mistakes to avoid when scaling your business:
Jumping the gun
One of the deadliest scaling mistakes you could make is to scale too early. Growing your business is great, but there’s a process for sustainable growth. Just because you now make more profit doesn’t mean it’s time for you to expand. Doing that without an increased steady profit isn’t sustainable. Sooner or later, you will have to pack up due to your inability to meet up with the responsibilities that come with scaling.
There has to be channels in place to generate more profit. Your target market has to be willing to pay higher rates for your products and/or services, otherwise, you’ll be stuck with a bigger business with no resources to sustain it.
Identify ways to increase the value you offer to justify your increased rates.
Make the numbers work for you. Do more work at a lower cost of delivery to increase profit.
Doing everything at once
Scaling a business is a lot of work. You literally have to roll up your sleeves and get dirty. For one who has a business to run, you probably don’t have so much time on your hands. There’s the tendency to juggle your scaling plans with what you have on your plate. You will be biting more than you can chew, and lowering your productivity.
Create a schedule for your scaling work. Designate 5 – 10 hours per week for the activities. We all have our Power Hours – the period of the day when we are most productive. You will get better results putting things in perspective in those hours. Schedule meetings and other activities about your scaling within the designated period of time.
Making wrong hires
There’s the general belief that expanding a business calls for an expansion of the staff base. As much as that is true, the need for more people isn’t to occupy space, but to be productive.
Employing more people in business increases your financial responsibilities. If there isn’t an increase in cash inflow, you’ll have to share your current resources with more people, and that will lead to a shortage in the long run.
Any addition to your team must add value, otherwise, they become a liability. Duplicated hires are counterproductive in expanding a business. Why hire new employees to execute tasks that are already being taken care of? Evaluate your business processes, and identify areas where there’s a gap. Make it a priority to close those gaps by employing the right candidates who possess the required skill set. If they fall short of this, they are of no use to your organization.
Unless the workload is much and requires more hands, multiple employees shouldn’t be performing the same tasks. New hires must bring a different value to the table. That way, everybody’s contribution generates results.
Incurring too many expenses over a short time
Growing businesses are fascinated by the idea of looking and acting the part. In order to meet up to the new standard, they increase their overhead rate and operating expenses. You need to keep these in control, otherwise, you will be stretching your business beyond its financial capacity.
Make a list of resources needed. Identify those that play crucial roles in your operations. If your business can function without certain things, you should consider putting them on hold for now. Rather than buying a dedicated office space, how about you rent a bigger space for the time being?
If certain expenses will put a strain on your account, it’s an indication that you can’t afford them at the moment. Create a feasible budget and stick to it. As you begin to see positive results from your expansion, you can tick off the items on your bucket list gradually.
Things may fall through the cracks sometimes, but it’s in your best interest to minimize the mistakes. Before taking that big step to scale your business, look carefully before you leap; you don’t want to lose all you have worked hard to build.
Featured Image Credit: Pixabay
About the Author
Chris Odogwu is a freelance content writer. Connect with him on LinkedIn.