How and when to scale a business 

Posted on by Kat Wellum-Kent

Scaling up is a critical decision for businesses aiming to expand their market presence, enhance profitability, and solidify their competitive edge. Companies may choose to scale for several reasons, each contributing to their overall growth strategy. 

First, businesses often scale to meet increasing demand. As a company gains traction, its products or services may attract more customers than its current capacity or infrastructure can support. Scaling ensures the business can deliver consistent, high-quality offerings without compromising customer satisfaction. This aligns with effective business growth strategies that focus on customer retention and satisfaction. 

Second, scaling can significantly enhance operational efficiency. By increasing capacity, optimising processes, and leveraging economies of scale, companies can reduce per-unit costs and improve profit margins. This efficiency gain is crucial for staying competitive in a fast-paced market and is a key component of a successful company growth strategy. 

Third, scaling is often driven by the desire to enter new markets. Expanding into new geographical regions or market segments allows businesses to diversify their revenue streams and reduce dependency on a single market. This expansion can also buffer against market volatility and economic downturns, fitting well into a comprehensive strategy and business development plan. 

Additionally, scaling up can attract more significant investment opportunities. Investors are more likely to fund companies with clear growth potential and scalable business models. This influx of capital can fuel further expansion, research and development, and talent acquisition.  

Lastly, scaling can enhance a company’s brand reputation and market influence. A larger, more established company often enjoys greater brand recognition, trust, and authority within its industry, which can lead to more business opportunities and partnerships. These elements are essential in a well-rounded company development strategy. 

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How do you know it’s the right time to scale? 

Knowing when to scale is a balancing act. Scale too soon, and you’re at risk of damaging the hard work you’ve already put into the business. If you don’t have the resources in place to meet customer demands, for example, you could see an influx of unhappy stakeholders and dropping sales. However, wait too long to scale and you could see a host of issues begin to crop up, like bottlenecking at decision-making stages or employee overwhelm with high staff turnover as a result. 

So, what signs should you be looking out for in your business that say it’s time to scale? 

  1. You’re seeing consistently high demand for your product or service, and it’s becoming difficult to keep on top of it all. This is a clear signal to implement a company growth strategy to manage the increasing workload.
  2. There’s a new gap in the market for your product or service, either geographically or in new sectors. 
  3. You’re able to identify economies of scale (i.e. your costs growing at a slower rate than your sales). 
  4. You’ve secured enough funding to safely take you through the scale-up process. 
  5. You need to start bringing in specialists to take your business in other directions, such as IT or HR. 

This isn’t an exhaustive list, but these are five of the core reasons we regularly discuss with our clients when they’re considering scaling. If your business is meeting some or all these checkpoints, now’s the time to consider scaling.  

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The three parts of how and when to scale a business 

When we work with a client that’s exploring scaling, we focus on three core areas: maximising growth levels, infrastructure management, and risk.  

  1. Firstly, we ask what are the growth levers that you can pull to grow revenue. What’s going to make you scale? Of course, this is a bespoke conversation for each client, as it differs completely from one company to another. Perhaps you can sell more of your service or product, roll out new products or services, or expand into new markets. While a lot of scaling up advice looks at what more can be done or sold, it’s also crucial to look at where savings can be made. Are you losing revenue that you could be keeping?

  2. Secondly, we explore what infrastructure you need to support a growing business. This could be people, processes, systems, and physical space. Do you have the right specialist teams around you to help you scale and to ensure you’re not wearing so many hats you overburden yourself? If you’re speaking to us, then you’re on the right track and engaging with finance experts. We work on your behalf as the professional in money and numbers; two aspects any scaling business needs to keep a close eye on.

  3. Thirdly, we deep-dive into investment. All scaling businesses will come up against the challenge that they need to invest money before they see any return. It’s a risk, but one that can pay off handsomely when managed well. You need to be striking the perfect balance between investing enough, but not so much that your cash flow depletes entirely.  

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Stick to your North Star 

No matter where you are on your scale up journey, the most important thing to remember is your ‘North Star’. It’s that one thing that keeps driving you in the right direction, the very reason why you started this company in the first place. By keeping sight of this, you’ll continuously be driven by purpose rather than objectives. When the going gets tough, as it likely will at some point in your scale up journey (hey, no one said it was going to be an easy ride!) it’ll be this purpose that sees you through.