What is scaling – and how do I do it?

The truth behind entrepreneurial stigmas
Funding options for Australian entrepreneurs and SMEs

The simplest definition of scaling, in business terms, is growing your revenue with little to no additional operating costs. Investopedia provides a little more depth: being able to maintain or increase performance levels or efficiency when tested by large operational demands, such as companies being able to improve profit margins while sales volume increases or financial institutions handling higher trading volumes. In short, successful scaling is when your business handles increased demands and increases profits without increasing its operating costs.

If you are thinking about scaling your business, the first thing you should do is ask yourself: does my business have the capital and infrastructure to pursue scaling? And if the demand is not already present, how will I create the demand so that the scaling is successful?

Answering these questions is not easy – in fact, it involves breaking down both questions into a myriad of smaller questions which you can answer succinctly. Further questions you should consider asking yourself could include topics such as whether or not your growth strategy is aligned with your overall vision, if your timeline and projected customer growth are realistic, and how customer trends may change in the next few years. There are also the logistical questions: How efficient are my manufacturing processes? Is my product documentation complete enough to keep a rapidly evolving situation under control? Are my suppliers able to keep up with my expanding needs? Can my services organization support the growing customer base?

Once you have managed to answer all of the questions related to practicalities and logistics, you should have an idea of whether scaling your company at the current moment is possible or sensible. It’s important to consider the different scaling requirements of different industries in addition to the practical considerations. For some companies such as tech startups, the ability to scale up rapidly is essential in order to remain current and relevant; for others, a quick scaling up could prevent organic growth and ultimately ruin the business.

Other advice that should be considered when scaling up is looking at outsourcing non-essentials, such as any legal costs, or considering strategic hiring. But at the top of most entrepreneurs’ list of tools for successful scale ups is your network and your contacts, and the importance of building person-to-person (P2P) relationships. Customers, investors, strategic partners and advisors like to be able to put a face to your business, and maintaining personal relationships with your partners and clients as well as your professional B2B and B2C relationships is essential in ensuring that your scaling process runs smoothly.

Finally, make sure you work on your business rather than inside it when scaling – as difficult as it is to relinquish control over certain elements, it’s critical to remember that you are the driving force behind your business. Whilst you are your own employee, you are also at the company’s helm and the direction you take is entirely under your jurisdiction.

The truth behind entrepreneurial stigmas
Funding options for Australian entrepreneurs and SMEs

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