Contributed by Small Business Expert Barry Moltz
Many small business owners can get things started by personally doing everything inside their company. But when it comes time to scale it, they fail because they stray outside their niche, don’t have enough capital, qualified people or an effective infrastructure.
As a result, many companies “grow themselves broke.” This can cause businesses to collapse under the weight of growing sales to serve more customers.
Preparing Your Small Business for Growth
Here are four steps you need to take to prepare to scale your business:
Stay in your niche.
Be very targeted on what niche problem your company solves and who you solve it for. Unintentionally straying from this mission or doing “everything for every customer just because they asked” will put even more pressure on your business in terms of having enough capital, the right people and an effective infrastructure.
Have enough money.
Make sure you have enough capital to grow your company. Many times, small business owners need to incur expenses to grow their companies well before they get paid from customers to perform them.
Put together a future profit-and-loss statement and cash flow statement to ensure you will not run out of money as the company invests in expenses to scale.
Find qualified people.
As a business grows, you need to find people who will do the work besides you. Know what skills you want to hire, how much they will cost and where you can find these people.
Have an infrastructure that runs your company.
Small business management software like Thryv will make it much simpler to operate your company as it grows. These solutions can automate calendar scheduling, customer marketing, payment collections, and your online presence.
These are all the things that growing companies need, but owners never have time to do, which ultimately prevents sustainable growth.
The changing needs of customers during the COVID pandemic demonstrated the dangers of staying stagnant. While some companies went out of business as a result, others were able to change with the market and scale during this difficult time.
Scale Correctly or You May Fail
Here are the signs that your small business is not scaling right and may be in danger of failing:
More than 50% of your sales comes from outside your targeted niche.
It’s good that customers are asking you to provide other services or products. However, this can come at an added cost.
For example, you may need to hire people with additional skills your business does not currently have or get new equipment or perform services outside your core infrastructure.
The solution is to continue to find customers who have the niche problem you service without straying too far from the original mission.
This does not mean your company should not intentionally pivot, but it can’t afford to provide too many products or services at one time.
Not enough money to pay your bills on time.
You are staying up at night worrying about cash flow. You do not have enough money to pay all your bills and employees on time or invest in marketing or other growth opportunities.
The solution is to develop a future profit-and-loss statement and cash-flow statement to make sure as you grow sales, you have the capital to support it.
A shortage of people to provide the service to the customer.
It has been difficult over the past three years to find qualified people. As a result, companies sometimes have more work than they can deliver. This leads to customer dissatisfaction when they are not serviced on time.
Some companies then become too quick to hire anyone just to fill a role even if they are not qualified.
The solution is that if your company is growing, hire ahead of when the people are needed so they are there when the sales come in. These new hires can also be used to fill in for people they leave. Always have a “hiring pipeline” of qualified candidates that you can hire next.
The business outgrows the current infrastructure.
Too many small business owners do things manually or have disjointed software that performs separate tasks inside their company that become more dysfunctional with growth. The solution is to start with an all-in-one online solution that can grow seamless with your business.
Only by leveraging technology can a small business achieve sustainable growth.