Considering all of the horrific statistics doing the rounds about businesses failing in their first years, a small congratulations is in order if you are thinking about scaling.
Starting a business is by no means easy, particularly in the current environment, so the topic of scaling is one that should be celebrated.
It is also one that should be treated with an element of caution. After all, you must have heard the stories about “growing too fast, too soon”. There are genuine risks to this approach – ones that can undo the years and years of hard work it has taken to lift your company of the ground.
As such, if you are getting to this stage, let’s take a look at some essential advice you need to keep in mind.
Scaling doesn’t always mean locking into bigger, permanent contracts
One of the biggest misconceptions about scaling is that as soon as you decide to take the bolder plunge, you need to invest in anything and everything.
For example, let’s look at warehouse space. The natural assumption is that you will need bigger storage space (at least if you sell physical products), but sometimes it is about thinking outside the box. Instead of thinking that you need to rent a warehouse, what about if you were to consider personal storage from Safestore? It’s these sorts of moves that can save you from signing costly contracts and instead allow your growth to be more flexible.
The same could be said about office space. Most cities have co-working spaces which allow you to scale as you grow. Or, via the rise in remote working over the past 12 months, how about allowing a more flexible policy that means you don’t need that big, shiny new office?
The same rules apply with recruitment
Following on from the above, apply the same logic with recruitment.
Sure, you’ll probably need the extra hands, but do they need to be permanent ones? We’re all for jobs creation, but only if it is at a sustainable level. In the meantime, what about freelancers? Again, you don’t have to lock yourself into a permanent contract and while the costs might be slightly higher, it’s the flexibility that really plays to your advantage.
Always think about cash flow
The main message today has been simple; scale sensibly and try to avoid long-term commitments.
We’re going to conclude today’s article with a separate message; always make cashflow your number one priority.
You’ll already understand everything about the dangers of cashflow and unfortunately, they don’t go away as you start to scale your business. On the contrary, they start to get more intense. Suddenly, you’ve got a whole host of costs to factor into your business, ones that are of a much greater scale than previously. It means that you need to make sure enough money is coming in to cover these new costs, which can be difficult to keep on top of during the early days of your expansion.