3 Crucial Strategies for Sustaining Growth in a Competitive Market
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In the early days of a business, there is typically one goal: making sales. Most startups don’t have unlimited cash for their operations, so they’ll quickly fall apart if they can’t attract customers. But those who successfully build a client base face new challenges, including scaling their business for further growth.
Scaling a business for growth isn’t a simple task. For one thing, startups have limited resources. They can handle only so many sales before hiring more employees or increasing their infrastructure.
Managers must recognize a specific tipping point as the signal it’s time to boost human or material capital. If they fail to see the signs, the results can be just as disastrous for the company as failing to attract sales in the startup stage.
If you believe your startup organization is nearing the time when scaling is necessary, take the following steps.
1. Assess your staffing needs
One of the biggest mistakes companies make when it comes time to scale is hiring the wrong employees to do the job. They often end up with bad hires simply because they need people immediately and can’t wait for cream-of-the-crop talent.
The cost of a bad hire is difficult to estimate, but SHRM places it around $240,000. You’ll incur the expenses of hiring, sourcing and training the employees. If they turn out to be the wrong fit, you’ll need to start the process again, requiring more time, effort and money.
Additionally, a bad hire can impact your organization, like decreased team morale and lost customers.
When organizations solidify their plans for eventual expansion, they’re less likely to encounter bad hires. They identify the roles they need to hire for well before it becomes time to fill them. They can start their hiring processes early rather than waiting until the last minute.
Planning ahead gives hiring professionals time to write a thorough job description, conduct lots of interviews and pick the person with the skills to handle the role that best aligns with the company’s values.
Hiring the right people for your organization is critical in the early stages of a company. They will often form the backbone of the business and set the tone for future employees. A supportive team on board ensures that you start scaling on all four cylinders.
Related: How to Scale a Marketing Strategy That Works
2. Make financial arrangements to support your growth
Scaling a business requires an increase in expenses. There are no two ways around it. You’ll need more equipment, a bigger advertising budget and a larger team.
If your company doesn’t have the bank account to support all these changes, you’ll need to find the money elsewhere — by taking on debt or finding an investor who believes in your company’s potential for success.
It’s critical to seek out financial support early. When you know it’s almost time to scale, get your accounting books in order if they aren’t already. If you don’t have a full-fledged accounting team, seek help from a CPA firm that can prepare your financial statements and set up proper internal controls.
You’ll also want to undergo an audit, as most lenders and investors will want to review approved financials before they provide you with any financing.
Once you feel confident about your books, you can research funding opportunities. You’ll need to obtain a loan if you don’t feel comfortable bringing an outside investor on board. The SBA provides financing opportunities to small businesses, but you’ll need to prepare the proper paperwork and collaborate with an SBA lender to qualify.
Carefully consider your funding opportunities and evaluate each to determine which suits your company most. Look for low-interest rates and fair repayment terms if it’s a loan. Business owners who prefer to work with investors should realize that they may need to give up some control in their organization, depending on the terms of the agreement.
Related: Should You Scale or Should You Grow? (The 2 Strategies Are Not the Same.)
3. Define your objectives for the future
Where do you picture your company in six months, one year or five years? Understanding your vision can help you establish the milestones necessary to achieve your objectives.
You’ll probably need to set several goals, not just one. For instance, you might envision reaching a certain level of revenue, introducing a new product or opening a location in a new region. Some startups aim to grow their company to a specific level before they sell it to interested investors.
Once you know your goals, it becomes easier to identify what you need to do to meet them. Expanding your revenue will likely require increased marketing expenses, and you may need to bring a few new employees on board. If your goal is opening a new storefront,…
Read More: 3 Crucial Strategies for Sustaining Growth in a Competitive Market