Scaling up your small business is undoubtedly an exciting journey that can push your business forward and onto new levels of success that you may not have thought possible. However, scaling up a small business can have its challenges, and the many changes required when scaling up a business may cause even the most successful of businesses to hit snags.
You may be wondering what is scaling up in business? While scaling a business can be a crucial part of achieving business growth and success, it can sometimes be easier said than done. There are five core scaling risks that confront ambitious small business owners seeking to grow their business. Let’s look at each risk and examine how you may reduce each one as you scale up your small business.
1. Scaling up before perfecting your product or service
Some business owners may make the mistake of scaling up too quickly. Some may believe that their product or service will naturally evolve and improve over time, so they start scaling up their business when in reality their products or services still need a little refining.
If you feel that you have such issues that require fixing, your business may not yet be ready to scale up. Instead, you may consider conducting further due diligence and refining your product or service before you look at ways to scale up your business.
2. Working with the wrong people
Working with the wrong people can be one of the biggest mistakes small business owners can make on the road to scaling up their business. It may be adding new staff, bringing on new investors, appointing new suppliers, or outsourcing a key function such as marketing.
For busy business owners, it can be very easy to accept any help that’s offered to you – be it new staff, new suppliers, or a new business coach – without considering how they will fit into your larger plan. All of the above engagements may turn into long-term relationships, so be sure to carefully consider how the people you choose to work with will fit into your company’s culture and the bigger picture for your business.
When considering how to scale up a business, if you are experiencing scaling up problems you may benefit from hiring senior individuals who have experience in scaling up a business but remember that they also need to align with the culture of your business as well.
3. Cash flow management
As a business grows business owners will be required to invest in additional capacity, which can often require sizeable upfront payments. This may cause cash flow problems for business owners, so it is important to budget and plan accordingly.
Inadequate cash flow can dramatically slow the growth of your small business, but you can reduce the chances of that happening through thorough planning. Business owners may solve this issue by developing new revenue streams, securing business loans from their bank, crowdfunding, or other financial solutions. A good way to ensure that your cash flow situation doesn’t get out of hand can be to regularly review your budget and adjust business spending where needed.
4. Competing on price
It can be tempting to focus on price when you are scaling up your business. You may figure that if you can increase your production, you will be able to reduce your pricing while still remaining profitable. While this strategy may work from time to time, it may not be a sound long-term strategy for reducing costs while ensuring quality.
5. Avoiding burnout
Scaling up a business can be hard yakka and may lead to staff fatigue from increased workloads. This may eventually cause fatigue in your employees (and yourself) and could cause business growth to stagnate. As the business owner you may avoid this risk by restructuring your business and hiring additional employees.
However, in the rush to hire new staff as you scale, don’t dismiss your standard hiring process and due diligence, as this could lead to more harm than good. Set a timeline for hiring new employees so they can join your business at the right time.
6. Not realising that trimming the fat is a part of scaling
Some small business owners may believe that scaling is only about growing upward and outward. However, as your business grows there may be things that no longer work as intended. You may no longer need certain functions in your business.
Or if you are pivoting your business in a new direction you may have some hard decisions to make regarding the make-up of your team. As such, you may need to shed the parts of your business that won’t serve you moving forward.
Business insurance made oh so easy with BizCover
As you scale up your business and calculate risk, you’ll want to ensure that what you are building can endure for the long-term, and this is where business insurance can play a leading role. Business insurance provides cover for your business’ premises and contents against loss, damage or theft, also offering protection against financial loss experienced from an insured interruption to your business.
Have you got your business insurance sorted? At BizCover, we make purchasing business insurance quick, easy, paperwork-free, and drama-free. Our cutting-edge online platform gives small business owners the option to compare competitive business insurance quotes from leading insurers. Get your business insurance done and dusted in less than 10 minutes and carry on with scaling up your business.
To learn more about how business insurance can reduce your risk, visit the BizCover website and compare competitive business insurance quotes, get covered in only 10 minutes, avoid paperwork, and get back to business. If you prefer to speak with us, you’ll reach our friendly team on 1300 920 864.
This information is general only and does not take into account your objectives, financial situation or needs. It should not be relied upon as advice. As with any insurance, cover will be subject to the terms, conditions and exclusions contained in the policy wording.
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