10 ways to build a scalable business – Startups advice
Cliché as it may seem, Rome really was not built in a day. For small business owners, progressing to the next step can seem pretty daunting and might take longer than expected. When you take a look at your current state and see that you’re not anywhere near where you want to be, your patience can wear thin. However, take a step back for a bit and ask yourself a couple of questions. Are you expanding at the right pace? Are you investing time and effort into growing your business to the right direction? Is your business scalable?
In this article, we’re going to take a look at 10 ways you can work on improving your business’ scalability; to build a business that can potentially multiply revenue with minimal incremental costs.
1.Work On Your Business, Not In It
One simple question you can ask yourself when you’re stuck in a rut is this: am I micromanaging every little thing? Of course, it’s important to have an eye for detail to make sure that everything is going as planned, but are you really focusing on the right things? Running a business was not, is not, and will never be easy. There are always a lot of things to do and a lot of nuances to take into consideration.
However, remember that you are in charge of the big picture. You don’t have to stress yourself out too much over details that you can have someone else work on. Stop getting pressured over the couple of hiccups here and there, especially if it’s relatively minute. Focus on putting your foot on the pedal and navigating your way forward; let the engine do its work. Simply put: work on your business, not in it.
2. Study and Apply the 80/20 Rule
Image source – Medium
In 1906, Italian engineer and sociologist Vilfredo Pareto discovered that 80% of Italy was owned by 20% of its population. Since then, the 80-20 ratio has become the foundation of the Pareto principle, also known as the 80/20 rule and the law of the vital few. According to Wikipedia, the Pareto principle states that for many events, around 80% of the effects come from 20% of the causes. IF you find
The connotation of this is pretty simple: by applying the 80/20 rule, you can find out the parts of your business you should focus on. For example, you may find out that 20% of your employees produce 80% of the output. You can then focus on rewarding these employees. If you see the demographic for the 20% of your customers that make up for 80% of your sales, you can steer your business to catering towards them more.
The 80/20 rule is a vital yet simple tool. Learn it, use it, and see your business grow!
3. Work on Partnership and Collaboration
In the beginning, it’s very tempting to try and do everything yourself. In fields outside your area of expertise, however, this can be a bit damaging. Take the time to study the marketplaces online to see what services can have what you want done. This can be anything from design, legal services, and sales. If you’re not feeling up to taking the leap, try out small projects first and see if you’re satisfied with the results. The most important part of all this is that you know exactly what you want to have done and using the resources you have to accomplish these goals.
4.Work on Your Brand
In the beginning, it’s very tempting to try and do everything yourself. In fields outside your area of expertise, however, this can be a bit damaging. Take the time to study the marketplaces online to see what services can have what you want done. This can be anything from design, legal services, and sales. If you’re not feeling up to taking the leap, try out small projects first and see if you’re satisfied with the results. The most important part of all this is that you know exactly what you want to have done and using the resources you have to accomplish these goals.
5. Know the Importance of Customer Retention
According to the U.S. Chamber of Commerce and the U.S. Small Business Administration, companies are 400% more likely to do business an existing customer than a new one. Simply put, the importance of having regular customers and doing business with them is much more important than targeting new ones. On top of that, it’s way more profitable! According to the book Leading on the Edge of Chaos by Emmett and Mark Murphy, a 2% increase in customer retention is almost equivalent to a company decreasing its costs by 10% whilst targeting new customers can cost around 500% more than retaining the current ones!
6. Look For Ways to Better Serve Existing Customers
Now, besides having regular customers, the next thing to do is to learn how to make your business serve them better. Again, such as in the previous point, instead of working on multiplying your numbers, work on satisfying the regulars. This can be as simple as creating new content – be it product, program, or service – for them. Listen to your audience; communicate with them; and most importantly: create for them. In short, support them and they will support you (and eventually grow your revenue!)
7. Don’t Try to Create a Perfect First Product
When Leo Fender first released his first prototype for a solid-body electric guitar, the Fender Esquire, back in 1950, it wasn’t a perfect instrument by any means. However, it still took off soon and after a year, the Fender Telecaster was born and eventually the Fender Stratocaster came into fruition. These two guitars would eventually become some of the most popular guitars in the world.
As entrepreneur Scott Oldford puts it: “Money follows momentum, not perfection.” Don’t be afraid to create an imperfect product. Just get started and sell!
8. Choose a Scalable Idea
Most great things start as one simple thing: an idea. Your product is your idea that’s come into fruition. To make a great product, you need to have a great idea. So realistically, if you want a scalable business, you need a scalable business idea. Investors choose businesses that are backed by market research from experts. Learn the trends and make your research. Once you’re sure that your business idea is highly scalable and attractively investable, go for it!
9. Build Business Plans and Models Attractive to Investors
When you’re selling a product, you want it to be as flawless as possible for your customer. On the other hand, when you’re building a business, you want it to be as impeccable as possible to your investors. For example, when you add operating costs at the same frequency you’re growing revenue, your business will not scale. Another example is having a business plan that is more like a product plan for customers, offering freebies and features investors would see as additional high-support free products. This is extremely attractive to customers but not to your investors! Having business plans with high margins and low operating costs is the key to getting investors take more than just a second look at your business.
10. Use Automation Wisely!
Automation is key to reducing your labor and staff costs. Remember that these costs can add up to your operation costs and might affect your scalability! Consider using production automation and process technologies. Get around to having online training videos so new employees can easily get in the loop. Technology is ever-changing and easily accessible; learn to apply it to lessen your costs!
Article by Freddie Achom
