Aaron Agius is the Co-Founder and Managing Director of the award-winning global marketing agency Louder.Online.
Scaling your business may not be easy. But with the right mindset and strategy, anything is possible. First, let’s take a step back and define what it means to scale a business. According to Merriam-Webster, this can mean “to grow or expand in a proportional and usually profitable way.” In business, you don’t want to just grow but rather grow from a foundation of strength, organization and agility so that your business doesn’t break along the way.
That said, let’s talk about four ways effective entrepreneurs scale their businesses:
1. Start with the endgame in mind.
If you don’t know where you want to end up, you won’t have a clear path to scale your business. You, your leadership team and your front-line employees must be aligned with your overall scaling vision. After all, companies with clear objectives are more likely to experience successful transformations.
Ask yourself the tough questions like: “What challenge does my target buyer face?” and “What revenue (or profit) do I want the company to generate in three years?”
Sharp questions unlock your thinking and open up new ideas or approaches you hadn’t thought of before. They shape the kind of company you need to have to reach your end goal. There’s a big difference between wanting a multimillion-dollar exit after selling your business versus having a passive cash cow that generates a few thousand per month to support a lifestyle for one person. Having a clear outcome in mind will set you up for success from the start.
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2. Consider outside investment.
Venture capital-backed companies receive over 50% of investment in the U.S. If you can get a VC firm behind you, it can be a great option. VC firms can provide you with a lot of cash to invest in better systems and employees so you can grow faster. Typically, these firms have invested in several other companies, so their ability to guide you is priceless. They may even be able to help you take your company public or merge with other businesses to scale faster.
On the flip side, you might feel like you’re not ready for the “big guns” just yet. Whether you wouldn’t qualify for VC investment or just don’t want to go that route, you might consider getting cash from other sources.
If you truly believe in your mission, then asking friends and family for investment is one route you can take. However, we live in the digital age. Even without a support network, you can tap into crowdfunding. Sites like GoFundMe and Kickstarter allow you to raise money from people all over the world in minutes. Thousands of people chipping in small amounts of money can add up to a significant head start in your scaling efforts.
Just remember that you need to keep these micro investors happy. Whether it’s a small piece of equity or early access to your product, figure out a reasonable reward to offer them before launching your crowdfunding campaign.
3. Understand how to grow without investment, too.
If step one is the endgame, then step two is to align with the right strategy. A lot of entrepreneurs believe the only path to scaling is through investment from venture capitalists or other big investors. However, you should always do your homework before you accept an investment in your company. Some investors will expect big returns quickly. This means putting more pressure and stress on you to hit certain KPIs before you’re truly ready. In addition, you’ll give up a big chunk of equity, which ultimately means less money and control for you if you exit. Instead, consider some alternatives to startup capital, such as bootstrapping and strategic advice.
Bootstrapping: This is a classic way to scale. Put in some old-fashioned hard work, even if that means 80-to-100-hour workweeks. You can scale fast with bootstrapping, especially in the beginning phases because you can simply take an idea and run with it.
Strategic Advisors: Once you hit a certain point, it’s going to be difficult to grow a company on your own. When you get to that point, bringing in strategic advisors can help you push through this next phase. The right advice can act as a shortcut, shaving off months or years of trial and error. And the beautiful part about bringing advisors in, as opposed to equity investors, is that you get to pay a fee instead of giving up equity, which could net you much more cash in the long run. If you really want to fast-track your scaling with strategic advice, make sure to select someone who has already achieved the results you want in your business.
4. Upgrade your tech stack.
The world is evolving faster than ever before. Scaling doesn’t just mean getting bigger, but also faster. When you embrace new technologies, it has an effect on your bottom line, too. In a recent McKinsey study, 68% of companies said that technological transformations impacted their revenue growth.
It’s time to take a deep dive into the technology your company is using. Everything from employee communication tools to marketing software to big data applications are on the hot seat. If it’s the most efficient, user-friendly and cost-effective technology, keep it. If it isn’t, it might be time to make a switch.
It’s not fun to hop to new technology, but better to rip the band-aid off now. You want the right infrastructure in place before you start scaling, not in the middle of your transformation.
Everyone and their cat wants to scale these days. But few entrepreneurs actually understand the effective ways to grow quickly by leveraging internal and external resources. Use the four steps above to supercharge your growth without alienating employees or clients.
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Author: Aaron Agius, Forbes Councils Member