It’s also something that many startups struggle with. Unfortunately, the overwhelming number of myths out there regarding scalability make it that much more of a challenge.
Understanding these myths will help you scale your business much more quickly and avoid some of the most common pitfalls.
Myth #1: Explosive growth is impossible for my business
This is a self-limiting belief that will only hold you and your business back. In reality, there are thousands of entrepreneurs around the world in every industry imaginable that have developed sustainable, rapid growth for their businesses.
Every successful company you see today started out as nothing. In the 90’s, you would have gotten plenty of weird looks if you talked about “Googling” something, but now Google is most people’s search engine of choice. Likewise, Facebook started as a social network for just one college, and it’s now an absolute addiction for millions of people worldwide.
Over the course of running my PR business, I’ve seen businesses in every industry imaginable achieve explosive growth. It’s not just about having the right idea, but more importantly having the right strategy and the right team in place, which is where most businesses fall short.
Myth #2: Scaling a business costs a lot of money
Contrary to popular belief, there is one key difference between growing and scaling a business.
When you grow a business, you commit more resources to gain more revenue. Meanwhile, scaling is about increasing revenue without committing an equal amount in resources, allowing you to boost profits instead of just the size of your company.
The key to scaling is that you must have a product or service that you can offer to more clients without committing more time toward it.
Let’s say that you have a web design business. You can only serve a limited number of clients yourself, and to serve more, you’d need to hire additional employees. You’d be growing your business, but not scaling it. A scalable option would be to create an online web design course. You profit every time someone purchases the course, without committing more of your time or resources.
For example, when I wanted to add revenue to the bottom line at my PR firm without hiring additional talent, I created a self-service option for a new segment of clients. I created the strategy for them and walked them through the process, but they did the busy work themselves. This allowed me to service more people at a high profit margin, without doling out a ton of money or resources.
There are all kinds of scalable products and services to consider. You could create a WordPress plugin or a smartphone app. You could set up a marketplace that connects sellers and customers—eBay is one of the biggest examples of this. Or you could introduce a new product or service that has a high enough profit margin to justify hiring more employees.
Consider your business’s focus and figure out what it can offer that won’t require a significant time commitment.
Myth #3: Growth will solve all my cash flow problems
Cash flow problems are more about your budgeting than your revenue. Now, if you’re not making a profit, obviously that will lead to cash flow problems at some point, but growth can lead to more of those problems if you don’t plan it properly.
A common cash flow problem that occurs is when you don’t plan for the period before you start profiting off a new business venture.
For example, you invest money into developing an app. Even if you believe that this will help you scale your business, there will be plenty of development costs before you see any profits. You need to account for those costs so you’re not short on cash before your app launches.
At the end of the day, proper financial planning will solve your cash flow problems, but growth may not.
Myth #4: You need to hire as many people as possible
The key to scaling is choosing quality over quantity when it comes to your employees. Hiring the right talent may cost your business more when it comes to salaries, but those employees will be far more productive and typically have less turnover.
Jason Berkowitz, a business growth expert and founder of Break the Web digital marketing, says:
“When it comes to hiring for growth, the key is quality over quantity. The people you hire can make or break your business.
Focus on hiring quality employees who share your vision. Always interview at least three people for each position you’re hiring for, and hire people with exceptional communication skills.”
Your employees are the backbone of your business, so if you want it to succeed, you need the right people. Make sure that you also put your employees in a position to succeed by providing proper training. While this costs you up front, consider it an investment in the success of your business.
For more on determining whether or not the time is right to hire, check out Should I Hire More Employees? What the Numbers Say.
Myth #5: Scaling a business is complex
Scaling doesn’t need to be a complex process, and in fact, you’re more likely to be successful if you keep your strategy as simple as possible. Complex strategies are more difficult to follow and you can lose sight of your goal.
How can you simplify your business strategy? Put yourself in the shoes of your customers. Think about your business’s mission and what needs it will fill for your customers. At the core of every business, large and small, is a simple mission that drives it forward.
Another key to keeping your scaling strategy simple is automation.
Mike Belasco, founder of Inflow, an Inc 5000 marketing agency and one of the fastest growing companies in Denver, says, “Why spend three hours on a task, when it could be completed in less than an hour with automation? Yes, that’s a trick question. Not only can automation help you save time, but it can also directly add to your bottom line. According to the Annuitas Group, businesses that use marketing automation to engage with prospects see an increase of up to 451 percent in qualified leads.”
Keeping your scaling simple also helps you avoid spreading yourself too thin. It’s better to launch one great new product or service than to try to do it all. If you develop an ebook and an online course at the same time, your business can’t commit as much time to either project. Committing your resources toward one project makes it far more likely to succeed.
You can scale a business too
Many of the world’s most successful businesses have used scaling to grow rapidly without overextending themselves financially. Your business can do the same with the right planning.
Don’t let any of these common scaling myths keep your business from achieving scalability and massive growth. If you come up with the right strategy, work smarter, and hire the right team, you can increase your business’s profits, while keeping additional costs to a minimum.