Once you’ve established a business, it’s time to scale. Scaling is the process of growing your business beyond what you can do alone. As you scale, you’ll need to consider hiring employees, outsourcing work, and delegating tasks. There is even a point when you’ll want to consider bringing in investors, but it’s important to know what’s coming before you do.
All of these options have pros and cons, but as a solo entrepreneur, you must be aware of what will happen if you take on help. Let’s look at the six things every solo entrepreneur needs to know about scaling.
Understand that You Can’t Do Everything Alone. Every successful solo entrepreneur knows one thing: they can’t do everything alone. If you want to grow your business while retaining control over it, you will eventually need to bring in help. It doesn’t matter if you outsource work or bring on employees; the only person who can run your business 100% is you.
Know Your Numbers. It’s imperative you know the numbers behind your business. These numbers include your burn rate (how much money you spend every month vs. what you bring in), your average sale, and your profit margin. For example, if you’re averaging $100/month in sales with a profit margin of 20%, you know that you will need to sell $2,000 worth of product each month to be profitable.
The stage you’re in matters. If you’re at the idea stage, don’t expect that you’ll need to develop complex organizational charts or guiding principles. The stages will change your needs and the way you structure your business. There are many different ways to scale up. Things work differently for different types of businesses and even for different projects within the same business. The stage is just one of four areas where you can focus on scaling. The other three are people, memberships and products.
Don’t wait until the end of a project to figure out if it was successful. Stopping along the way and evaluating your progress can help shape future efforts. As you move through these stages, make sure to record lessons learned. For example, what was effective and what wasn’t? Look for recurring problems you might find helpful to write down so you don’t make those mistakes again when working on your next project.
Keeping track of lessons learned is the first step in ensuring that you don’t make the same mistakes twice in future projects.
It would help if you had a business plan. A business plan is your roadmap and guides from starting your business until you build it to a reasonably successful level and
beyond. It provides the basis of your budgeting, growth, cash-flow and financing strategies. It can help you set and achieve your goals.
The thing to remember is that your business plan should change along with your business. As your organization grows, you will want to make changes and adjustments as you learn more about your market, your customers and what works best in your business. Your business plan will probably change more than once as your business grows. This is normal and OK. The important thing is that you are prepared, informed and proactive in making the necessary changes.
Think of employees as partners.
I know it’s hard to imagine, but let me explain. When you think about a partnership, you are there for each other; you bring something different to the table. You respect each other’s contributions. You genuinely see each other as equals and rely on each other.
I’ve worked with several entrepreneurs, and their mistakes boil down to two things:
● They tried to do everything themselves—and couldn’t do it all.
● They didn’t allow their employees to grow by not letting them make decisions or running out the door whenever there was a problem.
Keep it lean with systems, processes and tools.
1.Choose your distribution channel:
· Do you sell directly to consumers?
· Do you sell to manufacturers?
· Do you focus on a particular industry?
2. Order fulfillment management firm:
· What is your process for shipping?
· Do you have the infrastructure to ship efficiently?
· Do you have the tools to manage your shipping?
3. Choose the suitable software systems:
· Do you have a program to organize customer details?
· Do you have a program to manage inventory?
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4. Ecommerce platform: If you sell online, do you use an ecommerce platform that is easy to use, offers excellent customer service and integrates with your software systems to grow your business without having headaches?
Know what to measure, when to raise capital and when to give up and quit.
I am asked what to measure when to raise money and the real secret to success. If a business is going to grow, it must be able to scale. I didn’t just learn this overnight but
instead had to learn this the hard way, by making mistakes and spending way too much money. There are many components of scaling a business successfully, including:
To measure or not to measure?
– You need to know which metrics are essential for your business to figure out if you’re capable of scaling it. There are three main metrics I look at that tell me whether or not we can scale our business:
– 1. Recurring revenue: It is easy to sell one product, but can you sell it repeatedly for years?
– 2. Customer lifetime value: How much does each customer bring in? This changes depending on your business, but there should be a value associated with each customer regardless of whether you make a product or service.
– 3. Cost per customer acquisition: Do your costs increase as you acquire customers at a given rate? For example, if it costs $1,000 to acquire one customer and $2,000 to acquire a second customer on top of the $1,000 spent to acquire the first one, there is no way that’s scalable.
Final thoughts from the above guide:
– The fundamentals of scaling your business do not change regardless of the industry or size of the business being scaled.
– If a company is not scaling, it is either not looking to grow, or management cannot make things work at a larger scale. Identifying and eliminating bottlenecks as quickly as possible will allow a company to iterate on customer acquisition and retention with more incredible speed until it reaches the desired scale.