Scaling Up Your Business: Is It The Right Time?

No matter what industry they’re in, most business leaders dream of making their business bigger at some point.

But scaling up isn’t something that can be approached lightly. Indeed, a 2021 McKinsey study found that only 22% of new businesses launched in the past ten years have successfully scaled.

Timing is everything when it comes to scaling up your business successfully. Doing so too quickly can leave a business with a workforce that’s too small to cope. On the other hand, being too cautious could mean you miss a sweet spot for growth – one that a competitor may use instead.

So, that begs the question – without a crystal ball, how do you know if it’s time for your business to scale up? We’ll be revealing some of the key signs to you in today’s article.

Signs It’s Time to Scale Up

More people want to work with you

Having potential customers coming at you left, right and centre – nice problem to have, right? Well, yes, but if the demand for what you offer is outstripping what you can supply with your current resources, you might be having to turn some of those people away. That’s a golden opportunity being wasted – and one of the key signs you should think about scaling.

Revenue is growing consistently

As with most things in business, finances are a key consideration when you’re looking to scale up. Though one quarter of growth might not be enough to justify an expansion, growth happening over a longer period of time can be. This is why waiting to scale up is sensible – with more data, you can make accurate forecasts for the future. This gives you a clearer picture of where your business might be going over time. It can also show you if your revenue has reached a ceiling, something that Forbes Business Council Member, Chris Clear says is the biggest sign that a business needs to scale up.

You can keep up with competitors

In the early years of running a business, it’s all about getting your foot in the door. Entering a market with numerous competitors may leave you as a small fish in a large pond. How long it takes to establish yourself among them is different for everyone. But if you’re finding yourself matching the competition, it’s a sure sign that you have the space and resources to scale up and take advantage of opportunities for growth.

Changing leadership priorities

When businesses start out, there’s often not much need for their leadership team to expand beyond one or two people. But over time, having to get approval for everything from these people alone can actively hinder growth. A company where all the decisions depend on one person’s leadership is one that’s ripe for expansion – making better use of everyone’s time.

Positive customer feedback and referrals

As the saying goes, the customer is king – and that’s also true when it comes to scaling up. For one thing, a strong customer base is the one of the biggest indicators that your product or service has a market that’s ready to be expanded.

Your customer feedback can also help to gauge your scalability; are you actually solving the problems you’re setting out to solve? Does your product or service still need some tweaks to make it scalable? In any case, a large number of positive customers are perfect advocates for your product or service when it reaches a wider stage, helping to attract new clients and keep your business growing.

Assessing Readiness For Scaling Up

If you’ve seen some of the above signs in your business, you’ll still need to check that it’s properly ready to be scaled up.

Financial readiness

Further to the earlier point about revenue, companies need a decent pool of money available to pay for the expenses associated with scaling up. Research into these investments should be done as soon as possible once you’ve decided to move forward with scaling your business. Depending on your situation in terms of partnerships and investors, this can take time – but a slightly delayed scale-up is better than one that falters early on.

Operational readiness

Success in scaling up is also less likely if you lack a capable team to support the process. The data backs this up. Sherry Coutu’s Scale Up Report found that for 61% of UK leaders, it was the lack of talent that hindered their company’s growth.

Scaling up should always be a long-term project – but it can only be that if your employees are also on board. Team members should actively participate in the scaling up project, rather than being left on the sidelines. When the business itself goes through major changes, it’s likely that their ways of working will too. Acknowledging the upheaval – and preparing them for it – will make them more likely to come along with you.

In truth, there’s no generic ‘right’ time to scale up a business. Only by looking at your company as a whole – and being honest about its standing both financially and operationally – can you get a true view of if yours is ready to take the next step.

When your business is growing, you need accounting software that can keep up. Contact PKF Smith Cooper Systems today to learn more about Sage 200 and Sage Intacct.

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