Growth is a persistent goal by most companies, but scaling for growth is what successful companies have managed to do well. When a startup has shown its mettle in the marketplace—its first couple of years have proven that there is a market for its offerings, further confirmed by investor interest—then it becomes time to consider how to move the company to the next step. Here is what scaling an emerging growth company entails and how to do it right.
Scaling Up Your Business
What does it mean to scale up your operations? It’s not enough to desire that more customers will want what the company is selling—you also need a plan for meeting those orders day after day, in a cost-efficient, sustainable way. Does your company have the systems in place that can keep up with the faster pace and higher volume? The bigger and more complex the company gets, the more of a strain it can have on the current ways of operating—particularly the people involved.
This is why scaling the business is a delicate balance act, as it’s not as simple as hiring more people across the board or upgrading every system within the company (such as upgrading from the “small business” version to the enterprise one). Spending too much too fast can lead to an abrupt end of the cash runway—from the system upgrades to the additions made to payroll. During transitional growth periods such as this, trusted advisors can provide expertise from companies that have skillfully built up without burning out.
How can you determine if your business is ready to scale up its operations? Scaling the business is an ongoing endeavor—many aspects are involved and some will progress slower than others.
As you build up resources—and the capital—to work toward the next level for your startup, the scaling up begins. Ideally, this begins with a careful evaluation of current operations and a plan, but some companies start the process too early and have to go back to evaluate whether they took the right steps or need to revisit some of their decisions. You may see this with companies that hire senior leaders who end up not being a good fit for the kind of company that is being refined.
Common Challenges When Businesses Scale Up Their Operations
Here some of common regrets that companies experience as they scale:
- Hiring mistakes: Bringing in people who are not a cultural fit for a fast-moving startup; filling full-time roles that may not be necessary when the company is bigger; hiring too quickly before knowing whether expansion efforts will be successful—these are few of the many human capital challenges when scaling for growth.
- Overly high optimism: Positive attitudes are most welcome in the business environment, but there also needs to be realism when planning for the future. This often falls under the purview of the CFO role. On an interim or part-time basis, a CFO expert can help right size expectations and projections.
- Choosing appropriate systems: A wide selection of choices for managing accounting, payroll, invoices, expenses, cash, and equity can be overwhelming when a company is looking to grow in a sustainable way. Experts in these areas and in smart growth for emerging growth companies can save the business significant time in recommending the systems that would be the right choice while also offering critical support during implementation efforts.
- Employee engagement: When you want to retain your star employees, you need to keep in mind the hours they are putting in, their interest in the company as it evolves into another iteration of itself, as well as making them feel involved along the way. Open communication and transparency are musts for keeping a connection with them and being alerted if they feel any sense of dissatisfaction with the way things are going.
- Aversion to change: Change is afoot in the company—but not everyone will be on board, even when the changes in store are positive. Some employees, either because of their personality, where they are in their career or their home life, or simply how they feel about the company in general, may not want to take this journey.
Best Practices for Scaling Up Business Operations
With strategic growth advisors who have helped companies similar to yours set a business scaling strategy and go on to thrive, you can include the following best practices in your plans as you consider what will work at your company. Here are a few:
- Keep evaluating skills gaps and resources: Where are the strengths and weaknesses on your current team, and what gaps can or should you fill now? What resources do you have to build up in a smart way, and what will you need to acquire as you proceed (is your company “investor ready” or do you have some work with the financial operations to undertake before taking on significant strategic moves)?
- Be creative when addressing skills gaps: Making full-time hires across the organization does not need to be the default—in fact this can be a risky move. By outsourcing some roles, such as in marketing and finance, you can fill in critical gaps for now while taking the time needed to find the right people for those positions down the line. Consultants who are known for being adaptable and highly experienced can jump right in to get the work done—so that your company won’t miss a bit in its business scaling.
- Trust the type of expertise that only a CFO can provide: If your company is not yet ready for a full-time CFO, you can still tap this expertise. CFO experts have a unique perspective and a knack for helping companies in this exact type of situation, when they are looking to scale up business. Whether you need CFO expertise, an entire accounting team, or advice on when and how to scale your company, RoseRyan can be there for you. Contact us to find out how we can help your growing company.