5 Mistakes to Avoid when Scaling Your Business
Scaling a business is a huge milestone as you prepare for increased growth and the exciting commercial opportunities that come with it. However, pulling off a scale-up is no mean feat.
Research from Beauhurst, which provides data on every UK private company, has found that only 23% of over 2,500 companies successfully scaled within their first five years.
A failed attempt could result in issues including overworked staff, low demand for products and services, and disillusioned investors, all of which can really set your business back. To support you in achieving your scale-up, here are five of the most common mistakes small companies make and how to avoid them.
1. Scaling too early, or too late
Timing is everything, so make sure you pick your moment to scale carefully. Going too early means you may not understand your business or market well enough to do so successfully. For example, you need a clear idea of your ideal customer profile and how your business solves the problem they face, what the best route to market is, and the personnel and structure of your core team. You also need to be confident that your offering has sufficient demand before you think about scaling.
However, if you can tick all of those boxes, don’t wait too long and miss that golden moment either. That gives your competitors the upper hand and allows them to steal your market share before you start to expand. Exploring franchise opportunities in Texas could be an excellent route to consider for your expansion plans.
2. Losing track of spending
Investment is necessary for a successful scale-up operation, but you still need to be disciplined when it comes to your fundamentals and that means your spending can’t get out of hand. Integrating AI task management into your business can boost productivity, streamline communication, and support data-driven decision-making during scaling. However, maintaining discipline in spending on AI tools is essential. Set clear budgets, regularly assess their effectiveness, and adjust spending accordingly to ensure they align with your growth goals. In addition to AI tools, you may also consider upgrading your communications tools and invest in a commercial phone system.
For example, SaaS (Software-as-a-Service) is a key part of modern business, enabling companies to increase efficiency and flexibility. SaaS can also help cut costs – as long as these platforms are managed properly. If not, this technology can have the opposite effect.
As SaaS management experts at Vertice explain, ‘Nowadays, the subscription model is the main way that software is purchased — but with so many different apps making up a company’s tech stack, these recurring costs can quickly add up […] Between duplicated or redundant licenses, under-utilized tools, and forgotten contracts, your software portfolio could be concealing all too many missed opportunities for cost-savings’.
In short, whether it’s SaaS or other business expenses, make sure you understand exactly what you’re paying for so you can cut unnecessary spending and divert that money towards resources that will help you grow.
3. Not testing the market first
Market research is essential to ensure it’s the right time to scale up and to enable you to form a winning strategy. This will allow you to better understand your customer and make sense of the opportunities available. Here are some tips for refining your approach:
● Define your goals and metrics: Visualise what you want to achieve and how you’ll measure success, prioritise your actions, allocate your resources, and track your progress.
● Validate your assumptions: You can do this by conducting market research, customer interviews, surveys, focus groups, or experiments.
● Test your solution: For example, with prototypes, demos, beta versions, minimum viable products (MVPs), or pilots. The aim is to collect feedback and data you can build upon.
Your strategy is a continuous process of learning and improvement so you have to commit to monitoring and analysing your performance against your goals and metrics and being ready to adjust when needed. Once you’ve got a go-to-market strategy you’re happy with, you’ll be in a stronger position to scale up efficiently.
4. Making poor hiring choices
Scaling up means you’ll inevitably have to recruit more staff, but a common mistake is hiring the wrong people. Bad hires can prove incredibly costly in the long run (2.5 times the employee’s salary according to the Recruitment & Employment Confederation (REC)) and this can also slow you down as you try to scale.
Rather than rushing to expand your team, make sure you have solid recruitment processes in place and stick to them so you can grow your business smartly, focusing on the skills you need to fill your desired outcomes and considering how potential hires will complement your company culture. There also needs to be clear standards in terms of onboarding and performance management.
5. Spreading your team too thin
It’s hard to successfully scale up if you don’t concentrate your limited resources in priority areas. Trying to achieve everything at once, whether that be in terms of product ideas, revenue channels, or new customer bases, will be more likely to slow you down.
Famed management consultant Peter Drucker once said: “Whenever we find a business that is outstandingly successful, we will find that it has thought through the concentration alternatives and has made a concentration decision.” Get your team aligned and focused in the same area so you can apply laser focus and execute to the best of your abilities.