How to Scale your Business: Growth Guide
Are you prepared to take your business to new heights?
Scaling your business requires strategic planning, sound financial decisions, and effective marketing. In this guide, we'll explore key steps to help you scale your business successfully.
Whether you're a startup or an established company, these tips will empower you to achieve sustainable growth and maximise your potential.
Are you ready to scale your business?
Before scaling your business, it is important to consider if you and your team are ready for it. If not, scaling a business can lead to serious consequences including failure of your company.
There are several negative consequences associated with scaling your business too early. Therefore, we have create a checklist below to see if you and your business are ready for growth:
▢ Do you have consistent positive cash flow?
- Set up projections in regards to your revenue and expenses and compare them on a regular basis with your actual numbers. This will allow you to predict setbacks so that you can act accordingly early on.
- Consider implementing smart financial strategies to maintain a positive cash flow. For example, optimizing your payment terms, reducing expenses, and diversifying revenue streams.
▢ Do you have a solid business plan that is extensively thought through/updated for your scaling goal?
- Identify your unique selling propositions (USPs) and map out a clear vision for your business. Also map the scaling goal that you plan to achieve.
- A solid business plan can guide your decision-making process and can help you attract potential investors and partners.
▢ Do you have a skilled marketing team with both the know-how and commitment to grow your business?
- You need a to have or assemble a team with diverse marketing expertise who can execute your vision.
- If you lack in-house expertise, you can partner with a growth hacking agency to provide you with the necessary expertise.
Were you able to check-off every point above?
Then it is likely that you are prepared to take the next step and scale your company!
One of the most important things when it comes to scaling your company is, as you might expect, money.
It's key to be honest and critical with yourself when establishing how many resources you have available. Also, you need to be able to justify the spending on each part of the scaling process. There are many aspects that require resources such as hiring new talent, running advertising campaigns, and moving into new markets.
As discussed, realistic financial forecasts are key for you to successfully scale your business. You should aim to be as accurate as possible when determining your expected revenue. Establish how many customer you aim to reach and the budget you have available to allocate towards reaching that number.
Remember, you need a motivated and experienced marketing team to generate the desired demand for your business. Simply having "more money" isn't sufficient for an effective scaling journey.
Having discussed the requirements, go to the next step.
How can you scale your business?
One route towards scaling your business is through financial investors. Investors are a good choice if you business has high capital requirements to scale.
However, keep in mind that this type of growth is often less organic. Involving another individual into your business reduces your own control. Also, you will likely be bound to the goals and desires of the investor.
Here are some general funding/investor pros and cons to take into account:
Pro
- Some investors come with expertise and can guide you
- The funding you can receive can be substantial if your business model is very intriguing to the investor
- If everything goes well, it can be an opportunity to build a strong network
Con
- You often have to give up a portion of equity in your company
- You have to communicate with your investors and you have to meet their expectations & wishes
- Applying for grants/funding can be highly competitive
- There are no guarantees till you actually have the funding. It takes a lot of effort to apply for funding/grants
- The criteria to get a loan/funding can be quite extreme
Who could be a right fit for investors/funding?
Applying for funding might be the right fit for you…
- …If you are lacking the necessary budget to hire an agency.
- …If you immediately need a significant amount of money that your company can not generate in an efficient way.
- ...If you have a specialized niche and can find an investor in that field who is willing to share their expertise.
Are you interested in taking the investor route to scale your business?
Here are five funding opportunities that you can take a look at:
- Angel investors
- Venture capitalists
- Crowdfunding
- Traditional bank loans / Small business administration loans
- Grants & Government Programs
If you're concerned about the downsides of using investors, you can try hiring a growth marketing agency instead.
Growth marketing agencies can help you scale your business in a organic way.
This means that a growth marketing agency will work closely together with you, as an extension of your marketing team.
Growth marketing agencies focus their strategies on the resources that you have and generate. Therefore, this allows for a smooth process of continuous growth cycle of making profit → using that profit to scale your business → making more profit, and so on.
Here are some general growth marketing agency pros and cons to take into account:
Pro
- Growth marketing agencies bring a lot of expertise to your business
- You don’t have to give up any equity/control in your company
- Hiring a growth marketing agency allows you to focus on your core business activities which saves you time & resources
- They are flexible to your demands and needs, which means the service can scale proportionally to your business
- Growth marketing agencies have access to the latest tools and technologies making them efficient.
Con
- Your business' performance determines your funding/scaling budget.
- You need to have a certain budget available in order to start working with a growth marketing agency
- You are depending (to some extent) on external resources
- You need cultural and communicational fit between your company and the agency to avoid problems in the future
Who could be a right fit for hiring a growth marketing agency?
Hiring a growth marketing agency could be the way to go for you if you…
- …Are interested in growing your business organically.
- …Want to take less risk & start immediately with scaling your business.
- …Want to avoid giving away equity/control in your company.
- …Want to be able to scale the extent of your external help according to the scaling progress of your business.
Are you interested in taking the growth marketing route to scale your business?
Here are the top 5 growth hacking agencies (in Europe) that you can take a look at:
- Dapper - the Growth Agency
- GrowthRocks
- Rocket
- Growth Tribe
- TUYA Digital
Want to learn more about which agency could be suitable for you? Read more here.
Besides that, it is also possible to take advantage of both routes at the same time. This gives you the option of having more capital and having an agency that ensures it is spent efficiently.
Additionally, you have to keep in mind that the best option will vary based on your business’ stage, growth potential, and specific needs. There is no one-size-fits-all solution!
Remember!
Before scaling your business you should ensure that you are ready and prepared to do so!
Firstly ensure you have a well-thought out plan for your growth and financial strategy. You can check out our bonus section below for the three key metrics for your company's performance and scalability.
This information will help you to have a structured and thorough overview of all aspects of your business (and scaling goals). Also, it will help you attract investors to fund your scaling needs, if needed.
Lastly, you should carefully consider which route makes the most sense with your industry, stage of business & goals in mind.
Bonus - How to figure out your top 3 key metrics
The following is a list of three key metrics that pinpoint your company's value and position. You can use them when presenting to investors or applying for funding.
▢ Lifetime Value (LTV) of a customer
- What is it? The total value a customer brings to your business throughout their entire relationship with your company.
- Why is it important? Knowing the LTV will help investors understand the revenue potential of your customer base. It also indicates the profitability and sustainability of your business model.
- How can you calculate it? Multiply the average purchase value (V) with the number of repeat purchases (P) and multiply that number with the average customer lifespan (L).
▢ Customer Acquisition Cost (CAC)
- What is it? The cost to acquire a new customer.
- Why is it important? The CAC helps investors evaluate the efficiency and scalability of your customer acquisition strategy.
- Tip: A low CAC relative to the LTV indicates a healthy business model with strong potential for growth and profitability!
- How can you calculate it? Divide your total sales (SE) and marketing expenses (ME) by the number of customers (C) acquired within a specific period.
▢ Break-even point
- What is it? The point at which your expenses and income are completely equal and you make neither profit nor losses
- Why is it important? It provides insights into your financial stability and helps investors to assess the feasibility of scaling your business.
- How can you calculate it? Subtract the variable cost per unit/service (V) from the selling price per unit/service (S) and divide the fixed costs (F) with that number.
