Part of what makes small businesses unique is their ability to manage so many of the aspects of their mandate in-house, with creative and directional control in the hands of the owners. Despite this, the dream of operating in a bigger league, expanding to serve or reach an ever-greater audience, is high on the list of desires for many small business owners. Scaling a small business is a delicate decision: some businesses scale better than others, and the adjustments needed to increase your scale also introduce a higher than average degree of risk, depending on the size of your ambitions.
If you’re thinking of scaling your small business, consider the following advice to make the transition as stable, profitable and free of interruption as possible.
Consider Different Avenues of Scaling
Much of the scaling-up process is conducted through mergers or collaborations between companies. However, a straight-ahead merger or acquisition is not always the most desirable option for a business from a variety of standpoints, including management and cash flow. You might also consider entering into a distribution agreement that sees your products’ market expanding in exchange for minimal additional risk: alternatively, there is also the option to find a licensee with whom you may diversify the growth of some particular piece of your business’ intellectual property.
Scale According to Your Goals
To be adequately prepared to scale up your business, you must first be fully in control of your current market situation. Having a full understanding and mastery over your current processes, cash flow management, and most importantly a clear set of goals, will predicate the direction and fashion in which you can scale your business. By scaling, you will aim to refine and project your core strengths as a company, while spending less time dealing with the aspects of the business that impede your process.
Make Use of Technology
Emergent technological resources can help businesses bridge the gap to the larger audience they may seek. Technology allows companies of all sizes access to efficiencies that were previously only accessible to large enterprises. Consider the importance of such tools as crowdfunding and social outreach, as well as cloud-based or mobile-optimized solutions for workflow management, inventory, and communications both internal and external.
Manage Your Cash Flow
Growth puts strain on cash: that’s why more businesses fail when growing than when shrinking. In light of this, having a rigorous cash flow forecast and monitoring it closely are key. You must be able to fund your growth and also minimize the disruption to your current financial plan and existing obligations that are integral to your business at its current size. Alternative lenders have stepped into the gap created by major banks and allowed more small businesses to take on the funding they need to grow and scale to new levels of profitability and exposure.