Business growth can be confusing to entrepreneurs big and small. It’s like climbing up a mountain. Once you reach the summit, it’s easy to admire the view but hard to see how you got there. And it’s even harder to figure out where to go from there.
Whether you’ve reached a peak or you’re halfway up the mountain, you may find yourself wondering how to scale up. But before you invest in an ad campaign or hire more employees, it’s important to understand why you want to scale and what type of growth you’re looking for. With this insight, you can take better advantage of new technologies, leverage your marketing efforts, and put a strategy in place to achieve the sustainable business growth that you seek.
Is Your Business Ready to Scale?
Scaling is all about efficiency. However, a common mistake that entrepreneurs make is focusing on growth for the sake of increasing revenue, as opposed to expanding in response to customer demand.
When deciding if scaling is right for you, ask yourself the following questions:
- Why do I want to grow the business?
- Is there a real opportunity behind this goal?
- Does it align with my company’s purpose?
- Is my business positioned for growth?
What Tools do You Need to Promote Growth?
Operations are everything when it comes to scaling. As you begin to serve more customers or fulfill more orders, it’s important to keep a streamlined process in place. The following elements will allow you to maintain quality as your company grows.
Taking the time to research the best technology for your industry can help unlock workflow automation. This is also the best way to boost project management and use data analysis to make smarter decisions.
As you expand, your people should grow with you. Education and team-building events are two ways to preserve your company culture. This also helps protect your brand and has a positive effect on your customer satisfaction.
Equipment and Space
Investing in the right equipment is the first step to increasing your production. By the same token, you should also make sure that you secure enough space to serve your client base and perform the work.
With the right team of advisors, you can determine if your business is truly ready for growth and a strategy to help you get there. The following are five key indicators that can help you assess your business preparedness:
- Liquidity: Do you have the financial resources to meet short-term business expenses?
- Solvency: Is your debt-to-asset ratio sustainable in the long term?
- Profit: Is your current business model driving earnings?
- Breakeven: How much do you need to sell to make scaling profitable?
- Equity Growth: How does scaling affect your business ownership?
What Are the Pros and Cons of Private Equity?
For many entrepreneurs, private equity is the most effective way to raise funds and take their company to the next level. But offering investors a stake in the business is not for everyone. If you’re looking for development capital to help you expand your current operations or pivot to new markets, these are the pros and cons of private equity for you to consider:
Advantages of Private Equity
- No loans to repay
- Business guidance
- Access to resources
- Possibility of increased revenue
- Ability to withstand market fluctuations
Disadvantages of Private Equity
- Sharing your profits with investors
- Loss of control over company decisions
- Potential conflicts with investors
- New reporting requirements
How do You Choose the Right Business Partner?
For other entrepreneurs, the best way to grow a company is by bringing in a business partner. This is an important, long-term decision that owners should consider carefully and decide with the advice of their financial and legal team.
When looking for a partner that’ll help your business grow, these are some of the factors to keep in mind:
- The partner’s skills and experience
- The values and vision they have for the company
- The partner’s business history, credibility, and reputation
- The financial contributions that they can bring to the business
- What a dissolution agreement would look like in case the partnership doesn’t work out
Stay Nimble to Maintain Consistent Growth
Just like when you started the business, innovation and adaptability are essential to scaling. By aligning growth with your company values and revisiting your strategy on a regular basis, you can achieve sustainable growth.
At CornerCap, we are happy to support every stage of your entrepreneurial journey and offer advice along the way. To gain more insight into your business financials, reach out to your advisor today and start creating a plan to reach your business goals.