Is Your Business Ready to Scale?
There are a few very important questions to ask yourself before you can grow. There’s nothing worse than scaling a business and realizing that you weren’t ready for it.
Do I have enough team power?
Your team needs to be ready for the increased amount of pressure from your stakeholders, including managing new customers and existing customers, plus managing inventory, sales and cash flow. You also need to make sure that you’ve hired in preparation for scale because good human resources mean everything in a business and not enough human resources stunts growth and can destroy a company.
How will you manage your product?
You need to have enough server space if you have a web product or are a SaaS company, and if you sell a physical product, you will want to make sure your supply chain can support new and growing sales without compromising on quality.
How will you manage cash flow?
With more human resources, more product being moved, how can you make sure you have enough cash to pay your team and suppliers so that business isn’t hindered? Finances aren’t an easy thing, but they are important for a business to operate, so make sure your finances are in line and that you have some cash reserves in case things go wrong.
Danny Wong is the Manager of Blank Label Group, working with the startups Blank Label, Thread Tradition and RE:custom, and also supports GemKitty. Danny also blogs at HuffingtonPost, TheNextWeb and ReadWriteWeb.
April 11th, 2011 at 5:21 pm
I do totally agree with you on having a power team,managing the product and the cash flow.
However, the challenge is how to maintain a steady cash flow and make profits in the midst of a recession where things and businesses are falling apart.
April 12th, 2011 at 3:37 pm
I am very close to going out to pitch my start up (6-8 mos) and basically doing the reverse of what you are speaking about. My start up (full blown)will cost an estimated 7 million dollars. In this economy feel I would find it difficult to secure funding so I scaled backwards. When buliding my model I saw that there were multiple revenue stream possibilities so I structured each as if it were a stand alone business so if the need arose where I had to break up the company,I could sell off components as opposed to the entire business. By doing this I also realized that I could open my first location with a lot less up front capitol and a smaller footprint than originally projected and based on the concept get the same bang for my buck sticking to the same marketing plan and show a sound 5,10 and 15 year growth plan to potential investors all of which could thrive independent of the whole. Thats my take away on your story.
April 12th, 2011 at 6:26 pm
So true- nothing worse than getting knee deep in building the company and finding that you are not prepared to handle the volume of business! Always pays to think things through and be well-prepared in all aspects.
April 14th, 2011 at 2:33 am
I have to agree with all your points here: Capital + Manpower + Technology. I have to balance all three for my business. My business is purely online so scaling my business can be much tougher when you have millions of competition on the World Wide Web.
April 26th, 2011 at 1:20 pm
Another very impotant matter is whether the money required for expanding the company are available. There are numerous businesses out there that are not working at their full capacity due to the fact that they lack in capital in order to expand. One product I would recommend in case of facing this problem is that of raising venture capital. If your company is ready to expand, you are very likely to be able to attract venture capitalists. One of the best internet resources for international investors can be found here: http://www.vcgate.com/International_investors.htm. This can be the best solution for what is, in fact, the most important problem companies face when thinking about expanding.
May 20th, 2011 at 3:48 am
One more criteria could be the acquisition of resource(like Employees, Machineries etc)in establishment of any business.