You’ve worked hard to lead your startup business through the initial founding stages. After establishing a successful startup, the next step to growth is scaling the business. However, the challenge is finding the right time to do so.
Trying to scale a startup too early along the journey is risky. If your business is unprepared for the transition, things can fall through the cracks and ruin everything you’ve achieved.
With good documentation, you can tell your business is ready to scale when you’ve noticed certain trends, achieved your goals, and overcome some of your biggest challenges. Read on for six signs that indicate your business is ready to scale.
1. You’re Prepared For The Legal And Insurance Business Aspects
Scaling a startup is undoubtedly a significant transition for you as a founder and the business as a whole. Growth means you might have to change how you do things, and you need to ensure that your business is protected should something go wrong.
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These two factors can’t be overlooked if you’re preparing to scale. As your business grows, the list of laws and regulations it must conform to grows with it. This could include payment handling, customer and team member data security, and wage expectations. If the next step is international growth, you’ll have to consider any laws that may influence business dealings in any new country you expand to.
If your legal team and business insurance are prepared to handle the load of future expansion, you can ensure your business interests and assets remain safe throughout your growth.
2. You’re Turning Down Business
This is a telltale sign that scaling your business may be a good idea. If you consistently have to turn away clients, it’s probably because you don’t have enough resources to keep up with an increased load.
This usually isn’t bad—it means your business’s clients are happy and your services are in demand. But turning down clients also means you’re missing the opportunity to leverage the demand for your services to your advantage.
3. You Have A Skilled And Reliable Core Team
The success of any startup is strongly dependent on the core team keeping everything running. Yes, customers and demand are important, but it’s the team who keeps those customers coming back.
When you can see that your team is motivated, committed, and able to handle projects independently, it’s a good sign that they’re ready to help you scale. The best time is when you have a handful of team members you trust to stay with you long-term.
Remember to keep team members happy, especially during expansion. Drastically increasing workload on individuals may lead to burnout and loss of motivation—you don’t want to push your trusted team away. Instead, think about trusting your team to train new members and spread the workload appropriately.
4. You’re Exceeding Your Business Milestones
Every business starts with a set of goals. These typically evolve over time, with new goals set as previous ones are reached. Meeting goals is one thing, yet when you notice that you’re consistently exceeding the goals you set, it can be considered an indication your business would handle being scaled.
For example, you might repeatedly attract more customers in a given time frame than initially projected. When you notice similar trends in other goals, like revenue, sales, and profits, your business is in good shape.
5. Your Product Fits The Market
One of the most uncertain aspects of starting a business is finding out whether there’s a demand for your product and how strong it is. When your business strategy consistently meets the right customer base, your sales are steady, and your customers love your product, it’s a good sign of demand for your product—or proof of product value. Scaling up is very timely.
Next, you must ask whether your product itself is scalable. In other words, is the market for your business large enough to justify scaling? How strong are your competitors? How unique is your product? Can it be copied easily, or are you the only one who can provide it?
6. Your Business Has A Positive Cash Flow
In short, cash flow comprises all the funds going in and out of your business, not to be confused with profit. When your startup has a positive cash flow, it means the total amount of money it coming in exceeds the total that’s going out.
One unavoidable aspect of expanding a startup is that it costs money. And in almost all cases, you spend before seeing additional revenue. Having a positive cash flow before will help your business remain financially secure once you decide to scale.
Conclusion
In business, taking your time is usually better than rushing. None of these signs should be taken as a definite sign that you should scale. Instead, use them to inform your decisions on whether you scale.
If your business shows none, you might want to put it off for now. When your company shows half or more, it’s an indication that your business is on track to scale. Of course, always ensure that you make the proper preparations, manage your risk, and monitor your cash flow to maintain a healthy business.
