How to Scale Your Business in 2024
Business leaders from around the world come to Singapore because of its innovative ecosystem. It has made Singapore a leader in corporate innovation, and the annual Global Innovation Index 2017 even placed it first among Asian nations for innovation, and first globally for innovation input, which included quality human capital and research.
Despite this vibrant environment, 30% of Singaporean startups fail within 2-5 years according to research data and insights from e27’s Singapore based market research.
Only 25% of new companies survive 15 years. Running your own business is hard, which is why it’s so important to focus on scaling your business and creating a strategic plan for success!
Overview:
Why you should scale your business
Take Nalli Sarees, an Indian textile business that began in a house in 1928. In 1935, they established their first showroom. During World War II, at a time when businesses were closing down worldwide, Nalli’s kept their shop open and flourished instead. During the world war years, this shop remained open, and they continued to serve and build trust among their clientele.
In 1958, this family business passed on to the next generation, which evolved their practices to make the products more affordable without compromising quality. The evolution continued into 1980 when they began using new barcode technology to thrust the business into the digital age.
In 1991, they opened a second store. In 1993, they expanded abroad to Singapore. Today, they have established business growth all over the world and their brand is famous worldwide. The question arises: how, during this era of immense hardship, did Nalli Sarees scale up from a small shop in a house to an international retail chain?
No matter how established, many businesses face severe repercussions, especially due to the COVID-19 downturn, followed by social alienation and a countrywide lockdown. Much like how World War II forced Nalli Sarees to adapt, the pandemic has forced businesses to rethink how they manage and conduct their firm, including a re-visitation of their business strategy and processes.
Most businesses struggled to keep their financial wheels turning during the lockdown due to decreased revenue turnover, lack of focus, and global financial instability.
Given that the market is changing every week, it is critical to evaluate the business model and reassess where your company stands based on your revenue and cost projections. This is also an important moment to monitor existing financial indicators and cash flow. Businesses must assess the impact on new sales, collections, credit cycles, and possible bad debts.
What is a scaling strategy?
Scaling a business entails developing business models and building your organisation in a way that allows significant growth. It means producing constant revenue growth and avoiding stall-points without incurring significant additional costs and/or resources.
Without a scaling strategy, your business will not be able to grow and prosper. It will stagnate. And a scaling strategy is not something that you will discover through random experiments. It takes experience, and it requires you to follow certain principles of business scaling.
Your scaling strategy should help you identify business enterprise opportunities for growth and leverage them by incorporating similar high-quality services. Scaling strategies can be used in most industries, including tech, manufacturing, ecommerce, finance and many others. You can develop new products by scaling up old ideas; tiny steps can be used in some projects so you don’t have to reinvent the wheel.
Now let’s focus on some key factors that determine the success of your business scaling strategy.
These critical factors are:
Value addition
The larger market allows businesses to enjoy the benefits of economies of scale, improve profit margins and expansion through leverage. For a scaled business, new customer acquisition is an important factor.
Once you’ve divided your clients based on healthy vs unhealthy revenue, you need to delve deeper into your customer journey – beginning with knowing your acquisition conversion rates and working your way down.
Cost-effective operations
This helps businesses in increasing revenue and achieving low production costs, as well as conserving costs for competitiveness in the industry. You can do this by developing better products and more efficient facilities or acquiring low-cost facilities.
Anticipating opportunities
Anticipating opportunities means identifying the growing needs of consumer services and providing solutions for increasing standards of living.
Diversification
A business develops when you diversify your product portfolio to increase the public acceptance of products, thereby increasing sales volume. The expansion process indicates the company is preparing to expand its business, lower its competition and increase demand for products that it can cover with the existing product line.
Expansion strategies allow the company to offer the expanding target market goods different from those of its existing products. It would require additional revenues, better capitalization, larger infrastructure, and an enhanced ability to innovate. Profitability will be affected as more resources will be used on research and development, but it will be worth it in the end, when you have better products that are being adopted by more consumers.
When is the right time to scale a business?
Before deciding to expand your business, you will need to ask yourself some questions – mostly about where your company is in terms of its market share, earnings diversity, cost of resources, time spent on preparing product offerings.
- Is the business profitable? If not, you don’t have a scalable business.
- What is the upside potential of scaling a business?
- Is it possible to scale the business without additional resources?
- How long will it take to scale the business?
- Do you have the resources to scale the business?
A simple rule of thumb is if your business is all over the place and you’re finding more problems than solutions, then chances are it’s time to grow.
Here are some major factors that can help you determine if it’s time for your business to expand:
Growth
The primary reason for scaling your business would be to fill out an unmet market demand, increase capacity at work or decrease the unit price of your product. All successful scaling factors directly affect your finances, and if you’re an entrepreneur, they’ll also affect your business strategy.
The economic or buyer’s environment won’t come into play in the decision to expand. Growth won’t work if your business isn’t creating significant value for your clientele; this would be an illogical path. Some channels may not deliver the impact you need. Scaling your resources by adding more resources or adding skills can help you meet your target.
More questions than answers
Making the decision to expand your business may be both thrilling and stressful. It’s hard to know when you should make this decision, how you should form a business plan, how much it will cost, or if you’ll even succeed. While mind mapping can be helpful for this thinking exercise, this is where it’s good to have extra hires to guide you on this journey. Adding to your team, even if there’s only one person, will play a vital role in getting your business to scale.
Finances
Finances are one of the most important factors to consider. The four variables you should be considering here are your bank balance, operating overhead, profitability, and cash flow (what money is received and spent). If you find that your company isn’t profitable or can’t pay its bills, you may slip into a credit crunch, which will eventually lead to bankruptcy.
Products and Services
The goal is “surviving and thriving,” so you need to scale up when your numbers look something like this:
- The competition is successfully chipping away at your share of the pie.
- You have a proven idea that continues to catch on
- New customers are actively asking about your product but waiting for additional features
- Your customer base acquisition costs are going up
- Your conversion rates are going down in parallel with the rise in customer acquisition costs
What’s the difference between growing and scaling?
What is the difference between growth and scaling? Growth is referred to as increased revenue as a result of being a typically ‘successful’ business. However, it also implies that a company’s expansion will necessitate the use of numerous resources to ensure product market fit.
Scaling, on the other hand, does not describe conventional growth. Scaling techniques result in an increase in revenue without increasing company expenditures or overheads.
How to scale your business
Formalize Objectives
Set goals for 1–5 years out, then develop weekly/monthly/quarterly milestones. When in doubt, remember SMART goals. SMART goals are Specific, Measurable, Achievable, Realistic, and Timely.
Secure Capital
Once your goals are set, you need to acquire the cash needed to complete each scaling phase. Secure 10–30% extra capital than projected as a contingency plan (e.g., capital fundraising, loans, or lines of credit). Adding further employees at this level might be costly and should be delayed to the last stage).
Validate and Support
Collect stakeholder and investor support ahead of time. Keep stakeholders informed as you grow; they will more readily support efforts that show success (e.g., share a monthly/quarterly progress report with investors).
Create “Prosumers”
Analyze your sales to identify your most loyal customers and turn them into “prosumers” who are eager to provide you:
- honest feedback
- a well-written recommendation
- a referral to others
Prosumers will help you develop organically (e.g., A high-margin customer who uses your offering daily).
Adopt a Repeatable Sales Strategy
Create a sales funnel that quickly qualifies consumers. Usually, a successful sales funnel looks like this:
Initial contact > Qualification > Develop Value Proposition Solution > Present Demo > Evaluation > Negotiation > Closing
Streamline Your Offer
Set standard high-value offerings with low entry barriers for clients. Eliminating most specialized solutions speeds upscaling (e.g., Build a subscription service or a starter package offering for customers).
Optimize the Customer Journey
Automate your infrastructure to free up capacity. Spend more work on features that enhance sales (e.g., sales scripts, CRM, or shareable material like one-pagers) or take care of time consuming tasks (eg. secretarial work, compliance, or taxes).
Admin is often the easiest aspect of business to automate, and Sleek is ready to take it off your hands so you can focus on your business. If you’re ready to free up some of your valuable time, take a look at Sleek’s services here.
Future-proof your business
Future-proofing is the best way to prepare your company for any future uncertainties. Every business faces challenges such as cash flow issues or being outcompeted. Future-proofing your firm is more than simply a practical consideration. It’s a cultural reset.
Changing the team’s strategies will allow the company to be proactive and remain competitive now and in the coming years. Being aware of internal and external dangers is critical for business success.
If you’re interested in how you can future proof your business, we’ve come up with 3 ways to become a future ready business that you can begin today.
How to seek funds
Business doesn’t succeed if you’re not prudent with the inflow and outflow of funds. Reinvestment of funds will be good for your business as it will stretch your finances and keep your profit margin high. The following ways could help you raise the needed capital to launch your business.
Bootstrap
Your startup, like a house, a large wedding, college tuition, or getting out of debt, is something you should budget for. If you haven’t already, take these measures to grow your business savings. By going it alone, you keep total control and avoid the distractions of alternative options. And this decision is not unprecedented: over 90% of new businesses succeed without loans or subsidies. Learn more about bootstrapping here.
Seek VC funding
Making money through finding a venture investor who shares your vision, or at least believes in your capacity to make money, is a smart method to raise money. Of course, you’ll need a polished business plan, ready to grow. The biggest disadvantage is that venture funders are searching for the next big thing, and many entrepreneurs struggle to explain their company’s scalability.
These funds can be used to reduce fixed costs, buy cheaper IT or manufacturing equipment, and educate employees. The primary disadvantage is the strong competition for such funds.
Crowdfunding
This is perhaps the simplest way to get cash for a new venture. To launch a crowdfunding strategy, you don’t even need to be tech-savvy; all you need is a strong pitch that showcases your company’s development potential and skill for interacting with your cash-rich audience.
If all goes well, you’ll have free cash without giving up any operational control. As a bonus, crowdfunding is a great method to promote your business before it ever launches.
Bring in an angel investor
Targeting high-net-worth individuals who have previously invested in startups is easy, but convincing them you are worth their money is challenging. Do your homework and start submitting pitches to angel investment networks and local investor organizations. Find the proper angel investor, and you will get not only cash but also business advice that could come in handy later.
Bank loan option
Seeking a bank loan feels almost archaic nowadays, but it is a tried and true method of securing funds. You can still get a bank loan if you have a good credit history, assets to provide security, and a viable business plan with clear profit predictions. The benefits of this choice include retaining complete equity, obtaining a substantial sum, and building credit; the disadvantages include having to repay the loan in full, plus interest, or risking bankruptcy.
Use government grants
There are hundreds of grants available, from both the government and private small businesses, to help stimulate the economy and create employment. The Startup SG Equity Program, for example, is a fantastic scheme to explore, where the government co-invests in companies with independent, qualified third-party investors.
Qualities of successful entrepreneurs
In order to successfully scale your business, you’ve got to make sure you, as an entrepreneur, have what it takes. There are a few qualities that successful entrepreneurs tend to display. Here they are:
Strong Starter
A survey of 500 successful companies found that 84% made a profit in the first four years, and over two-thirds made a profit in the first year. Only 8% were profitable after five years.
Adaptable
The world’s most successful entrepreneurs are self-assured but flexible. A successful business owner is adaptable and willing to change direction. To overcome adversity, the finest entrepreneurs think creatively. They realize that occasionally their gut sense is wrong. Changing ideas, strategies, or even starting over can help. A business owner must be ready to change strategies.
Motivated
Successful entrepreneurs have one thing in common: they are determined to succeed. When someone is enthused about their new concept, they are often motivated to work hard to see their company grow. Managing a firm demands the same amount of passion on day 10,000 as on day 1.
They invest in their companies
What would you do with extra cash? According to Kabbage research, 40% of entrepreneurs would reinvest it. And nearly half (47%) have utilized personal resources to fund their business at some time.
Wrap up
Successful businesses don’t scale overnight. They typically grow and scale due to consistent strategy, great product, and great people. It takes effort and time to build a successful business. You will have to keep on experimenting, learning from your mistakes, and constantly improving your business.
If you’re looking to scale up in Singapore, get in touch with Sleek today! Our friendly team of experts can help you with your company admin so you can focus on scaling your business to success.
