Growth and scalability should always be at the forefront of any business owner’s mind. It’s an inevitable process for any successful business looking to further its horizons. Judging the true potential of a business and its scaling capabilities can be tricky as it involves many different aspects. However, evaluating these are necessary for planning the future of a company as they indicate the overall finishing point of the business. Below, we’ll run through the key components of a scalable business.
B2B or B2C?
The process of growing and scaling your business can differ depending on your customer base. So, let’s look at the split between B2B & B2C.
Selling and scaling a B2B venture differs from the B2C experience. The relationship with customers is more personal, and the selling angle needs to meet specific needs. This is due to a considerably smaller market size than selling B2C. This also means there’s a greater emphasis on lead generation, opposed to advertising to the masses.
The main takeaway is building personal relationships. This helps create trust and massively improves customer retention, which is vital in the B2B sphere. Having a solid base of loyal customers when selling B2B helps build the foundation of a scalable business.
The B2C process is very different. The relationship is transactional, so more time and resources are invested in the transaction experience. Due to the size of the potential customer pools, businesses can market and advertise to the masses, placing little emphasis on customer retention.
The stark difference between B2B and B2C makes the scaling process very different. B2C places a greater emphasis on budget, marketing channels, and increasing sales. Whereas B2B relies on having a solid foundation of reliable, loyal customers. In B2B, utilizing methods such as referrals and targeting niche groups is also very common.
Necessary resources for a scalable business
Growth naturally incurs higher running costs as well as some significant one-off costs. This includes logistics, marketing, inventory, and on-premises equipment. This is all required to facilitate future growth, but also highlights the risk of scaling.
Raising capital is also a common issue. Businesses can naturally fund their growth thanks to excess demand and firm business models. However, loans are also a standard gateway to purchase assets to facilitate growth. This brings a certain level of risk with interest rates, plus the pressure to pay the money back in a specific amount of time. Pacing is also another factor to consider. Fast-growing businesses don’t tend to hold the financial sustainability to meet rapidly increasing costs. Planning out business growth and following a steadily calculated plan is usually the recommended route.
Investing in technology helps the speed and cost of scaling a business, especially long-term. Systems improve efficiency and even automate particular business areas, so tasks take less time, and free the resources of business owners. While the costs in the short term can seem like a risk, the long-term benefits will outweigh the negatives. Robust technologies and systems tend to be around for the long haul, so the significant investment should be incorporated into your business’s long-term plans.
Growth naturally brings an increased workload across the business, meaning the appropriate workforce needs to be in place. Overstretching the current workforce with an increased workload can begin to standardize poor results and stint the growth of a business. This can quickly become company-wide if the correct actions aren’t taken during the scaling of a business.
Know your industry
Understanding your industry is essential for any scalable business.
It is rare for an industry to not be competitive in the modern age of eCommerce. Regulations ensure a singular business can’t hold a monopoly, however, this doesn’t mean a handful of businesses can possess a majority market share. If your business is in an industry such as the one described, there will be a certain point where you’ll plateau due to the lack of available market share.
Threat of Substitutes
Substitute products can sap away large portions of sales if your products and services don’t meet customer demands. The main threat of substitute products is that they may reside in different industries, making it difficult to keep tabs on the given competing business. This can again link back to the industry you operate in. For some industries, the concept of substitute products is negligible, whereas for some it is a deep cause for concern.
Understanding customer behavior will be one of the biggest assets in the long term for any growing business. It can be utilized to improve sales, retention, and referrals. All these factors are vital and necessary to not only grow a business but also form a level of stability that facilitates scalability.
Tips for a scalable business
1. Understand your workforce’ capacity
Having a constant understanding of how much work certain departments can take on is vital to ensure rapid growth doesn’t overwhelm your scaling business. Knowing what departments need more resources to develop the business most efficiently will mean a smooth transition to growth. Moreover, you’ll have a workforce that isn’t in a position where overworking is required.
2. Track your sales data
While this can be difficult to set up in the short term, tracking your sales data through platforms such as Google Analytics is vital for longevity when scaling a business. Understanding what sales channels work best, marketing ventures that have the biggest return, and where your referrals are coming from (especially for B2B companies) is an invaluable asset. A well set-up Google Analytics account easily shows business owners where they are best off placing their resources from a sales and lead generation perspective.
3. Place emphasis on customer retention in the early stages
Having a loyal customer base in the earlier stages of your business will set the foundations for future growth. It will form a level of consistent revenue that you know you can rely on. furthermore, referrals will happen naturally if you continue to meet customer needs and demands. This strategy applies to both B2B and B2C businesses.
As it can be seen, you need to consider a variety of factors when both analyzing the scalability of your business and growing the operations. Having a firm grasp of outside factors such as competitors and customer behavior is vital when trying to understand the level your business can most likely scale to. From an internal perspective, it’s all about managing the growth and knowing where resources are needed at any given time.