So you want to build a 6, 7 or even 8 figure business? It all starts with setting up your business to scale.  

 

Why is it important to look at things from a scalable perspective? Well, as Abraham Maslow famously said, “You will either step forward into growth or back into safety.” In other words, you can stay where you are and be safe—or you can grow, be bigger, dream bigger, rise higher and step forward into growth.  

 

You might think your business is doing well, but if it totally relies on you, any number of things can derail your success. Setting up your business to scale can give you more time and make you more money.  Plus, your business will not depend entirely on whether or not YOU are in the business 24/7. 

 

 

Understanding Why You Need to Scale

 

What does scaling your business actually mean? There are many different ways to scale. Maybe it’s moving from being a solely local business to shipping nationally or internationally, perhaps it’s adding another product to your line, or hiring contractors or employees to whom you can delegate tasks, enabling you to spend more time on growing the business. 

 

What does your business need to be more profitable—and what do you need to be more productive, in your business AND in your life? We can’t all work 24/7; it’s just not possible. What if you want to simply take a one-week vacation? Who’s going to run your business?

 

This is what scaling actually means. It resonates differently with different people, but whatever it means for you, write it down. Why do you want to scale? And once you understand the why, you need to figure out what steps you need to take to have a truly scalable business.

 

Before you decide you want to grow—or preferably before you even launch your idea—you need to take the following five things to heart deeply. These areas provide the keys to a truly scalable business, and they are based around the five letters of the word, "SCALE”.

 

 

The “S” Stands for “SO WHAT?” Who Cares? 

 

Who cares about my product or service?  Does it fulfill a real need?   

 

Be honest with yourself. Everyone is not your customer. Does your product or service fulfill a real, long term need? Give people what they need, and people will buy from you.  Notice I didn’t say “want.” To me, “want” implies a fad... something that can be impacted by the winds of change. Every year around the holidays you see a new hot toy. That’s great, but what happens the following year? How do businesses keep up the momentum? By having a scalable business, not a one-hit wonder.

 

People buy things that make them look good, feel good, make money, save money, save time, and so on. What need does YOUR product or service fit?

 

How can you tell who cares?  When you come up with an idea, you have to conduct market research. Don’t worry if someone else is doing what you’re doing. Google wasn’t the first search engine, and Apple wasn’t the first personal computer maker, mobile phone manufacturer or music device maker, right?  

 

Once you have your idea and are ready to take it to the next level, conduct preliminary research. A majority of your research can be conducted online, and you can ask your own clients if what you want to sell is something they’d be interested in. You can also conduct an independent focus group. Whether formal or informal, it’s worth the investment.

 

In the case of my company, wiseHer, we provide an easy way for businesses to get the answers to their most pressing business challenges. We have an expert advice network that has over 1000 been there done that experts from around the globe ready to help businesses and professionals go farther, faster in their business or career.  

 

We thought we had a great idea, but we had to prove it out. We have a large mailing list of our target customers as I have been in the small business space for many years. We started by asking our customers to tell us about their challenges starting, building and growing their businesses. From there I took the product concept on the road. I went to every small business meetup in a 25-mile radius. I told people I was considering investing in the company (not a falsehood, the company was bootstrapped). The reason I did that is because I wanted them to tell me what they really thought, not what they thought I wanted to hear. Turns out every single person I spoke to was excited about the idea and we even had customers before our platform went live! I knew I was on the right track. You can do the same. Surveys are great but passive. Find out where your customers are and go talk to them. 

 

 

The "C" in S.C.A.L.E. Stands for “COMPETITION”

 

You need to determine not only who your competition is, but how hard it would be for a competitor to swoop in and steal your business. If it's easy to do what you’re doing, it’s not impossible to be successful... but if your customers bought from you based on price, they could easily abandon you if they find a lower price somewhere else.  

 

Circle back to the “S.” So what? Why should customers buy from you? Venture capital investors often ask “what’s your ‘moat’”—your defensible business value proposition. As I mentioned, there may be others who do what you do, but not in the same way you do it.  Being clear on your “moat” or your Unique Selling Proposition (USP) will help you model out a scalable way to build your business.  

 

Now that you’ve determined your so what and the competition, next comes the A: “AVAILABILITY.”

 

Availability, in other words, how stable is your business? How much control do you have over the processes, procedures of manufacturing... or do you rely on others?

 

Say you own a franchise, and the main company goes out of business. What then? Or perhaps you’re a baker, and the price of flour goes through the roof. How are you going to keep your cost of goods reasonable so you can maintain a decent profit margin?

 

How “AVAILABILITY” can Hamper your Business

The most recent and famous availability example I can think of is the Coolest Cooler, which was the highest-grossing crowdfunding campaign in Kickstarter history. It looks like an old-time cooler but has so many more features and the design is really cool. I backed the Kickstarter campaign myself. The cooler features a blender, speakers, and more: pretty much anything you’d ever need in a cooler. It’s the coolest BUT... they had a manufacturer lined up in China, production began and they started taking deliveries when BAM—the factory in China went on strike, which paused all deliveries. It took two years for us to get our cooler, and that’s only because we were one of the first to back it (and I had paid an additional $100 to get closer to the front of the line).

 

They had to use every dime of the backers’ money to stay afloat and start selling on Amazon—plus they shipped those Amazon orders first. People who had backed their campaign on Kickstarter and still hadn’t received their cooler went nuts, and took to Amazon in droves to give the cooler a 1 star review—which killed sales. The Coolest Cooler is again available for sale, but this episode hurt their sales and definitely prevented them from scaling the way they had hoped. 

 

Think through how much control you have over your product, service and related processes and troubleshoot how you will handle worst case scenarios.

 

Obviously, you can’t control every single aspect of your business ALL of the time, but you can strive to build in redundancy and work through Plans B and C—so you quickly address issues as needed.

 

The bottom line is this: the less control you have over your product, business and supply chain, the harder it may be to scale. As Benjamin Franklin once said, “If you fail to plan, you are planning to fail.” 

 

Solving “Availability” Challenges Through Delegation & Hiring

Do a little experiment: track how much time you spend on tasks for a single week: social media, family obligations, sleeping, eating, leisure activities and the like. You may think you have a lot of “leftover” time, but I assure you, you don’t. 

You cannot be everywhere and do everything: you need to take time to eat, sleep, care for loved ones, do yard work etc. You can’t be “available” all the time!

Hiring employees, contractors and gig workers can help you scale. You can find highly qualified contractors on sites such as Upwork.com and Fivver.com. Make sure you have a good handle on exactly what you want these people to do to remove burdens from your plate—and be willing to delegate. That is a tough thing to do, but if you don’t delegate you cannot scale. 

 

Diversify to Scale

Does the entire business rely solely on you and your time? In that case, you may have a hard time scaling. Famous coaches, such as Martha Beck or Tony Robbins, have coaching “institutes” or “licensed” coaches, books, courses and so forth. This way if they can’t be everywhere, their companies are still making money. Diversification is a great way to scale.

 

 

One of the biggest things to take into consideration is the “L” in S.C.A.L.E.: LOCATION, LOCATION, LOCATION. 

 

Where does your market draw from? Is it local, regional, national or global? This needs to be considered in tandem with the “who cares” question when you initially define your target audience. 

 

Why is Location an Important Indicator of a Scalable Business?

Let’s say you open a bakery in your town. The size of the town will provide an initial indicator of potential market size. You will only attract a fraction of that market though because you likely aren’t the only local bakery—plus grocery stores sell baked goods. If you solely have a local presence, you can only scale so much before you’re tapped out in terms of attracting customers.

 

But what about if you have two bakeries in two different towns, like a small chain? This sounds like a regional, scaled business, yes, but again you are limiting yourself to perhaps thousands of potential customers— your income remains capped.

 

What if you started making baked goods and selling them nationally—in addition to the local business? Now your potential market grows to hundreds of thousands, possibly into the millions. Even if you sell a commodity like baked goods—and there are a lot of companies doing the same. You can achieve scale if you have a good local following, get great reviews, can ship your product and keep a good margin.

 

So far, we’ve covered the S,C,A,L...

 

 

“E” Stands for “ECONOMICS:” The Most Important Thing

 

What are your dreams? Do you want to live in an expensive house, have vacation homes, drive expensive cars and take exotic vacations? If so, you need to determine if this business can sustain that lifestyle in the long term.  

 

Make a list of everything you want to buy with the profit you make from this business, and then run the numbers to make sure there is enough profit potential to support your goals. You need to look 3-5 years down the road, because it takes at least 24 months to get a business up and running—sometimes longer, depending on how your product or service meets the other “S.C.A.L.” criteria.

 

Know Your Numbers

Recently, an entrepreneur scheduled a call with me to discuss their sales challenges. But we also ended up talking about pricing: she said, “I think I’m going to charge X; what do you think?” and I replied, “I think you’re asking the wrong question.”  

 

The question is: how much do you need to charge to cover manufacturing, labor, all the things involved—plus achieve a healthy profit margin? If that number is higher than your competition, that’s ok, but you need to determine how you will justify the higher price.  For example, Coach sells factory-made purses but is able to charge a premium because their brand communicates “luxury” to consumers. 

 

How do you determine how much to charge? First, you need to understand what your profit will be from each sale. I am sure this sounds elementary, but many small business owners never take the time to crunch these numbers. You must slow down and take the time needed to dissect each and every penny—and how it will be spent. This undertaking will take some time, but it will be well worth it.  

 

How much does a website cost to build, manage, and run? Which tools do you use for social media, email marketing and public relations?  What hourly rate do your contractors charge? How much does your phone and internet services cost? Have you considered required books and certifications, industry events, and the cost of travel to acquire new clients or attend networking events? All these things can be estimated and tracked to help determine how much you are really making at the end of the day.  

 

 

Following the S.C.A.L.E method to success:

 

  1. S: So what? Who Cares?—Know the need your product serves, and learn who is likely to buy it.

  2. C: Competition—Who are your competitors, and who can enter your market easily?

  3. A: Availability—How available are all the pieces and parts that go into your product? How available are you, if you are your product, and how can you delegate to have more scalability?

  4. L: Location—Does your product or service have a local, regional, national or international market.

  5. E: Economics—Know your numbers. How much money do you want to make to live the life you want to live? How can you get there?

 

Follow these simple steps, and you will set yourself up for success.

 

 

This article was written in partnership with wiseHer - a technology platform that provides on-demand expert advice for small businesses and women to accelerate their business or career.  

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