If you're thinking of ways to scale your business, congratulations!
You've already pushed past many of the uncertainties of launching a startup. You're not entirely in the clear, however; scaling a business carries its own set of challenges that must be addressed.
Cincinnati's startup community boasts various founders and programs that provide entrepreneurs with firsthand experience in scaling businesses. The University of Cincinnati's 1819 Innovation Hub, a startup incubator and one of the region's premier corporate crossroads, nurtures companies through all growth stages. Even if your business isn't near Cincinnati, our team will provide five questions to ask before and as you scale a startup.
Every entrepreneur should set up a working business model before launching a startup. Don't rely on your initial business plan forever, though. As your company expands and attracts new customers, you'll need a viable model that stretches years ahead.
As the owner of a growing business, your priorities change. You're often no longer working "in" the business but more so working "on" it. For example, marketing strategies evolve over time from acquiring to building a customer base, expanding sales and identifying underserved markets. Also, consider your company's revenue versus expenses to determine whether you can scale according to plan.
It takes a steady stream of cash to scale a business effectively. Customer acquisition, staffing needs, production equipment, workspaces and unanticipated expenses are just a few of the costs that will likely arise.
"Cash flow has been, is and always will be king," Matthews said. "Focus on a sustainable funding strategy that matches your growth objective. Small business scaling is typically debt-oriented, self-funded or obtained via traditional sources such as bank loans. High-growth-potential ventures rely on equity investment from angel investors and venture capital firms."
The critical question here is how your business infrastructure will evolve as your venture grows. In this sense, infrastructure can include two key areas: staffing and equipment needs. Staffing is critical to providing a positive customer experience.
Similarly, underinvesting in technology and equipment can also cause customer experience to slip. Websites, software systems and customer support lines are a few places where you should spend money to benefit consumers.
Consider the scope of your product or service's appeal. That is, ask whether your product has a broad potential audience or serves a niche market. Be realistic and understand that scalability doesn't reflect your good or service's inherent value - it's simply looking at the likely value and market appeal.
"I don't know the secret to success, but I know the formula for failure: trying to be all things to all people," Matthews said. "Always remember to ask two questions. First, 'Who are your customers?' The second isn't always asked: 'Who is not your customer?' Both are equally important."
If you lack a future vision for your business, don't even consider scaling. Flesh out your company's financial targets, potential markets, customer demand and marketing strategy early on to provide a game plan before issues arise.
"Small business scaling prioritizes gradual, sustainable growth with a focus on profitability and stability while high-growth-potential venture scaling seeks rapid growth via higher-risk strategies, sometimes delaying profitability to capture market share and attract investor interest," Matthews said. "Each approach is viable as it aligns with different end goals of local market dominance versus creating a potentially disruptive, scalable venture attractive to outside investors."
Scaling a business comes with risks, but many can be mitigated by crafting a strategy to address these questions. Startup founders at UC's 1819 Innovation Hub gain scaling insights at the Venture Lab business pre-accelerator, discover how to streamline functions at the Learning Lab and learn about patenting through Tech Transfer.
No matter your business' stage or trajectory, it's wise to ask questions before making big decisions. Scaling your startup is a huge step, so resolve any potential roadblocks ahead of time to set yourself up for success.
Featured image at top: Businessperson taking notes next to a laptop. Photo/Adobe Stock
