What is scaling in business? Scaling strategy for beginners

For many founders, it can be hard to know where to start when it comes to scaling their business. Focusing on sustainable scalability, avoiding burnout, balancing cash flow, all while managing the day-to-day operations of a growing business can be challenging.

Knowing when it’s the right time to scale – and understanding the difference between scaling and growth – will help you set your business up for success.

This article will give you the tools to create a business scaling strategy that prioritizes planning, process, people and profitability so you can scale sustainably and successfully.

What does it mean to scale a business?

To implement a scalable business model and strategy, it’s important to understand what scaling is and why it matters, especially for startups and online businesses looking to take their business to the next level.

Scaling vs. growing: What’s the difference?

While scaling and growing have a shared outcome of increasing a business’ impact and earnings, there are some key differences in how they achieve and maintain this result.

Growth tends to be a linear approach. Growth strategies center around increasing revenue through investment resources and expansion in operations. Growth could be entering new markets or adding a new product line.

In contrast, scaling focuses on optimizing existing processes and resources, seeking to improve efficiency so that the business sells more without expanding its operations or costs. The result is an increase in profitability.

Why scaling matters for online businesses and startups

For online businesses, scaling enables entrepreneurs and teams to achieve sustainable growth. Sustainable growth is the balance of increased demand at a pace that their processes can keep up with.

Having a robust business scaling strategy can minimize risks associated with growth-focused business models. Traditional business growth strategies often rely heavily on upfront investment and rapid expansion, posing a risk of diluting core company values or vision – or even degrading the quality of service to customers.

4 signs your business is ready to scale

Timing is everything when it comes to scaling. Doing it too soon can put your cash flow at risk, while doing it too late can stunt your growth opportunities.

As a founder, it’s important to recognize the signs that signify your business is ready to scale.

1. You’re meeting consistent demand

Balancing resources and the demand for your products or services is vital when starting a business. However, if you’ve noticed that you’re consistently meeting demand, you may have reached a point to consider scaling.

Try to spot the signs early. Don’t wait until you’re having to either turn away business or are struggling to keep up with demand. This can be detrimental in the formative years, when you want to build your brand awareness and positive reputation.

Instead, look for sustained demand over a period of time, where your resource and revenue have remained stable, or periodic seasonal fluctuations are predictable and consistent. This is the perfect time to consider scaling.

2. Your processes are repeatable and/or automated

Investing time in refining and optimizing your process in the early years of building a business can ensure that you work efficiently and effectively. A key focus on scaling is to optimize existing processes to increase productivity and profitability.

With a solid foundation in place, you may have already identified recurring tasks that can be automated or implemented standardization for repeatable tasks.

If you’re increasingly identifying processes that could become more standardized or automated, it may signify that you are at the point in your business journey to start investing in the next steps for scaling your business.

3. You have the right tech stack in place

The best way to leverage momentum and get the most out of your talented team is to ensure that you have the right technology in place. Investing in upgraded technology with increased capabilities and more features can help you reach new heights in your business.

Having the right tech already in place can help when it comes to scaling, as the foundations are set to keep processes and people connected, and allow for efficient communication between tools and team members.

One tip is to research the best SaaS tools for businesses.

4. You’ve established reliable and consistent income streams

While scaling looks to improve existing operations, there will often be some investment required.

To minimize disruption to your productivity and create a risk-averse scaling strategy, building up additional revenue streams can help you build up a level of cash flow without impacting your business-as-usual (BAU) functions.

Diversifying your income through passive income streams, like strategic affiliate partnerships or digital products, or expanding into complementary services like reseller hosting services, can help you build up funds to invest in your business scaling strategy without depleting your core revenue.

How to scale your business: a step-by-step guide

If your business is hitting the key milestones outlined above, now it’s time to start planning and implementing your business scaling strategy.

1. Define a scalable business model

Creating a scalable business model looks different to every entrepreneur or founder, depending on the type of business they run and their overall goals.

Defining what growth and success look like for you and your business can help you to mold a scalable business model that aligns with your desired outcomes, that allows your business to handle increased demand, and your team to manage increased workload while maintaining consistent cash flow and people satisfaction.

2. Standardize and automate core operations

Streamlining operations enables you to reallocate resources and refocus on the future, while the present takes care of itself.

Automating tasks that are pivotal to business operations, such as automated accounting or tax calculations, frees up business owners and their team members to focus on tasks that can stimulate creative problem-solving and profitable processes or products, creating a more rewarding environment for your business and people.

In a quest to standardize and automate, it can be tempting to invest in multiple platforms or services that, however, it’s important to avoid overcomplicating your tech stack. Instead, try to find tools that can integrate to increase efficiency and minimize repetition or discrepancies.

For example, many of the best CRM software for small businesses can connect your core business functions, like marketing, sales, and eCommerce teams on one platform.

3. Use data to make growth decisions

Using data from your CRM, ecommerce platform or accounting tools can help you to identify the areas that could be improved or invested in first in order to improve performance or efficiency.

Making data-driven decisions can help you hone your business scale strategy to maximize impact and define your growth goals.

By collecting data, you can accurately measure the results of the scaling optimizations or processes you’ve put in place, to evaluate impact and make continuous improvements to ensure your growth is sustainable.

4. Plan for international sales and tax compliance

Even if your early growth isn’t yet looking at international expansion, setting yourself up for cross-border ecommerce in your initial business scalability model means you are setting yourself up for long-term success.

It will eliminate the need for big, potentially disruptive changes further down the line, ensure you are agile and make proactive business decisions, ensuring your next big growth phase runs seamlessly and strategically.

Common pitfalls when scaling your business

Scaling failures often occur when businesses haven’t given enough attention to core business fundamentals and lose sight of company values and vision.

Expanding too fast, too soon

For ambitious entrepreneurs, it can be tempting to begin your scaling journey as soon as possible. However, if you don’t channel this momentum properly, scaling too early can cause instability that is hard to recover from, and it could have a detrimental impact on your business.

Expanding too soon can put a strain on your team and yourself, causing burnout and impacting productivity. Expanding too fast can put a strain on resources and create difficulty in maintaining the quality of your service or products, or impact your customers' experience.

Failing to manage cash flow

Cash flow planning is an important part of a business's growth strategy. Creating a robust forecast and projections can help you manage the money that is coming and going in your business.

Rapid growth can cause problems when this cash flow balance is tipped. Growing too quickly may mean your investment in new technology or people aren’t aligned with sales demand.

Putting in place a scalable business model will help you to protect your cash flow and properly plan your strategic next steps to create sustainable growth where your resources and revenue are balanced.

Overlooking compliance and tax obligations

When scaling a business, it’s important to maintain accurate financial records to ensure you are adhering to compliance and tax obligations. Prioritizing compliance and tax obligations will help you avoid large fines, potential lawsuits and reputational damage further down the line.

This is especially important if you’re looking to expand your reach and sales in new territories or states. Having a solid understanding of how sales tax works will allow you to put in place the proper procedures to comply with tax obligations correctly.

Losing focus on your core values and company vision

Ensuring that you keep your core values and company vision central to all your decisions can lead to more successful and sustained scaling. While your business can evolve, the values and vision should shine through, even when scaling.

Keeping your businesses’ integrity can be the differentiation between you and your competitors. For example, while automating tasks or certain services can help you to scale, relying too heavily on automation in customer service functions could negatively impact your customer experience. For startups, this can leave a lasting impact on your brand reputation that limits your growth opportunity.

Simply monitor your progress and check in with your team to ensure that your operations stay aligned with your core values and company vision.

Summary

By streamlining operations, optimizing your processes and keeping your values in sight, your business can enter the next stage of growth with profitability and purpose in mind.

If you’re ready to start automating part of your business, start with tax compliance. Quaderno is a tax compliance software that is designed to make selling at home and abroad as easy as possible – with automatic tax calculations around the world, alerts when your business has tax liabilities in a new place, and even a registration and filing service.

Try Quaderno for free and see how it helps your business.