3 Things to Consider Before Scaling Your Business
Last week I was on a coaching call with one of my clients that owns a business. They've grown rapidly over the past year and he was looking at hiring and expanding office space. As the revenue increased, his natural instinct was to jump into growth mode. "We have to expand so we can take on more clients, right?" He asked me after mapping out his game plan. Truthfully this is a normal gut reaction. But as business owners it's important to approach growth carefully so you're not constantly trying to play catch-up. Let's say you bought a crate of newspapers to sell on the corner, and you sold out within an hour. What would your gut reaction likely be? Come back tomorrow with 5 crates, right? Sometimes this is the right response, but not always. We have to slow down and look at the data so you're not standing at the corner with 4 full crates at the end of the day.
Here are 3 things to consider before scaling:
1. What has your cash flow looked like the past 3-6 months? Has it been growing steadily or been up and down? If you didn't add any new revenue, could you sustain the growth? In my client's case, if they were to jump into a larger office space we'd want to see if they could afford it at their current state. If not, how long would it take for cash flow to sustain it? 2. What anomalies might exist in your growth numbers? Look at your growth for any factors that might have inflated or deflated the numbers. Using the newspaper example, was there something that might have inflated sales? What was the first page headline? Was there something going on in town that may have increased foot traffic? 3. What growing pains can you anticipate? As you navigate your growth, what hidden dangers lie ahead? How will you fund them? Back to my client: when looking at hiring a full-time staff member, we looked at the growing pains involved. How long will it take to train them? How many new clients/customers are needed to begin seeing the ROI on a new employee? When the growth train starts moving, we want to make sure we're driving and not running behind it just trying to hop on.
If you're trying to scale your business, you need a profit coach in your corner. Schedule a free coaching call now.