We all want our business to grow, but as you’re watching it thrive, it can be hard knowing whether the situation is right. If you’re at this stage, you are following business trends, your customer base growing, and profit is being made, you might be wondering whether to take the next step. After all, this decision can be risky if not done at the right time and can lead the business to an unprofitable situation. On the other hand, there are big rewards on the other side. For this reason, you should look for these five signs that tell you it’s time to scale up your business.
To avoid cash flow mistakes, hiring the wrong people, or other scaling errors, it’s necessary to find the right moment. The following signs will let you know that your business is ready for the next level.
Is it time to take the next step?
Strong cash flow
Generating a profit is one thing, but a strong positive cash flow is an indicator that it might be time to expand your business. Cash flow is money that’s effectively going in and out of your business without pending payments. And here, the output of cash must be delayed while clients make payments as soon as possible.
With this type of cash flow, a business can afford all the costs incurred by the upscale. Scaling will increase the costs, usually before it’s possible to generate more revenue. This climate should allow you to prepare for any temporary unanticipated setbacks.
Another sign that your business is growing is if you don’t have enough space to support its growth. Luckily, a quick transfer to the new office with the help of movers can solve this issue. You don’t have to work in a hectic environment, as more space will provide you capacity for growth.
What’s perhaps more important is to make sure you have a proven concept and that your infrastructure is, overall, sturdy. Proper staffing is essential to achieving your goals. Everyone needs to understand the importance of their role and to have the same mission. If not, the risk of failure is much higher, as expansion can put a lot of stress on a team.
If your team is ready for a change of this kind, their attitude will show it. They’ll show motivation in participating in the company’s mission, and they will be proactive in their duties. If you’re confident that this is the case, you can consider this as a sign that it’s time to scale up your business.
Turning down clients
Turning down potential business because of a lack of employees or inventory indicates a strong market demand for your services. However, it’s also one of the indicators that it’s time to scale up your business.
When the demand is steady, and it’s outpacing your current capacities, you can either turn down business or choose to expand. As a strong customer base is an essential factor in a business’s longevity, accepting customers is the most natural choice. Over time, you will have a more extensive client network and also nurture a growing baseline. As rejections become inevitable, expansion is the next logical step.
But, keep in mind that knowing that it’s the right time to grow is not only about rejecting business opportunities because of success. It’s also about whether your business is stable and whether you’re using a proven model. If more clients have been showing interest in your services, you should consider reinforcing your infrastructure, start setting new goals, and preparing for scaling up.
Your customer base is important.
You might’ve found yourself in a situation where your pre-launch product marketing has given you outstanding results. If you’ve managed to exceed all your previous goals, you will usually not have enough data to forecast all the costs, revenues, and other events. These variables are needed to base your objectives upon.
When forecasting the future of a business, managers set goals using familiar statistics. If you have surpassed these goals, re-evaluation might be required, as well as scaling up. You can be satisfied with your business reaching goals, or you can make the most of it. With challenging yet realistic objectives, you can set your business up for success.
You know the regulations
When focusing on cash flow and revenue, you shouldn’t neglect the legal aspect of scaling up your business. While your business expands, the list of regulations with which the company should comply also increases. This relates to multiple fields, from laws concerning customers to employers and more. If you’re growing your business internationally, the situation might be even more complicated.
Doing your research regarding the regulatory issues is as important as other aspects on this list. You need to know that some sudden problem with compliance won’t stop your expansion.
Do legal research.
Adjust scaling up to the type of your business
To scale up your business and survive, you need to do it carefully. First of all, consider this option only when you’re ready. While everything is a risk in business, you shouldn’t take unnecessary gambles. The signs that it’s a time for scaling up might not be apparent at all times. Re-evaluate your decision, and make sure to adjust the process of scaling up to the nature of your business. Try to see how other similar companies managed to go through this. For example, if you have an online store and you’re ready to revamp it, check out the traffic statistics for an e-commerce website. Besides taking care of scaling up, you still need to manage and lead your business, so try to have this in mind every step of the way.