Challenges of scaling a business

caling a business is an overused term that many users donât really know what it means. You may think you are scaling your business because your customers are increasing and more people inquires about your business. Your business scales only when it has achieved cost effectiveness.

What do I mean? Ability to produce something at the least cost. In essence, if your customers are increasing and you are not able to meet their demands at the least possible cost then you are not scaling yet.

For a business to scale, you must be able to produce goods and services while keeping the operational cost low.

Scaling businesses tend to face a lot of diverse challenges. Deciding to scale your business can be both exciting and devastating. Because as a business grows, it is faced with different problems and opportunities that demand different and crucial solutions and approaches.

Scaling is an entirely different business environment, itâ?`s more than just entering an advanced revenue growth. The difference with scaling is that the game changes so fast and often affects everything, starting from your people to your system (they all tend to change and adapt). At this point, you need a core vision of where your company is headed and you need to know what your values are, what you will and wonât do to succeed. And as you bring in new employees, make sure everyone knows what your companyâ?`s core values are.

It is very important to recognize and overcome the common challenges associated with business growth and expansion in order to successfully scale-up and keep-up with the market. You need to ensure that the growth steps you take today will not themselves create additional problems for the business in the future. A good leadership management will help you make the most of

the opportunities through creating a sustainable level of growth for the future.

There are numerous challenges associated with scaling a business but we will be discussing the key points under the following subheading:

ð Management challenges

ð Financial challenges

ð System/Process challenges

ð Manpower challenges

ð Sales Challenges

MANAGEMENT CHALLENGES

Most times, management and leadership structure is overlooked during the scaling process Remember that scaling brings its own unexpected challenges and changes, and your management team alongside other departments have to be ready to adapt.

As the business scales up, the kind of management structure that worked well when you were small will definitely not work this time but be laid aside for a more defined and structured leadership and management style.

When scaling up, itâ?`s crucial to look at your leadership and management arrangement objectively ensuring that the team is fully aware of the potential issues and feels supported during the scaling period because this will keep them at alert for the new challenges that will need urgent resolving which they may spend most of their time brainstorming.

Having a structured management approach geared at creating and developing a strong management team and building a reliable business strategy. This helps you develop systems and structures that make it easier to handle in the

future

 

FINANCIAL CHALLENGES

As a business grows, financial constraint is one of the major challenges it faces because at this point it has exhausted the funding potential of the friends and family who put in the capital to get the business started. The challenges businesses encounter while scaling may range from inadequate budget allocations to excessive salaries or overhead expenditure.

Scale-up affects business finances in ways that is unexpected for example if more employees are needed, but the budget cannot accommodate additional salaries, growth is limited/restrained . As the business grows, it will need to employ new staff, procure more facilities or raw materials, increase supplies and develop new products and features, and all these require additional funds.

A good cash flow control is very important for any scaling business because the key element in business planning and assessing new opportunities is making the best use of your finances. The choice of asset based loans and invoice financing compared versus Venture Capital is about more than just the availability of funds.

One of the most important things you can do to protect yourself if you are scaling is to plan ahead because it helps you anticipate your financing needs and arrange suitable funding.

 

SYSTEM/PROCESS CHALLENGES

Another serious challenge of scaling is creating and maintaining the right systems that will meet your growth. At this point, responsibilities and tasks can be delegated to subordinates, but without strong management information systems you cannot manage effectively.

Putting the right process in place is a vital part of helping your business to grow, and

by employing extra services and support, you can reduce the workload for your employees, and allow them to focus their time accordingly. For this can ease overall stress and ensure the growth stage runs as smoothly as possible.

Nevertheless, investing in the right systems is an investment that will pay off both short and long term. You benefit every day from more effective and productive operations.

 

MANPOWER CHALLENGES

As the business grows and becomes more complex, you need to develop your time management skills and learn to focus on what's really important.

Thatâ?`s where hiring the right manpower comes in!

The abilities you need to take youâre your business to another level is not the one you will need to grow your business. Attracting and keeping the right people is very vital in any business that has the potentials to grow bigger because hiring one wrong person can cost more than just lost salary, youâll be facing loss of revenue as well as wasted recruitment and training time. If it is possible, get rid of the wrong people quickly and hire people who have scaled a business before and rely on their expertise, but remember that a strong culture fit and competence is most important.

You can as well decide to consider using outsourced or part time options initially or to train and develop your employees to ensure they stay committed and productive to the company

 

SALES CHALLENGES

While business leaders might intuitively recognize that many areas of the business change as the business scales, many fail to realize that this applies just as much

to the sales function. As a business scales up, some executives usually fail to expand and scale their sales teams accordingly.

However, up-selling and cross-selling are still more effective techniques than selling new business opportunities as your business grows. And while itâ?`s important to maintain a balance of prospecting and relationship management, also allocate time to check in with clients to ensure theyâre satisfied.

Selling today requires more resources and large quotas and that is why sales organizations must focus on building the selling skills that have the greatest business impact such as investing in maintaining and improving your teamâ?`s sales skills so as to stay in-tune with customer needs and be one step ahead of the competition.