Ready to scale up your business?
Are you interested in scaling up your business? In my conversations with business owners, there will be some who have seen their businesses become profitable and sustainable and want to expand and scale up their business operations.
That is to say that once a business reaches a certain level of profitability, the business is ready for expansion. Or put another way, if you are reaching near or are at full capacity, it’s time to think of scaling up. You can also be thinking of scaling up if you have found an investor to invest in your business or you have partnered with an advisor and wish to apply for a Government grant to further develop your business.
How to scale up?
So, what do you do when you want to scale up? Well, the first option is that you can do more of what you are doing now. For example, if you are producing 40 units of your products/services currently, you scale up by producing 800 or 1,000 units from now on. Of course, you will need more resources to do this and grow organically.
Alternatively, you may want to produce other products but in the same product line. If you are making handphones, for example, you may want to produce cheaper or more expensive models compared to your current one. If you offer a particular service, consider offering a different service but in the same or related niche of your current one.
Or, you may want to offer products/services in a different line altogether. Using the example of handphones: you may want to start a new line by producing notebooks, or hard disks which share similar resources that allow for economies of scale.
Similarly, you may want to start completely different services/products in another industry/niche. This is like starting a completely new business since you have to do everything differently.
As you can see, there are many ways of scaling up. And once you decide how to scale up, you next look at your resources. The principle is value creation is made possible because of your resources and what you do to turn those resources into products/services that your customers want.
Building & reinforcing your foundation to scale up
What resources are needed for organic business expansion? There are several things to look at here. The resources will include people and things within your organization and outside your organization.
Have your finances in order
As far as resources go, most will recognize the importance of financial resources. Financial resources are enablers. We will not discuss financing here since it is a specialised service.
Review & evaluate your supply chain
Just as important are the resources in your Supply Chain. As you scale up, your need for resources goes up and you have to ensure that it is uninterrupted or you face significant disruption to your operations.
The consideration here is how much of your supply chain should be a part of your organization or should be outsourced. This is an important strategic decision.
This is not just a matter of costs, important though this is. The strategic considerations are, are your competitors likely to have similar supply chains and do they overlap. Moreover, the fact that you can swallow up parts of your own supply chain also means that elements of your supply chain can cannibalize your business. Therefore, think through this carefully especially with a trusted advisor.
Employ the right manpower
Another aspect of your resources that you should consider is that of manpower. This has to do with the skills and abilities you need to create value. Here’s where your processes have to be streamlined so that operations may be maintained irrespective of who the skilled manpower is. In short, your processes must be duplicable besides being effective and efficient.
Have and use the right technology
A closely related area is the use of technology that is so pervasive in all aspects of a business operations strategy. While technology will increase your costs, it can likewise make you more efficient and productive.
Stay focused on the customer
Value creation is always about the customer, and scaling operations must always take that as the focus of everything you should be doing. You don’t scale up a product or product line only to find that that is not what the market wants. That’s a pure disaster because you have invested in the resources and with no demand, that’s a sunk cost.
So, even before you scale your operations, do your due diligence with market research to determine that demand is indeed present before you invest in accumulating and building resources. Once you are certain that your scaling operations and value creation are meeting specific needs and are sustainable, then you go full steam ahead in stepwise fashion.
Make sure there is demand
Among the places you should look to ascertain your demand are your own existing customers as well as potential customers according to demographics. Segment your potential customer in as many ways as you can and determine demand. Then use the results to target a specific segment for a start.
Reviewing your resources and planning to secure your supply chain is part of the process of external alignment. Your value creation must be aligned to real conditions in the external world with regards to competition, exploitation of resources, and entry to the market you want.
Be internally aligned
Equally important is that your organization has to be internally aligned so that the value you create and are implementing can be efficient and cost-effective.
This means that your organization must be united and march as one body towards your vision, mission, and goals. Hence, it is crucial that your leadership team and key people “walk the walk and talk the talk.” And with you as the leader align the rest of your organization to the vision, mission, and goals to which you have committed yourself.
Therefore the people you have recruited, and their personalities and behaviours must be harmonious with that. Additionally, the talent that you are seeking to keep your business sustainable must be similarly aligned so that your organization will be on target to achieve the ideals and goals you are striving for.
With more people to do the work, organizing into Systems is therefore necessary and important. Your organization design has to be functionally designed around your value creation process a with the strategic values and goals you are seeking. This important organization design work will ensure that the motivation and behaviour of your people will be channelled into serving organizational purpose and goals.
Closely related to organization structure are your processes which are your means of value creation. Your objective here is to implement agility especially with the application of technology. This is perhaps an area that a lot of SMEs are struggling with and lead to unnecessary costs.
Plan & Track
With all this in mind, you now need a strategic plan to implement to ensure that these intentions are executed consistently and steadily throughout your organization. Then you will achieve your objectives while remaining true to your vision and the values that power it. More importantly, you need a means of monitoring and tracking progress at all levels and in all departments.
For this, many organizations now use a tracking tool such as the Balanced Scorecard where the tracking can be implemented throughout the organization right down to the most basic work unit. Doing this is an art and requires discipline from your organization. An impartial outsider may be able to ensure that this happens.
Get external help
If you are getting a little confused, no worries. This is just a quick summary of the steps needed to transform from a small team to a complex organization. Depending on your product/service, the scaling up can be a complex affair and with so many issues demanding your attention; you need the collaboration and cooperation of capable professionals.
Talk to Dr Douglas Kong about scaling up your business.
Schedule a one-to-one withDr Douglas Kong to discuss how best to scale up your business. Together, he will help you identify where you are in terms of readiness to sale up and what steps are needed to take the first step. Isn’t it time you fast-track your business?