February 22, 2024

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Business Life

Best Strategies To Use And Mistakes To Avoid

Dr. Michael Thiemann at Strategy-Lab™ is a bilingual Business Model Strategist, Key Note Speaker and Innovation & Agility Facilitator.

Today’s competition is fierce, and entrepreneurs must do everything they can to succeed. You might be sure that your products and services address client needs. Still, finding the proper strategy for scaling your business from small to a globally visible go-to authority is another topic. These scaling strategies differentiate a small business, a startup or a profitable organization.

Every globally successful company like Apple or Amazon began small. But they were actively scaled after their launch. Certain factors play a vital role in how those organizations grew and became successful. Besides others, which I will show later, here are the primary elements:

• A product that solves a big customer problem

• Customers perceive the offer/result as valuable

• The customer gets the product at the right time

• Many people around the world have the same problem

• The gross margin is high

• No frictions between the elements of your business model to hinder scaling

Scaling a business has always been challenging, and learning from failures can sometimes be expensive concerning time, money and frustration. Most big companies I have coached and consulted run through this fail-forward cycle. Nonetheless, these learned experiences and wisdom allow me to give you better advice on executing scalability techniques, which I am happy to share. Additionally, today’s digital connectedness to your target customers worldwide reduces your effort to implement these strategies.

I will give you some tips and thoughts so that you can scale your business quicker and avoid common mistakes. You can benefit from the experiences I’ve gained as a corporate finance banker, strategy consultant, investor and C-level executive so that you can create sustainable growth through successful scaling strategies.

What is scaling a business?

Scalability is the ability of a company to increase its qualitatively constant output or revenue without the input resources or costs increasing to the same extent. Ideally, even the expenses remain almost constant. This is the case, for example, with software that can be copied virtually free of charge as often as desired and sold online.

From the point of view of the business model, you need sufficient customer potential that can be developed in a scalable and timely manner through an attractive offering via the right customer channels. To ensure this on the production side, the input resources must be procurable or available in a scalable manner. But the processes must also be able to serve the additional demand potential without further investment. So there must be no friction between the elements of the business model.

Technology in recent years has made the idea of scalability easier even for small businesses. For example, customers can be reached worldwide via the internet; they have become accustomed to buying even high-value products and services online, and processes can be systematized and automatized relatively inexpensively, even for small companies. For example, think of software as a service, platform as a service, robotic process automation/robotic service automation or even AI solutions related to big data, the internet of things and blockchain.

What is growth vs. scaling?

Technically, growth refers to an increase in output or revenue, while scaling refers to increasing output or revenue without increasing input resources or production costs at the same pace.

Let’s say you are a management consulting firm that has signed a contract with a new client. If your staff is already involved in other projects, you can only handle the new client by adding staff. This is called growth.

However, if your current team can provide all the additional consulting services to the new client without hiring additional staff, this is called scaling.

Why scale up your business?

Here are some reasons why scaling should be of immense interest to you as well.

Cost-effective technology allows easy global access to your target customers so that you can take advantage of your market share globally. Low costs for systematization and automation of processes allow you to gain a competitive advantage over your competitors and secure your business model and niche.

In order to achieve this position, these prerequisites are required above all.

When is the right time to scale your business?

If you have a repeatable sales model and your processes, systems and input resources can be increased smoothly without suffering jumps in costs, your profit margin can remain attractive. Revenue growth should be higher than the increase in costs, and the profit margin should at least remain stable.

It would be best if you also asked yourself the following questions:

• Is there enough demand for your product or service?

• Are your model and profit margins attractive to investors?

• Are you updated with the latest tech reforms?

• Have you considered current trends that impact your customer expectations?

• Are all your business model elements working harmoniously together?

• Do you have the right team of stakeholders in place?

With all that in mind, what can small businesses or coaches, in particular, do to scale their business?

1. Build an impressive skill set through a diverse team.

Building a remarkable skill set through a diverse team allows you to define the right product, systematize and automate processes and help your customers with your offer at the right time via the best channel.

2. Build the right ecosystem.

The best way is to build a widespread ecosystem with all stakeholders, potential partners/supporters and the public.

Use social media to become globally visible as a go-to authority through valuable content. Networking and collaboration help in this context, as you can potentiate your visibility.

3. Invest in knowledge and technology.

Technology is cost-effective today, and with the right knowledge, you can systematize your processes and achieve high profit margins. In doing so, automate as many processes as possible to increase time to delivery, production scale and quality without increasing costs. But don’t make the mistake of neglecting your relationship with your customers in the process. Engage directly with your customers in a human-centric way to increase your brand’s perceived customer value and trust. Customers have emotions, and they are not just numbers in your scaling efforts.

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