5 Handy Things To Note About Scaling Up Your Business
Consider These Helpful Tips Before Taking Your Company to the Next Level
Congratulations, your business has gotten off the ground and you are thinking about expanding operations and increasing your profits. Before you take the momentous leap, there are a few important things to consider. This article will share some invaluable tips on how to predict realistic growth and foresee challenges before they hinder your progress.
1. The Art of Negotation
If you are dealing with investors to accelerate your upcoming expansion, approach the negotiation table with prudence. The first and most important lesson to be learned is the “Art of Saying No”.
While it may seem ‘right’ to accede wholeheartedly to an investor’s requests, practice caution when evaluating the needs of the business against the objectives of the incoming stakeholder. Clearly identifying the investor’s goals places you in a suitable position to compromise, as much as is necessary, while remaining firm to the business principles that have brought you success thus far.
Above all else, remember to show respect and understanding for the other party in all negotiations. Framing the negotiation around mutual interests, rather than yours alone, helps both sides maintain a positive, productive approach to the union.
2. The ‘Nitty Gritty’ Things Add Up
Seemingly minor expenses have the unwelcome tendency to add up and saddle the business with a hefty bill to clear. Keep a close watch on these, including minor business expenses, petty cash expenditure, late invoices, unpaid fees and staff expense claims.
Planning ahead on a quarterly basis will help you keep a tight rein on the company’s finances, anticipating the smaller upcoming expenses before they pop up and ensuring that your company’s finances stay in the black.
On the occasion that the little expenses add up and overwhelm the company coffers (and they will!), maintain a rational outlook and take positive lessons from the experience. Taking careful note of the trigger points and resulting outlays will help you prevent a repeat occurrence and maintain the CFO’s blood pressure levels!
3. Plan Your Finances
In line with the previous point that discusses the ideal approach to ‘smaller’ business expenses, maintain a keen grip on your overall finances and stay on top of the comings and goings in your books.
Keeping track of where your finances are headed will allow you to make an educated assessment of the type and amount of investment you will need to take the business to the next level.
In fact, Martin Senn, the CEO of Davinci Virtual Office Solutions, says it is beneficial to “bootstrap (self-fund) your business for as long as possible. Early venture capital or angel investments can be very distracting for the person that runs the business, and you’ll give up equity at lower valuations than later when the business matures”.
Incoming investments may seem a welcome headache for most business owners seeking rapid expansion, but all business decisions should be carefully evaluated and rooted in hard numbers instead of emotional desires.
4. Do Your Homework: The Ins and Outs of Tax
While you may have successfully navigated the myriad tax-related regulatory requirements and guidelines for a small business, ascending to a larger corporate presence will undoubtedly be accompanied by a new set of taxation requirements.
Take all the time you need to learn about the regulatory guidelines surrounding the expanded business, engaging the services of a trusted tax advisor who is familiar with companies of similar stature.
International expansion should also be undertaken with requisite caution, as each country’s tax regulations are different. Falling foul of these guidelines would mean a premature end to your expansion efforts, so rope in a trusted local partner or undertake copious amounts of income tax-related research and planning before setting up shop in a foreign land.
5. Recruitment & Training May Take Longer Than You Think
Scaling up operations will almost certainly require an increase in company headcount. Since your budget may not be commensurate with prevailing market rates, finding good talent with the right experience and a willingness to accept a lower pay cheque may be near impossible.
As a result, most companies in an expansion phase resort to hiring inexperienced staff to get more ‘hands on deck’.
Tim Soulo, the Head of Marketing of Ahrefs, shares that “it will take quite a bit of time to teach these people all the things you want them to handle, so the sooner you hire them - the sooner they will reach the level you’re looking for.” As the old Chinese proverb says: ”The best time to plant a tree was 20 years ago. The second best time is now.”
Business expansion represents a lucrative endeavour for entrepreneurs, if potential pitfalls are anticipated and managed ahead of time. The tips listed above will help business owners evaluate their options and prepare themselves for the challenges that may present themselves, leading to greater returns and an increased likelihood of success. Good luck!
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