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You must have come across multiple fixed costs or non-negotiable costs that you must pay for your business. No matter your firm has zero employees or hundred employees, or whether you have monthly revenue of 50 thousand or 5 thousand; the cost remains the same of these expenses.
Every small business is looking to increase their profits whereas the startups are looking for ways to attract investors. The main goal here is to make money which you are probably thinking of right now. How do you make more money without spending too much?
This is the question that confuses most businesses. Unfortunately, this here isn’t the challenge. The myths involved while scaling a business makes it much more of a challenge.
We will discuss the 5 myths every business should know before scaling so you understand them and make necessary amends if needed.
Myth 1. Scaling a company costs a lot of money
Many people believe scaling and growing are the same things, however, there is one key difference.
While growing, you invest in resources to get more returns or sales. Whereas, while scaling, you take actions to increase your revenue without investing in further resources, allowing you to boost the cash flow and profitability of your business.
For scaling a business, you must have a product or service that can be offered to consumers without investing in further resources.
There are lots of scalable products and services to consider. You can create a smartphone app or an online course that can be purchased by the people. EBay is the biggest example of a marketplace which is another form of scalable business.
Look into your business figure and find out what you can offer to your clients without requiring further investment in resources.
Myth 2. Explosive growth is impossible
This is a self-limiting belief that can hold your business and you back. Many entrepreneurs around the world have made unimaginable growth for their businesses.
It is not about the idea, but the strategy you will implement and being prepared for the worst.
Rapid growth does not mean growth in 2 to 5 years, Google was founded in 1998 and it took them years to get where they are today. Amazon was founded in 1994 and it took more than 5 years to become number 1.
Every business faces a time when it falls short and has slow sales, don’t lose hope if your business faces that time. Just remember not to over commit when you get a period of high sales and high revenue. Develop strategies that allow you to reach customers without committing too much in the resources.
Myth 3. Cash Flow problems can be solved with Growth
This myth is widely believed by the people. What they do not understand is that cash flow problems are more because of your budgeting rather than your revenue. If you are making profits and your sales are slow, it will cause problems for you in your cash flow at some time. Growth can increase these problems if not planned properly.
Cash flow shows how much cash moves in and out of your business. If you make a cash flow forecast and compare it to the actuals, it can really help you with the growth. However, this cash flow should also account to the time period when the product or service was into developmental phase.
Growth alone may not solve your cash flow problem but proper financial planning just might do.
Myth 4. Complexity is involved when scaling a business
Scaling a business is not complex. In fact, there are more chances of you succeeding if simple strategies are implemented. Complex strategies are hard to follow and can make you lose the sight of your aim or you goal.
Try writing a lean plan that can help you help you scale your business. Short plan will ensure only relevant points are made and there will be less or no chances of you losing the sight of your goal.
Another way of keeping a simple strategy is automation. This will not only cut down the time taken to complete a job but will also aid you with sales and finding quality leads for your business. Automation can even help you cut down your monthly expenses of salary but will involve a onetime huge investment.
Myth 5. Hire as many talents as you can
I know this may sound stupid at first but hiring the right person for the right job will give you a long term benefit. Sure this will increase your costs in shorter run but this will also make the labor turnover rate low which can be useful for scaling a business.
They key here is to get quality over quantity. Hire people who share your vision and can help you achieve it. Provide your handpicked best employees the adequate amount of resources and benefits so they can provide more to your business goals, and stay motivated throughout the business boosting process.
Employees are the backbone of any business and can make or break any firm. Hiring quality will ensure productivity and commitment of employees towards the business.
Much business scale without investing in too many resources. You can do the same with right planning.
Do not let any of these myths stop you from scaling your business. You should work smarter, and hire the right team to achieve scalability and increasing your business profits keeping business costs low.
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