There always comes a time when a small business owner, or for that matter, any entrepreneur asks – “what next?” From my own personal experience, I can tell you that the answer to that question more often than not is, “let me see how I can scale up my business.” This holds especially true if you have survived the first year after setting up a small business.
With the Indian economy expanding rapidly and getting more competitive each day, it is only natural that many a small business owner would be tempted to expand their venture – call it survival instinct kicking in. Scaling up a small business is about increasing your current levels of production or services.
It means you will be more aggressive with your marketing and will also need to follow through on higher levels of deliverables. It would most likely involve spending more resources and working harder.
I suggest that you ask yourself some extremely critical questions before jumping in to expand and only to find your business in a tricky position.
How do you want to expand?
You know you want to expand, but ask yourself just how. Will you be scaling up in terms of the products and services you are offering or would you be looking at completely new geographies?
You will need to carefully assess new markets and also address how you are going to meet the demands of new consumers. As a small entrepreneur, it is important to not bite off more than you can chew – new geography does have to mean a completely different global location, it could even just be a different locality within the same city.
Understand just how much you can expand given the current state of affairs for your business.
Where will you get the funding from?
If you are liquid or profitable enough to fund your own growth, then reinvest into your small business. Another way to finance your expansion would be to pitch for investment from angel investors and venture capitalists.
Loans from banks are an option worth analyzing, as long as you find a good deal in terms of interest rates and the duration of the loan. The one factor working in your advantage when looking for outside financial support is the track record that you have already build for your venture.
Should I partner with a third party?
Try to strike mutually beneficial partnerships. For instance, if I were in the business of photography, I would look at collaborating with event management companies. Your partners can help expand your business in markets that you never would have considered before, and likewise, you can do the same for your partners.
How about trying a different medium?
If you own a business that solely operates online, then you could try to establish a brick and mortar presence. This can attract more customers and pave the way for expanding your scale of operations. Alternatively, one of the easiest ways to make your business globally known is to establish an online presence.
Set up an official website with e-commerce facilities where visitors to your site can order products and services. This apart, try and expand the areas that you can deliver your products and services to. Consider offering international shipping to your consumers.
What is the risk involved?
Expanding your business in a lot ways is like starting a new business – the only difference is that, this time around you have a foundation in place. Aspects like SWOT (strengths, weaknesses, opportunities & threats), PEST (political, economic, social & technological) and risk analysis will need to be carried out.
The onus is on you to thoroughly understand the new markets that you are about to dip your feet into. Analyze if the risks that you are taking would pay off in the long term.
Can my current infrastructure support me?
This is another crucial aspect that you need to address the very instant you start thinking about scaling up your small business. Does your business infrastructure need an upgrade or does it need to expand? You may need bigger office space, additional space for storage or even a bigger parking lot! When you address this question, think about your IT or technology infrastructure.
Try out some suitable new software that can simplify processes as your business gets more complex. My advice – shift your business process to the cloud as much as you can right now!
Do I hire or outsource?
As your business grows, the need for specialists such as IT specialists, accounts and HR professionals will also grow. Do you plan on hiring these specialists to work in-house or does hiring the services of consulting professionals make sense for you? When you outsource specialist services, draw up good contracts that include strong confidentiality clauses.
Hope the above questions help you to get on the right track with your plans for scaling up. Here’s wishing that more small businesses meet success and expand their business in 2013.