When your business is just starting out, you’re hanging on by a thread. With every new customer comes some new expense and, as your business grows, so does your overhead. Whether you are increasing your marketing budget, expanding your product offerings, hiring more employees, or moving into a larger space, the costs just seem to grow exponentially.
Evolution is the single greatest force in the Universe. It is the only thing that is permanent and it drives everything. It is good because it is the process of adaptation that generally moves things toward improvement. That includes not just your products and human capabilities but your business.
Like everything else in your business, there is no magic formula that can tell you exactly when is the right time to scale up. However, the following questions are a good guide to determine whether now is the best time for you to evolve.
Do You Have Enough Demand?
Business might be booming for you now but that doesn’t mean it will be sustainable going forward. One of the biggest challenges businesses face when scaling up is being able to attract enough customers and clients to support their growth. Don’t just base your direction off of emotions or assumptions.
When Adam first considered expanding he thought about Henry Street as the ideal location. He had the reputation for bagels, quality food and exceptional service and he felt that seven years after the coup, the city was still home to a large number of thriving businesses whose patronage he could count on. Adam’s thinking was: I’ve done it in Maraval, I can replicate it in Port of Spain. However, what actually happened didn’t match his assumptions. The bagel simply did not do well in Port of Spain. So Adam closed shop and returned to his Maraval location, focussing all his energies and efforts there.
Do You Have the Right Technology?
The largest technology challenge faced by businesses in the process of scaling is understanding changing technology needs and what products and services will meet those needs. The fear “you don’t know what you don’t know” can be incredibly daunting when it comes to figuring out the right technology for your business.
If you’re unsure where to start, consider hiring an internal IT employee who can help put the technological processes in place. If you aren’t quite ready to hire internally for that position, a managed service provider can be a very useful partner to lead you in the right direction.
Do You Know Your Customer’s Expectations?
In the early days Adam himself took orders by phone and delivered his bagels in person. “I really got to know people on those runs and the more they got to know me, the more business we did.”
When considering expansion, it is imperative that you keep your customers and their expectations top of mind. Your business should revolve around their wants and needs, not your wants and needs. Spend less time worrying about day-to-day logistics and more time on connecting and innovating with your customers. After all, your business wouldn’t exist without them!
Do You Have the Right Processes in Place?
Companies are taking shape in many different forms, from standard brick and mortar establishments to completely distributed work forces. It is essential no matter how you plan on scaling your business, you have documented systems in place to accommodate your company’s structure.
Do you actually have a documented plan to scale your business? If not, it’s essential you put one in place before you begin.
Do You Have the Right Team in Place?
Extraordinary service has been Adam’s primary strategy to keep people coming back to Adam’s Bagels. He insisted on a quality of caring so profound no one would ever forget the place. He also knew intuitively that none of it would work long term if his staff caught only occasional glimpses of how he treated the customers. That’s when he set out to provide radical customer service training involving his entire team including remembering customer’s names, and meal preferences and to always be on the lookout to wow them.
Rarely can businesses scale up without training their resident talent in some capacity.
“You’ll need to let go of some of your control and train and hire appropriate people to support you as your business grows.”
Are Your Finances in Order?
Cost is another major concern for small business owners who are planning to scale. Uncertainty comes with change, and to help ease your anxiety around changes within your business, it’s recommended that you have the proper guidance to create a financial plan to accommodate the immediate “what ifs” that may occur, to include projections and to simply see if your business can pay for business essentials moving forward.
Also always keep in mind that there is a direct relationship between great service and profits, something Adam didn’t initially appreciate until he started attending international food shows and seminars.
Make a note to remember this: the details pay off! Having ruled out expanding the restaurant geographically, Jackie George-Aboud (Adam’s wife) found ways to scale the business from within. She took a keen interest in what customers were asking for.
What got Adam’s attention was when he sat down to look at the numbers and saw the impact of the minute changes his wife was making. For example, in the past, they never labelled their items but with labels on items, sales jumped 10%. Lighting the display cases saw a 15% increase in sales.
Is Outside Financing Always Necessary?
Unless your business has sufficient retained earnings to cover the costs of an expansion, outside capital will be necessary to make growing your dream possible. If your business is on solid financial ground, and has a track record of loan repayment, it will be much easier to secure debt financing for your venture.
Initially when Adam considered expanding, his father offered his own property as collateral for the loan. Today, he has been able to fulfill a growth dream by significantly upgrading the restaurant with financing from Republic Bank, allowing the purchase of the adjoining property.
“Outside financing helps you quickly raise the cash needed to pay for equipment and cover anything else that you need to grow and expand.”
While there’s wide advice by some financial advisors to not borrow more money than you need, there is the real consideration of running out of money before your growth dream is realised and strong enough to stand on its own.
Recognise there is no straight line to growing your dream. Mistakes are a natural part to the evolutionary process. If you don’t mind being wrong on your way to being right you will learn a lot. If you don’t have a willingness to fail, you’re going to have to be very careful not to scale.
The key to any kind of evolution, is to fail, learn and improve quickly.