Business woman looks worried because of a business decision

Scaling your business is an exciting journey, the funniest thing in the world of business is that countless businesses are always very eager to expand, but it’s easy to fall into terrible business traps that can hinder growth, so learn from these common mistakes to ensure a smoother path to success. This blog post is the second of the Scaling Your Business series, in the first one Why You Should Scale Your Business: 21st Century Strategies for Success, Where we addressed everything about what it is and the advantages of deciding to scale your business. This blog post will explore the common mistakes to avoid when you are trying to scale your business, using candid examples to provide valuable insights. We aim to guide you through the scaling process and avoid the same missteps.

1. Scaling Too Fast:

When a business makes the mistake of scaling at the wrong time, it could lead to its downfall. Remember this quote from Guy Kawasaki: “I have never seen a company die because it didn’t scale fast enough. It’s best to focus on “Business Leverage” before considering “Scaling”. 

Scaling up too fast could mean increasing prices without considering the facts, opening more stores, hiring new employees, or getting new machines when the current ones haven’t been adequately utilised or the money used to purchase has been recovered. Though I understand the desire to capitalise on opportunities and maximise profits, it can lead to operational challenges, strained resources, and potential customer dissatisfaction.

The priority should be to create a sustainable and seamless business process, generating profits that cover your production costs of products/services and other expenses. If not, your business will go bankrupt. To attain profitability, get your pricing structure right because “Pricing goes up” with scaling. So, don’t “just raise your rates” as customers might not be willing to pay for that sudden price change; it’s better to have progressive business changes to let customers see they are getting more value and then change it. 

Customers Would Pay More If:

  • The solutions are well-tailored to fit their problems 
  • Your Customers have the cash at hand 
  • If the offers are enticing and quality 

How to fix it:

  • Leverage with your Haves: Before expanding, make the most of what you have, from working on your current services/products to maximising profits and customer relationships. 
  • Solve Real Problems: Find out what issues your business can solve effectively, find the problems at the top of your customer’s minds, and witness how your business will grow.  
  • Know Your Valuable Clients: You also want to ensure you always find ways to satisfy customers who value your services the most. “Identify and satisfy them”.  
  • Increase Value Before Scaling: Focus on increasing the value delivered to clients/customers before expanding operations. Introduce premium services, personalised offerings, or additional benefits.

After you have successfully increased your value and managed the outcome, you can approach scaling and price adjustments with better preparedness. 

2. Ignoring Market Research:

Businesses sometimes consider expansion without considering what the “Market” is saying and telling. With a comprehensive market, you get to see what your business is doing compared to other competitors and the consumer/customer preferences because its customers determine the market product’s popularity and demand. For instance, An e-commerce company expanded its operations into a new region without fully understanding the local market trends and consumer preferences, resulting in poor sales and significant financial losses.

Your Market Research will:

  • Help determine the type of Products/services to meet specific market demands.
  • Help you to understand the localised adaptations and how the customers within the region behave to your type of businesses so your offerings can be well tailored. 

How to Fix It: 

  • Conduct thorough market research 
  • Analyse consumer behaviour
  • Adapt strategies based on market insights.

3. Overlooking Financial Preparedness:

Deciding to Scale Up without knowing your numbers is a bad thing; the thing is, you don’t just wake up and decide to scale up. You need to know your financial numbers, including profit margins, sales conversions, taxes, trends, projections, etc. 

It would help if you didn’t depend solely on the former results for scaling because it could lead to severe repercussions. For example, a tech startup scaled rapidly without securing sufficient funding, eventually facing cash flow issues that impacted day-to-day operations and stifled further growth.

As your business expands, getting a CPA, financial advisor or consultant or fixing a one-time session, depending on your budget, is mandatory to help give you expert advice and help lessen the burden. Once your accounts are under control, you’ll have peace of mind and more time to focus on what you do best. 

4. Prioritising short-term over long-term goals:

Another area for improvement is focusing too much on the short term and disregarding the long term, and some businesses lose their focus when they overthink Scaling. 

In as much you are trying to focus on marketing, sales and money-making, the more you attain more sales, the short-term goals are ticked and the closer you should aim at achieving your long-term goals: ensuring Customer experience, satisfaction, and Minimum viable products, products/services offering, making customers 100% happy and from one-time customers to loyal buyers.

You should have a clear goal in mind when deciding to scale. 

5. Rapid Expansion Without Operational Infrastructure, Processes and Systems:

Scaling your business rapidly can be tempting, but it can lead to negative outcomes if you don’t have a robust operational infrastructure, detailed processes, and efficient systems. 

To avoid this, 

  • It’s crucial to structure a detailed plan and involve your employees and team members in decision-making. Before embarking on scaling activities, list the necessary operations, resources, and skills you’ll need. This will help you avoid straining your resources and ensure your scaling efforts succeed.  

6. Ignoring Customer Feedback and Adaptability:

It’s essential to pay attention to customer feedback and incorporate it into your business strategy. Neglecting this aspect may lead to a disconnect with your target audience. For instance, a software company that scales its product without considering user feedback may face customer dissatisfaction. Consequently, negative reviews may surge, damaging the company’s reputation. Therefore, gathering customer reviews and using this information to improve your product or service is crucial.

7. Neglecting Employee Training and Engagement:

Neglecting to train and engage employees during scaling can have a negative impact on performance and morale. It’s essential for employees to feel valued and trusted, especially during times of rapid change. Instead of trying to do everything yourself or mistrusting your team members, take the time to evaluate their strengths and weaknesses. This will help you determine the best course of action and how significant the scaling should be.

  • Investing in skill acquisition for your staff is crucial. For example, a retail brand that expanded its store locations provided adequate training to new staff, resulting in consistent customer service and increased customer satisfaction. 
  • Additionally, fostering a positive working environment and investing in social activities can help improve employee engagement and morale. Remember, “growth is never by mere chance; it is the result of forces working together.” – James Cash Penney.

8. Lack of Scalable Technology Infrastructure:

Neglecting the importance of having a scalable technology infrastructure can impede business processes, especially during expansion. Instead of sticking to outdated methods, it’s crucial to incorporate up-to-date digital tools to enhance workflow efficiency. Andrea Meyer suggests that by doing so, you can help your team feel more connected to your company. 

Imagine an e-commerce platform that hasn’t upgraded its website infrastructure, leading to frequent crashes, slow loading times, and losing potential customers. To avoid such a scenario, it’s essential to list out your daily workflow and identify the free or paid tools that can help your business operate more efficiently. 

By introducing these tools and encouraging your team to use them, you can help them work faster, be more productive, and increase their accountability. Therefore, consider taking advantage of digital tools to help your team stay connected and streamline your business operations.

9. Insufficient Risk Management:

It’s essential to anticipate and mitigate potential risks to ensure that the entire scaling process proceeds smoothly. For example, a manufacturing company expanded its production without a contingency plan for supply chain disruptions. Planning for unforeseen circumstances that may arise during the expansion process is crucial to avoid such situations.

10. Scaling a Business when your Product/Service still has Faults:

If you’re working on a product or service that is still under deep work and has flaws, it’s best not to rush into scaling it up. Instead, take the time to refine and improve your offering. Customers will appreciate seeing progress in the value they receive and will 4be more willing to pay for more. After all, no one wants to purchase a subpar product or service. For example, if you own a hair salon and your staff needs to improve their hairstyling skills, it would be unwise to consider expanding the business to a new location. Instead, concentrate on helping your TV with better-quality services. Once you’ve accomplished that, you can consider raising prices.

In conclusion, by avoiding these common mistakes, you can navigate the challenges of scaling your business more effectively. Stay focused, plan meticulously, and prioritise both customer satisfaction and employee engagement.