There has never been a time like the present to start or run your own business. And don’t Americans know it.

A 2015 study conducted by the Global Entrepreneurship Monitor found that America is home to 27 million entrepreneurs. That’s 27 million people starting or running new businesses.

Put simply, roughly 14% of working-age Americans are self-employed. These figures are likely to rise as more people use technology to start and grow new businesses.

However, the start-up revolution isn’t without its challenges, especially for entrepreneurs looking to grow their operations.

The Art of Scaling

Entrepreneurship has long been the lifeblood of the U.S. economy. Self-employed individuals are brimming with ideas about how to transform our world. But they also appear to be struggling to transform those ideas into successful companies.

That’s the conclusion researchers from the Massachusetts Institute of Technology (MIT) reached in a 2016 policy brief on the state of entrepreneurship in America.

“To the extent that the current state of American entrepreneurship is facing a crisis, it is not in the rate of creation of high-growth potential startups or even in the initial funding of those firms, but instead in the potential of those firms to scale in a meaningful way over time,” the authors said.

Business scalability – the ability to change in size and scale – continues to be a major barrier for entrepreneurs looking to grow. Knowing how quickly, and in what capacity, to expand an existing business can have profound implications on its long-term success.

Five Ways to Scale Up Your Small Business

Scalability is important because it allows businesses to adapt to a larger workload without compromising quality or losing revenue. But to pull it off, you need to avoid doing it too quickly.

Research shows that three-quarters of small business failures can be attributed to premature scaling, or growing before you are ready.

Below are five ways you can scale up your business smoothly and without losing revenue. These methods should be employed by any entrepreneur who is afraid of biting off more than they can chew. Some of these have been adapted from a great article by Neil Patel of Inc.com.

Put simply, roughly 14% of working-age Americans are self-employed. These figures are likely to rise as more people use technology to start and grow new businesses. However, the start-up revolution isn’t without its challenges.

The Art of Scaling

Entrepreneurship has long been the lifeblood of the U.S. economy. Self-employed individuals are brimming with ideas about how to transform our world. But they also appear to be struggling to transform those ideas into successful companies.

That’s the conclusion researchers from the Massachusetts Institute of Technology (MIT) reached in a 2016 policy brief on the state of entrepreneurship in America.

“To the extent that the current state of American entrepreneurship is facing a crisis, it is not in the rate of creation of high-growth potential startups or even in the initial funding of those firms, but instead in the potential of those firms to scale in a meaningful way over time,” the authors said.

Business scalability – the ability to change in size and scale – continues to be a major barrier for entrepreneurs looking to grow. An inability to build your business to scale can have profound effects on long-term success.

Five Ways to Scale Up Your Small Business

After initial success, entrepreneurs need to start thinking about scaling up their business. This will allow them to adapt to a larger workload without compromising quality or losing revenue. You also want to avoid doing this too quickly.

Research shows that three-quarters of small business failures can be attributed to premature scaling, or growing before you are ready. If you want to avoid this, consider reading the following five tips on scaling your business. Some of these tips have been adapted from a great article by Neil Patel of Inc.com.

 

1. Understand the Basics of Your Business

Before you even consider increasing your capacity, make sure your business fundamentals line up. This includes understanding your market and your core customer. You should already know the marketing channels with the biggest ROI, and have the funding required to move your business to the next level.

Red Door Capital is committed to helping small businesses grow. If you’re in the market for additional funding, read about our Growth & Expansion services and contact us today.

2. Commit to Grow, Build the Process

It goes without saying that business expansion is a deliberate process. However, many entrepreneurs lack the will or motivation to grow their business. That was the key message of a recent report from Barclays on entrepreneurship in the U.K.

But committing to grow isn’t enough. You need to establish a standardized process that can guide you in how to manage the process.

3. Automate Your Business

In 21st century business, scalability isn’t possible without technology. That means automating as much as your business as possible.

Don’t worry – automation doesn’t require advanced computing knowledge. There are lots of easy-to-use platforms and software services that can automate everything from marketing to accounts receivable. Read Ten Ways to Automate Your Small Business for Maximum Efficiency to learn more.

4. Increase Your Marketing Channels

Both paid and social media marketing can help you gain exposure and convert more potential customers. If cost is a concern, consider building your social media presence first. Then hire freelancers who can contribute top-notch copy and marketing content to get people’s attention.

5. Hiring and Retention

Understandably, hiring and retaining staff is one of the most intimidating aspects of scaling up. After all, human resources are expensive and time consuming, especially if the people you hire don’t quite pan out.

At some point, you won’t be able to grow without building collaboration and hiring people. But as we mentioned above, hiring isn’t what it used to be. Feel free to leverage freelancing channels like Upwork or Toptal, and make sure you fully exploit automation tools before you bring on new staff.

 

Scalability is one of the most critical aspects to growing a successful business. Red Door Capital helps entrepreneurs and small business owners access the funding channels they need to expand their operations. Check out our solutions page to learn how we can help you finance the next phase of your expansion.

Sources

Neil Patel. “7 Ways to Prepare Your Startup to Scale Up.” Inc.

Philip Salter (May 2, 2016). “The Six Steps To Scaling A Business.” Forbes.

Jeffrey Sparshott (March 7, 2016). “The Crisis in American Entrepreneurship.” The Wall Street Journal.

Startup Genome. Startup Genome Report Extra on Premature Scaling.