Ask ESO: How and When Should I Scale My Startup?
Written by Cecilia Seiter
Startup founders and entrepreneurs often ask: how do I know when it’s time to scale my business?
The short answer is it depends. Making the decision to scale can only come after weighing several considerations, all of which vary depending on your individual circumstances, the current economic and competitive landscape, and your business goals. Here are a few general tips that we hope will inspire trust and give you the confidence to take the leap.
Scaling your startup: is now the time?
While there’s no one-size-fits-all formula, there are a few things to look out for before taking your business to the next level.
To start, determine your goal for this next chapter in your business. Growth can be qualified by a few different factors. Whether you’re hoping to expand your audience reach, increase revenue, or move to a larger retail space, your business can scale in multiple ways.
Once you’ve narrowed in on your vision, analyze your business performance. Growth requires momentum. Have you been building it? The following clues can be a sign it’s time to scale up.
Sales are growing. If you notice an increased demand for your products or services, it might be time to invest in expansion.
Demand exceeds capacity. Sole proprietors and small businesses should be especially aware of this—if you’re struggling to meet deadlines or need to turn down new clients regularly, it’s time to expand.
You’re ahead of the competition. Staying abreast of your competitors can be a sign that you’re already using the right technology, tools, and talent to support growth.
You’re experiencing steady customer acquisition and retention rates. Low customer churn rates indicate that people want what your business offers. If your customer base is growing organically, you’ve probably reached a good point for expansion.
Employees are seeking growth opportunities. Monitor your employees’ personal career aspirations and movements. If you notice employees seeking opportunities to take on more responsibility or higher-paying positions, scaling your company can be the right move to retain talent and provide them with expansion opportunities.
It’s also important to examine external business factors, including the economic conditions, the competitive landscape, and access to funding.
Strategies for scaling up
Consider the following strategies as you plan your approach to scaling. Balancing expansion with quality and customer satisfaction can be challenging, but it’s achievable—especially with guidance from a proven team of business leaders and entrepreneurs.
Here are a few key tips for scaling your business.
Automate. Free up the time and resources needed to scale by automating repetitive tasks such as accounting, inventory management, and customer service.
Extrapolate. The Harvard Business Review advises entrepreneurs not to overlook the “extrapolation” phase of scaling up—in other words, seeking out profitable scaling strategies. You can read more about extrapolation here.
Optimize existing revenue. It might be tempting to allocate resources towards expanding, but don’t overlook your current business needs as you scale. Sustainable growth comes from optimizing existing revenue and funneling resources into maintaining what customers have grown to expect from your offerings.
Invest in scalable infrastructure. Cloud and software-as-a-service (SaaS) tools are just a few examples of technologies that can support your business as it expands. These tools can help with things like task automation, customer platform management, and billing, for example.
Secure funding. Access to capital is a crucial component of scaling a business. If you’ve encountered barriers to traditional funding avenues, ESO Ventures can help. Our Capital in the Community Fund (CICF) is geared toward Black and Brown business owners ready to scale sustainably.
Is your business ready to scale? Get in touch with ESO’s business development experts and find out about our next incubators to get growing.
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