What to Consider When Scaling Your Business Model

What You Should Keep in Mind When Deciding to Grow Your Business

Regardless of your background in business or what you are offering consumers, beginning a new business is a very risky venture. Statistics show that almost 90 percent of all start-ups fail, and of those 90 percent, roughly three out of four companies failed because they decided to scale up too quickly or too soon. While this may seem like a bleak outlook, the good news is that premature business scaling is completely preventable. Here are some things to keep in mind when scaling your business model.

Consider the State of Your Industry Over the Next Few Years

The state of your industry has a lot more to do with your business’s success than you may believe. Before scaling your business model, consider what the state of the industry may be over the next three, five, or even ten years. Will the industry be able to support the growth of your business? Will you be able to see some profit before the product or service you are offering becomes obsolete? These, among others, are important questions you need to ask yourself before beginning your business growth.

Make Sure Every Aspect of Your Business is Scalable

Many small business owners believe that scaling their business is as simple as acquiring more customers and more sales while still using their same business operations. It is important to keep in mind that true scaling usually involves several overhauls of both your business’s internal and external operations. Do you have recruitment processes in place to hire more employees to support the demand? Will the technology your business currently uses support a higher workload of increased transactions, accounts, and customers? Scaling your business is more than just selling more of what you are offering.

Think About Your Businesses Culture

When you scale your business, you will often have to hire more employees in order to support the larger operation. Many small business owners are used to working in small groups, usually less than ten employees, and often do not understand how the business culture and dynamic will change with a larger group of employees working together toward a common goal. When your business begins to grow, focusing on your company’s culture will become very important.

Some questions you may want to consider include: “What is your company’s culture now?” “What kind of culture do you want your business to have?” “How will you focus on, manage, and grow the company culture you desire?” By documenting best practices and guidelines from others, it will be possible to grow and nurture a culture that will work for your business as well as helping to formalize your strategic ideals, company mission, and other aspects of your growing business.

Keep Short Term and Long Term Goals in Balance

An important part of beginning and sustaining growth is making sure your goals are in balance. Investing in new technology, and/or a new business infrastructure is a short term goal that can help to lead to longer term growth. But, working toward a long term goal will likely put the shorter term goals on hold. It is important to keep the long term impacts to your business and the short term achievements toward traction is vital for business growth and can often be more of an art than a science.

The Difference Between Project and Product Development

Despite similarly sounding names, there are huge differences between project and product development. These two concepts are often confused with one another that sometimes even experienced people in the field find it difficult to tell the difference. So, if you plan on hiring a developer for product or project development, it is imperative for you to conceptualize the difference between the two.

This is mainly because the process of selecting the right IT Company during development is of great importance. Therefore, if you make a mistake and hire the wrong company, it will directly result in the wastage of your efforts, time and money. That’s why in today’s article, you will learn more about the main differences between project and product development.

Project Development

The process of project development is usually carried out by a professional project manager who works closely with a product manager to create a successful product. However, please note that project managers are not a part of development process, but they are involved in the pre-development process. In simpler words, a project is a temporary endeavor undertaken to create a unique service or process that is developed by an organization for its own operational requirements.

Therefore, the process has nothing to do with product development, despite the fact it provides valuable information on what type of product has to be created. Additionally, a project is developed only for handling specific applications of an organization where look and feel of a product doesn’t matter, just the idea does. It is when a company wants to optimize its processes, but doesn’t want to waste money on purchase a ready-made tool that may or may not meet the exact requirements.

Product Development

Product development, also known as the ‘Stage-Gate’ process is when a product manager collaborates with other teams in order to ‘develop’ new innovations. Developing a product means creating something that a company intends to sell and generate revenues afterwards. It is strictly related to business and focuses on a wide range of consumer needs, wants and requirements. In fact, it has a whole life-cycle consisting of multiple stages.

The process begins right from the very conceptualization of the idea to developing all the architecture, drawings, designs of the products and then converting them into real, workable and sellable products. However, developing a product requires strong support and the assistance of professional product designers and industrial designers. Regardless, the entire process is carried out to develop a product with the intention of selling it in the marketplace to represent the image of a company.

Project Development vs. Product Development

  • In project development, less maintenance is required, but product development requires high maintenance, strong support, and good financial resources.
  • The development of a project requires long term testing, whereas project development involves limited tested.
  • In project development, features and requirements are important, but the feel and look don’t carry much significance. However, product development is all about the look, feel and user-experience of a product.

  • Product development is for selling and revenue generation where as project development is for a company’s own operational requirements.
  • Product development is an ongoing investment that involves adding new features, but project development is only a onetime investment.

So, now that you are familiar with the factors mentioned above, determining the difference between project and product development won’t be a problem.

How To Find and Size Up Good Businesses for Sale

Purchasing existing businesses for sale from someone who is looking to cash out of their business or retire is a great way to become an entrepreneur! You buy an already-proven and profitable business, and then use your skills and acumen to grow it further. However, finding owners who want to sell is not always easy. Consider this your guide for finding and sizing up good businesses to buy.

Business Opportunities Rarely Advertised

Most business sales are rarely known, largely because companies do not want the word getting around to their employees and customers, who might panic about the change. Instead, most business owners looking to sell are left with no choice but to wait patiently for a quality buyer, or use a broker to market their deals.

Call-Mail-Call

Often small business lawyers may know of a client who wishes to sell, however, it is typically best to focus on a particular industry and just contact owners directly. To do this, simply start calling business owners in your target industry, and ask if they know somebody who might be interested in selling their business. Often it helps to not expect an immediate answer, but instead give them some time to think about it.

Instead, follow up after a week or two by mailing your business card along with an inquiry letter. Lastly, call again to see if they have any ideas. This strategy communicates the fact that you are a serious buyer. Even if the owners you speak to are not willing to sell, they usually know someone who is.

Trade Newsletters

If the above strategy is not your cup of tea, or does not bring you quality leads, another thing you might try our trade newsletters or industry magazines. Often these will have classified ads for business owners in the industry looking to exit. These can be a great way to help you build leads in a particular industry.

Business Magazines

Business publications, both those dealing with a particular region and particular industries, also have listings or even write ups of business owners who may be reaching retirement age. Many business owners in this stage of life want to retire, yet are unable to because they do not know what they will do with their business. You could be just the answer, by giving them a way to keep their legacy alive, but leave more time for golf and grandkids.

Build Your Team

Finally, one of the best ways to both find deals and evaluate opportunities, is to surround yourself with a network of business professionals who can provide resources or advice. These should be investment bankers, lenders, business brokers, and venture capitalists. This way, not only will you be guaranteed to find a business to buy, but you will have a team of advisors in your pocket who can help guide the way.