After you’ve launched your business and things have been going well for a while, it’s time to focus on growing it and making it sustainable long-term. The best way to do this is to scale your business. Scaling is basically multiplying the number of clients or customers you have so that your revenue increases (without a huge increase in your workload).
Once you’ve decided that you’re ready to scale your business, you should start thinking about all the elements that you need to have in place in order to scale. This includes taking care of yourself, protecting your business, and avoiding burnout as you go through the scaling process.
Here are 5 important things to consider and ways to protect yourself as you scale your business.
Get Your Finances in Place
Make Sure You’re Profitable
Before you even think about starting to scale your business, it’s crucial to make sure that you’re profitable. I highly recommend reading the “Profit First” book by Mike Michaelowicz and following his directions on how to set up your business so that you’re prioritizing profit.
Remember that profit is your total revenue minus expenses. The expenses of running an online business can be substantial (even though it’s one of the most affordable types of businesses out there). Even if you’re pulling in a lot of revenue, you still need to make sure that your take-home profit is actually where it needs to be (i.e. at least enough so you can pay your bills, if not more), and consistent over a long period of time.
Also, keep in mind that a really important part of scaling is making sure that you’re scaling the RIGHT offerings. So if your offerings aren’t proven to generate a consistent profit, that’s a big red flag. You need to make sure that you have a proven concept first before you scale. You also want to make sure that your scalable offerings are already bringing in a decent profit.
If you try to scale before you’re consistently profitable, you could run into trouble. Scaling can have some expenses attached to it. It’s important that you’re in a super good place financially before you attempt to put all your efforts towards scaling.
Build a Healthy Savings Account
You’re also definitely going to want to make sure that you have some savings in place. If you’ve been following the Profit First system for a bit, you probably already have some savings in place or are on your way to having decent savings.
If you don’t already have some savings or you haven’t started following Profit First yet, I would definitely recommend reading that book ASAP. And if you follow his directions, you should be able to quickly develop a healthy savings account.
Why You Need to Save
Having at least some funds in your savings account is crucial, for two reasons.
First, that savings account serves as your emergency fund. It’s a safety precaution. If anything happens to go wrong in your business those savings can really come in handy. This also can protect you during low revenue months. Just make sure that you only use it when you absolutely need to.
Scaling may bring some additional expenditures (at least in the beginning) that you will need to spend money on. If you’ve built up your savings before you start to scale, you can use that money to help you through this process.
Usually, there’s a little bit of an upfront cost to begin to scale your business, or maybe you’re doing something more long-term, like growing your team. It’s important to make sure that you have money saved up to be able to pay for those expenses.
Through the scaling process, you should eventually get to a point where you will be able to recoup these savings. Keep that in the back of your mind. That’s really the whole point, isn’t it? You should not have to keep continually dipping into your savings. It’s good to have it there to help in the beginning, but eventually, scaling should start basically paying for itself and then it should start bringing in even more revenue!
Paying Your Team Members
If you are at all considering growing a team or adding more team members, having at least some savings is really important. Even if you don’t plan on making any large purchases or investments during the scaling process. You need to be able to pay your team members no matter what!
If your scaling doesn’t go exactly as planned and your revenue dips down one month…you don’t want to run into a problem. And you can’t really know exactly what’s going to happen with your finances until you’re deep into it.
I definitely recommend saving up, even just a little bit, before building up your team during the scaling process.
Pay Off Any Debt
Debt is, sometimes, unavoidable. Student loans and mortgages aren’t going away anytime soon. However, I would highly recommend making sure that you’re mostly debt-free before you focus on scaling your business.
If you have credit card debt or a business loan, it’s my opinion (although I am not a financial expert!) that all of your extra profit should go towards paying that off first before you start putting those dollars towards investing in your business, scaling, and/or growing a team.
It’s important that your business is in a really solid place financially before you scale your business. If things are rocky or you have debt that you need to repay, focus on doing that first. Once you’re debt-free (for the most part — again, I’m not suggesting you pay off your house before you scale), you’ll be in a MUCH better position to scale.
Get Your Numbers On Lock
If you’re unsure about what the heck is going on with your numbers, this is the time to get it all sorted out.
One of the first types of employees I recommend hiring if you’re thinking of building a team is a bookkeeper (I use Kristen Foster from Lighthouse Business Services) and/or a CPA (I use Melissa Whaley and highly recommend her!).
This is the time to make sure your finances are completely sorted out. You should know your numbers backwards and forwards. You should know exactly what your quarterly estimated tax payments are. Likewise, you should be paying them on time every quarter.
If that doesn’t sound like you, I recommend spending some time getting your finances in order before you start to scale your business.
Like I said previously, scaling can require some investments or additional expenses, so it’s important that you have and understand things like your monthly Profit & Loss statements, your budget, and your financial goals.
Scaling also involves things like making sure your individual offerings are at a healthy profit margin (this varies depending on your business model and the types of services you offer).
If you don’t have your overall numbers in place, it’s likely that you don’t have more specific numbers in place either. Having BOTH set up is an important piece of scaling. You need to make sure you’re focusing in the right areas and that your offerings are performing as expected.
Get Your Legal Ducks in a Row
Consider Hiring a Lawyer
If you’re thinking of scaling your business, it’s time to invest in a lawyer you can count on. They don’t have to be a full-time employee, but someone you can use when you need to deal with legal documents.
If you’re about to scale your business, it may be time to think about switching from a sole prop to an LLC or an S-Corp. There are some requirements you need to meet before adjusting your business type. A lawyer can help you identify when it’s time to switch, what you should switch to, and can even help you through the switching process. You may want to loop in your CPA on this. If you’re switching to filing as an S-Corp, this will affect your taxes.
My lawyer also takes care of all of the mail that comes in for my business from the government (we set it up so that it gets sent to his office). And any random paperwork that needs to be filed, he handles, too! It’s seriously a huge weight off my shoulders.
My lawyer also helped us out when we added my husband as a co-owner of the business, and he even set up some wills for us, too! (If you’re over 25 and don’t have a will yet, you need to do this!)
If you are considering hiring a lawyer, I highly recommend choosing a local lawyer who specializes in small businesses. Because laws differ wildly depending on what state or country you’re in, you need someone that knows your specific location’s rules.
Other Legal Stuff You Should Set Up
There are some additional legal things you can put in place yourself that you don’t necessarily need a lawyer’s help with.
As you start to scale your business, these legal elements become more and more important. When you’re just getting started out, it’s not crucial that you follow every single little rule or law out there. There’s a lot of them. But as you become bigger and get more popular, it becomes more and more important.
Firstly, pretty much all online businesses need to make sure they’re complying with GDPR guidelines.
GDPR (General Data Protection Regulation) is the new set of rules to give the citizens of the EU more control over their personal data.
GDPR compliance means that organizations and companies online have to make sure that personal data is gathered legally and under strict conditions. They also have to protect personal data from misuse and exploitation. They have to respect the rights of the data owners. If businesses don’t comply with the new regulations, they will be faced with penalties.
- Free Disclaimer Generator: https://www.websitepolicies.com/disclaimer-generator
- Free Terms & Conditions Generator: https://www.termsandconditionsgenerator.com/
Your lawyer may or may not be able to generate some contracts for you (if you want them to). But because contract law doesn’t really vary from location to location (within the same country), you don’t have to use a local lawyer for creating your contracts.
Especially as your business grows, you’ll want to have a couple of different types of contracts, including client contracts, joint collaboration contracts, and contracts for your team members.
Another great option is The Contract Shop, which provides iron-clad contract templates a la carte.
Return & Refund Policies
It’s also important to make sure that you have return/refund policies in place.
As you’re scaling your business, you’re going to start to have more and more clients and customers purchasing your offerings. The likelihood that someone is going to request a refund or want to return something becomes higher and higher.
Having these types of policies in place will help avoid any issues you may run into. You can add them to your checkout pages or inside of your client contracts for easy reference.
As you scale your business customer service becomes an extremely important part of your business. The bigger your audience is and the more clients and students you have, the more customer service you’re going to need.
They’re going to have questions and tech issues. It’s inevitable. I suggest hiring a customer service VA for your team, even if it’s just for a couple of hours a week.
Before you hire for this position, you should make sure to have some SOPs for customer service in place. Whoever you hire will need templates, too, so they can be on-brand and sound like you.
Start a FAQ document and record some videos of how you fix common problems. Stock up a library of customer service SOPs and templates for your team member to watch, so they can easily figure out exactly how to handle delicate situations and any problems that arise.
Pay Attention to Your Quality of Work
You want to protect your client work as you’re scaling. You’ll want to monitor their overall happiness, your turnaround time, and your quality of work. Especially if you’re bringing on subcontractors to help with the client work.
For the first few weeks or months, you may have to review your team members’ work to make sure it’s up to your standards. Give your team members time to get used to how you work and what your expectations are.
Never send something to a client without personally looking at it first, especially if it’s from a newer team member. Eventually, you can put some processes into place so you don’t have to look at every little thing, but it’s really important to do this when you’re first growing your team.
Keep Your Sanity
Also, as you’re scaling remember to take care of yourself too.
Set Boundaries for Yourself and Your Clients
Don’t overwork. Set the hours you want to work each day. Be clear on when you will answer emails, too.
Know how you will spend your time at the beginning of your business and set your ideal goals for the future. This will give you direction when making decisions as you scale your business. You’ll know if you should take on another client or not or another project. You want to protect your time.
Be Prepared for Emergencies
As you scale your business and grow a team, be sure to have a plan if anyone has to miss work for a long period of time. Have SOPs in place so someone else can take their place while they’re gone.
Plan ahead before you scale. Don’t let your business depend on any one or two people specifically to keep it running smoothly. Put systems into place and use automation where you can.
You’ve worked hard and have come to the point where you can scale your business. It can be challenging as well as rewarding. You can start to see your goals and dreams come to fruition. Be sure to take care of yourself and your time as you grow your business. If you don’t, it could all fall apart. Don’t take that chance. Follow these 5 tips to help you as you scale.