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When’s the Best Time to Scale Your Small Business?

It’s tough to know when to take the next step up with your small business. It’s especially challenging because small businesses feel so personal. They’re an expression of yourself. Bringing in other people can feel uncomfortable or risky.

To add to the challenge, many of us started our own businesses as small side projects. We never really expected them to take off into full-fledged businesses.

At first, you’re doing freebies for your friends and family to gain experience (and to figure out if this is really what you want to be spending your life doing). Then, you’re gradually raising your rates as you gain experience and bring in more and more customers to your business. You learn a little bit about marketing. You start honing your craft.

But at some point, whether you’re a wedding photographer or a web designer, your business will reach a plateau. That’s because at some point, you can’t reasonably raise your rates anymore, and you can’t physically put more work hours into a week.

At that point, if you want your business to keep growing, it may be time to scale. And scaling could come in many forms. It could be:

  • Hiring a team
  • Expanding to other verticals or channels
  • Taking on bigger clients
  • Creating products to sell at scale

The list goes on. But how do you know if it’s the right time to scale your business?

Spoiler alert: It depends. Each and every business and life situation is different. That said, here are some factors to consider as to whether or not you’re ready to grow your business.

When you’ve proven your concept

When you’re first growing your business, it’s not a guarantee that you’re going to be successful. To some people, that idea comes naturally. Other people can’t possibly envision failure. That doesn’t have to be a scary thing. It just has to be something you acknowledge.

The reason I bring that up is because you have to be confident your business model works as a core concept before you can invest time and money into expansion.

For example, I’m a web designer. There are a million-and-one web designers out there, so having a successful web design business unfortunately isn’t as simple as saying, “I’m going to be a web designer.” I needed a unique concept.

At first, I offered all kinds of marketing services: brochures, billboards, social media, email marketing, websites.

Ultimately, I honed in on what I loved and decided to take the route of creating and selling Showit website templates for coaches and creative business owners who want high-converting websites with lots of personality.

My concept worked, and I’ve been able to scale my business by building more templates and dedicating time to marketing my business through social media, a podcast, my website, and my blog.

The key takeaway here is that I had to figure out what I wanted to do as a business, and then prove that people actually wanted the business I was offering.

When you’re in high demand

The most obvious sign that it’s time for you to start scaling up is when you’re in high demand.

If you’re starting to turn down potential opportunities because you can’t take on any more work, you’re missing out on potential growth.

Diversifying and growing your customer base will bring your business more stability and profitability long term, so being over capacity is the first signal that it may be the right time to start scaling up.

That said, more opportunities aren’t always good opportunities. Make sure you’re focusing on the demand for the work you actually want and you’re best at delivering.

For example, if you’re a photographer that shoots weddings because you have to, you may not want to scale your business just because you’re booking tons of weddings.

Keep working at finding the work you love until you take steps to expand your business.

When business is consistent

Just because business is booming now doesn’t mean business is guaranteed forever. If you do decide to scale by bringing in more team members, remember that you’re on the hook for their paychecks and livelihoods. Therefore, you need to make sure you have consistent revenue.

So how can you track consistency?

If you’re not already doing it, start tracking your revenue on a month-by-month basis. How much difference is there between your best months and your worst months? Ask yourself honestly what would happen to your business if you had several “worst months” in a row.

If you’re seeing consistent monthly revenue, it’s a good sign it’s time to scale. Consistent revenue is awesome on the surface because there’s less risk of things going downhill, but it’s also a sign that you’re not growing as much as you could be.

You’ve likely capped out the top of your business unless you find a way to scale.

When you’re surpassing your original goals

Most entrepreneurs are ambitious! You wouldn’t have struck out on your own if you didn’t have big goals for yourself.

A sign that it’s the right time to scale your business is if you’ve already achieved your initial goals. For example, your initial goal may have been to earn enough money to be able to reliably employ yourself full-time so you could quit your soulless 9-to-5.

But once you’ve achieved that, what comes next?

If you feel like you’re already gone above and beyond your initial expectations for yourself, it’s time to set your sights higher. It may be time to scale!

When you can afford to invest in yourself

You need to spend money to make money, right?

Up to a certain point, you can grow your business organically without too much of a financial investment. You may need to buy equipment like a fancy camera or computer, but for the most part, costs are fairly low up front.

Scaling your business often requires more financial backing. For example, hiring staff is going to require paying their salaries, insurance, collaboration tools, and more. That may require getting financing from the bank or an investor.

Or perhaps you just want to go all-in on marketing for the first time to fill up your pipeline for the year. That means paying for a website, advertising, and social media content. It’s easy to spend money inefficiently in these areas if you’re trying to do everything at a discount—especially when it comes to your website.

Or maybe your version of scaling your business is making the jump from part-time to full-time entrepreneur. In that case, you should feel confident that you have enough of a financial runway that you’re able to survive for your first few months in the event that you don’t earn as much business as you expected.

Just make sure you’re comfortable enough financially so that you’re not taking on more risk (and more stress!) than necessary.

When it’s slow season

This may sound like the opposite advice from my previous sections. But hear me out.

As a service-based business owner, when client inquiries slow down, it can certainly be discouraging. However, you should take the slow season as an opportunity to grow big.

Last fall, when I hit a slower season, I spent my time improving my marketing, reaching out to potential clients, and creating focused content on my blog. My hard work resulted in me booking out my calendar five months in advance!

So don’t be afraid of the slow season—it’s often the best time to scale your business.

When you have reliable processes and technology

Another way to scale your business is to become more efficient with your time. You can become more efficient by developing reliable sales and business processes.

For example, you can use HoneyBook’s client management software for small businesses to handle clients, create online contracts and online invoices, automate your follow-up emails, track project statuses, and more.

Automating these time-consuming activities allows you to spend more time making money and less time chasing new contracts and payments.

And once you have these reliable processes in place, it makes it much easier to onboard new people into your company. If you’re manually handling contracts and payments, it becomes increasingly challenging to keep things in order as you add more employees.

When you can reliably scale yourself

The biggest challenge for creatives when it comes to scaling their businesses is nearly always the challenge of scaling yourself.

You’re the face of the business—people trust you. It’s your eye for design, or your skill behind the camera, or your wordsmithery that’s earned you your reputation.

How can you possibly translate that skill to a bigger team? It’s not easy, but it’s possible.

The truth is that it’s all about hiring the right people. You can’t bring in a designer that matches your skills 1:1, but you can bring in a hard-working, talented person with whom you can collaborate effectively.

It’s not as hard to sell clients on this model as you think, even if you have a well-known personal brand. You can make the sale through your personal brand and then assure your client that your team all shares your vision and talent. And you can assure them that you provide a final eye on every project.

When it feels right

Ultimately, you’ll know when it’s time to scale your business. And it’s perfectly acceptable not to. You may be happy humming along at your current pace.

But if you are ready, you’ll know it. You’ll be ready to take the next step in your entrepreneurship journey.

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