Strategies for scaling your business model
As we've mentioned, any business model can be scalable, but not every business is scalable. Some businesses have finite resources, and there's nothing wrong with that. But if you want a scalable business, you'll need to create a plan for how you'll scale and what happens when there's an increase in demand for your products or services.
Once you have a plan in place, you can start finding ways to scale your business. First, of course, you should always determine whether you're ready to scale. Yes, having more sales is great, but you could quickly lose momentum if you don't have enough products in stock.
If you're ready to scale your business and have the necessary infrastructure and resources in place, you can follow these strategies for growth:
Increase your customer base
To scale a business, you must increase revenue. The only way to increase your revenue is to grow your customer base. There are several ways to do this, and the method you choose will ultimately depend on your business strategy. For instance, if you want to increase your customer base quickly, you can offer a limited-time deal or decrease your prices to attract more customers.
Of course, price decreases aren't always the right way to go for all businesses. How you increase your customer base depends on several factors that can impact your overall business structure, so it's worth considering the best way to increase the number of customers you have without decreasing the quality of your product or services.
Expand your product/service offerings
Expanding your product and service offerings is one of the best ways to scale because it means you can do more. For example, a marketing agency might increase its service offerings to attract more customers and, in turn, sell more.
Meanwhile, another business might charge more for premium products or services. For instance, software companies might offer a free or low-cost solution for their product. Once customers realize they need the product, they'll pay more for premium features.
Another scalable business idea is an eCommerce company. Regardless of what you sell, expanding your product offerings can help you attract new customers and increase revenue, as long as you have the infrastructure in place to handle this type of growth, which means having increased warehouse space for inventory.
Enter new markets
Expanding into new markets can help you attract more customers, giving you more opportunities to sell. For instance, Tesla expanded into the home energy storage industry. As you already know, Tesla makes electric vehicles. However, by entering an adjacent market, they were able to increase sales while entering a multi-billion dollar industry using its existing technology to create a new product for a different market.
Of course, there are also businesses that entered new markets and abandoned their old ones. The makeup brand Avon was originally a book company with the same direct-selling business model. However, they expanded their offerings to personal care products using the same selling technique and abandoned books altogether.
These two businesses prove that entering new markets can help you scale your business by attracting similar but new customers or finding a completely new market using the same strategies to increase profits and sales.
Diversify your revenue streams
Giving your business multiple ways to earn money can mitigate risk. An eCommerce company depends on customers purchasing its products and coming back for more. Unfortunately, consumers can be distracted by the next big thing and follow trends that prevent them from coming back to your business.
The best way we've seen an eCommerce business combat this is by offering subscriptions. Nowadays, you can get subscriptions for everything from your coffee to beauty products and more. In addition, diversifying your revenue streams can help you predict your revenue easily over time because you know how many people are signed up and exactly what they're paying every month.
There are many ways to diversify your revenue streams, from adding subscriptions to taking your business online and offering online courses. How you choose to do it will depend on your overall business model. For instance, a personal trainer might offer online training courses, while a brick-and-mortar shop may start selling products online.
Franchise your business model
Franchising your business model is a great way to increase profits without necessarily spending more. Instead, you'll create a successful business and set it up in a way that others can do it, too. For example, you can open a successful ice cream shop and make other business owners want to do the same. However, as a franchise, you'll need to provide them with resources, products, and overall support to ensure a franchisee's success.
Franchising your business can help ensure you capture the market before anyone else can by growing your business across the nation without having to purchase buildings yourself. Instead, you'll have financial leverage and human resources that allow you to compete with larger corporations since franchisees assume most of the business responsibilities.
Common mistakes to avoid when building a scalable business model
Creating a scalable business model means increasing revenue while keeping costs low. Unfortunately, it's not a good option for every business or business owner. If you have a business idea, your main priority might not be to determine whether it's scalable; that might not even be your ultimate goal.
However, creating a scalable business model from the beginning can ensure you're set up for growth when it happens. Here are common mistakes to avoid when building your scalable business model:
Failing to identify your target market
Every successful business knows who its target market is, allowing them to effectively market and advertise to them. Unfortunately, failing to identify your target market means you'll end up spending more on marketing than you need to.
A shotgun marketing approach is never effective and can leave you with higher customer acquisition costs that prevent scalability.
Neglecting to develop repeatable processes
Automation is crucial for scalable businesses because it saves time while increasing efficiency. But even if your business doesn't use automation, you must have repeatable processes. If you're the baker we talked about earlier making cookies from their kitchen without a recipe, your process isn't repeatable. Instead, you'll have cookies that taste great, but they don't all taste the same.
If your baking business grows, you may have to hire employees to help you bake, but since there's no recipe, no cookie will taste the same. Additionally, your employees won't be able to repeat your process, so your customers won't get the same quality product each time.
Overextending resources too quickly
Overextending resources too quickly can mean anything from spending more on marketing to increase awareness of a new product to overworking your employees. Both of these things can be detrimental to your business.
For instance, overworking your employees because you simply don't have the cash to hire more can lead to mistakes at work that impact the success of your business. Meanwhile, spending too much money during periods of growth that may not last can leave you strapped for cash when you actually need it.
Focusing too much on short-term success
Many businesses have periods of increased success. For example, your business might go viral at any time if it attracts the right consumers. One minute you can be viral on social media, and the next it seems like your customers have forgotten you.
Short-term success can help you set the foundation for a scalable business, helping you determine what you need to do and learn from your mistakes. However, focusing too much on short-term success instead of long-term growth can hurt your revenue. You won't be viral forever, so you must have a plan in place for attracting more customers to help you scale your business.
Don't ignore the importance of culture
Scaling your business also means hiring top talent and being flexible. Your employees are the lifeblood of your business, and without them, you wouldn't be able to process and fulfill orders, maintain a website, or provide customer support.
All your resources, from your workers to the tools you use, are essential to your business's growth. Mailchimp can help you take your business to the next level with a suite of marketing tools designed to help you scale your business and increase profits.