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Scaling from Mid-Sized to Large: What Does It Take?

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How does an SMB stop being an SMB? What does it take to cross that hurdle from mid-sized business to larger enterprise? Some companies grow organically over time, while others have strategic, aggressive processes in place for growth. It all depends on your company's core strategies regarding scaling and your long-term goals.

Pay Attention to the Fundamentals of Your Business

Your company's fundamentals are its foundation, whereas fundamentals refers to your income and expense picture, your balance sheet, and your outlook and forecasting. Regardless of the strategy that you use for scale, it's important that your business be strong already. Scaling is not the solution to instability, much like purchasing a larger home isn't the solution for over-budgeting.

Scaling is one of the most dangerous times for a company, and if your business is already weak, scaling upwards could be a disaster. Improve upon and monitor the profit and loss of your business and review your trends. Only after a business owner has achieved stability should they usually consider scaling, though there is a notable exception to this: businesses such as peer-to-peer services that rely upon saturation for their viability.

Conduct Risk-Related Audits to Identify Potential Roadblocks

Before you begin to scale, have consultants examine your company and its books, and present to you the potential risks for your scaling. It may be that your market saturation is already high, that your demographic isn't in the area you're expanding into, or any number of other issues — such as not being able to acquire supplies and equipment to scale.

A risk-related audit will help you prepare and explore potential issues. It doesn't mean that these risks will ruin your plans for expansion, just that you should know about them in advance. 

Improve Upon Your Company's Credit and Relationships

Your company may need to fall back on credit and business relationships, in the event that it doesn't have the liquidity to continue scaling. Emergencies can happen to any business, but with a solid credit score and good banking relationships, you may be able to acquire lines of credit or loans in order to weather the storm. Always be prepared to need more, without planning to use more. 

Review Your Balance Sheet for Potential Deficits and Risks

A company's balance sheet and general ledger will tell the story of its potential deficits and risks. If a company is very in debt, then scaling may be riskier than normal: if these debts are called in, or if the company isn't as profitable as it expects, then the debts could become an anchor weighing the company down. In general, scaling is best done when debts are minimal, even if some debt is healthy for a business to hold. 

Remain as Liquid and Agile as Possible During Scaling

Most businesses shut down due to a lack of liquid funding. Even if a company may have assets, if these assets aren't liquid, then the company isn't as agile as it could be. Before you scale upwards, you should make sure that you have access to liquid funding, even if that funding isn't necessarily cash inside of your company's operating account.

Acquire Financial and Legal Consultants

Larger companies have entirely different concerns than smaller companies, especially in terms of accounting and legal help. Hiring a financial and legal consultant can be beneficial to any business that is interested in scaling upwards, as it will give them the opportunity to identify any potential issues in their books or their business processes. Many small businesses may be doing things that  a large enterprise simply can't. 

Build Up Your Company Culture

Company culture is a more important part of a company's strength than is often acknowledged. Your company culture is what tells your employees what they should prioritize and emphasize, even if they aren't getting immediate direction. Building a strong company culture will aid in guiding your employees, especially during hectic times such as scaling upwards. Without a solid company culture, employees may end up frustrated and adrift during the process of scaling. 

Have Backup, Contingency, and Disaster Preparedness Plans

Creating a successful business isn't about avoiding risk. It's about mitigating it. Disasters and emergencies will happen, but you may be able to plan ahead so that they don't have a significant impact. Create plans for your "worst case" scenarios when scaling your business upwards; with enough thought and time, you can turn most potential negatives into positives. 

Make It Possible to Scale Backwards as Needed

What happens when a national chain overestimates demand? Stores are shut down, but the business continues. It's important that a business have the ability to scale downwards if needed, because a business doesn't always know what's coming next. Even if you have all of your other information accurate, a sudden downturn in the economy could lead to scaling back by necessity.

Don't Be Afraid to Move Forward

No business has ever been scaled upwards through hesitance. Many business owners are afraid of scaling because it represents such a significant risk, but scaling is necessary at some point if a business needs to continue to thrive. As long as they have everything well-planned, most businesses should be able to scale with relative safety. If times are uncertain, slow down. 

Scaling effectively is a challenge for any business. Many CEOs and entrepreneurs have made their fortunes by being able to reliably scale businesses upwards. But with some caution and a lot of data, most businesses should be able to develop a road-map towards their success. It all begins with a hard, critical look at your metrics — and it continues with the help of expert and specialists.

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