Be the Goldilocks of Scaling Your Business: Not Too Fast, Not Too Slow, but Just Right

If you grow at a controlled rate and keep your costs in line with your revenues, you will have a better chance of being one of the lucky few who beats the odds.

business group discussing work

Most small businesses follow a similar trajectory. In the beginning, you identify a problem, have a brilliant idea and create a solution to the problem. You market your solution and begin to get clients and generate revenue. Then, if things continue to go well, you start to get more work than you are capable of handling. Eventually, you reach a saturation point and face the dilemma of when and how much to scale.

It's common for startups to try to quickly scale before they are ready. As you scale up, you move into new fields of competition with companies that have more experience than you. Here are some tips to make sure you are ready to meet that competition.

Hire the best team you can afford.

Staffing up can be the first issue you encounter. Let's face it: You can't do it all. When work is rolling in, you need people quickly. You may be inclined to hire staff who are inexperienced for roles that are beyond their level of experience, but you are setting them up for failure by expecting them to do more than they are capable of.

Hire the best person, given the budget you have. Your first hires are crucial as they will be the people who help build the systems and processes that will shape and support further development. Once they're on board, spend time training them and setting up checkpoints of accountability to ensure they're prepped for success.

Consider a coach to guide you through this phase of your growth.

At this point, it is also important to establish a vision and a company culture so that everyone has a common foundation. You may consider working with a consultant or coach to help with this step. As author and coach Cameron Herold writes, "a Vivid Vision brings the future into the present, so we can have clarity on what we are building now. It is a detailed overview of what my business will look like, feel like and act like three years out."

Does your growth plan align with your long-term vision? Do you have the plans in place to make that vision a reality? Communicating this vision to your team is essential. As ambassadors of your company, employees need to understand where the company is going and how they can help get there together.

Step back, review what works well and what needs to be adjusted.

If you're growing quickly, you may need to step back and review your systems. Things may have developed haphazardly as you struggled to keep up with growth. This is where slower scaling can be helpful. Take some time to look at your processes and figure out if they are continuing to work well. Things that may have worked in the past when you were working out of one room with only a couple of other people may not be the best way to do things going forward.

Be like Goldilocks.

Growing a company is like growing a tree. Water and fertilizer are essential but so is pruning. You may need to trim certain areas while cultivating others. As you grow from the startup phase into a mature company, there may be a shift in the skills required from your team. Someone who may have worked well in the less-structured phase may not adapt well as you begin to scale up and put systems and processes in place.

Having a lean, productive business is attractive if you are looking for outside investors. At some point, you may need to seek additional funding to help with cash flow. This should be a consideration of your larger vision for the company. Defining these thresholds in advance will help you make rational rather than emotional decisions.

Creating a successful startup is the goal of every entrepreneur. But it's not easy. Data from the Bureau of Labor Statistics show that about 20% of small businesses fail in their first year, and about 50% fail in their fifth year. As your business grows and becomes more complicated, so do your problems. Understand that you may not be able to grow as quickly or aggressively as you anticipated. Stay focussed and hire an experienced team. Don't risk your current customer satisfaction by putting all your emphasis on getting new customers.

If you grow at a controlled rate and keep your costs in line with your revenues, you will have a better chance of being one of the lucky few who beats the odds. Remember to be like Goldilocks as you grow: not too fast, not too slow, but just right.

The Newsweek Expert Forum is an invitation-only network of influential leaders, experts, executives, and entrepreneurs who share their insights with our audience.
What's this?
Content labeled as the Expert Forum is produced and managed by Newsweek Expert Forum, a fee based, invitation only membership community. The opinions expressed in this content do not necessarily reflect the opinion of Newsweek or the Newsweek Expert Forum.