The dream of a scalable business is the reason why so many of us decide to start an online business. Online businesses, after all, are supposed to be ripe with opportunities to scale them easily and quickly.
But if you’re running an online business, you’ve probably already realized that scaling your business is proving to be a lot more difficult than it sounded. A goal that seemed like something you could relatively quickly and easily has turned into a “someday” dream of a highly scalable online business.
Luckily, there are ways that you can successfully scale your online business without having to feel like you’re drowning and with the resources you currently have. It all comes down to understanding what a truly scalable business actually looks like and what actions you need to take as an online business owner to make it happen.
I cover the essential small business financial management skills you need to scale your business in my Not Rocket Finance course. While my course covers a lot of the missing piece of the financial puzzle for many entrepreneurs, if scaling your online business is your goal, you need to know a lot more than just the basics.
Let’s start with what you need to know about growth and scaling so you can turn “someday” into today for your online business.
Growing Versus Scaling Your Business
The common refrain in the online business space is all about scaling your business up. Scaling sounds great, but what even is it anyways? Scaling your business means increasing revenue without increasing cost. But it’s not the same thing as business growth.
Business growth isn’t scaling your business and that’s where most people get into trouble when they’re planning to grow their online business. Business growth means your business is getting bigger—both your revenue coming in and your expenses going out.
For example, you decide to grow your business by hiring a new team member. But the money you gain from increased capacity may not bring in a lot more revenue if the costs of that new employee outweigh most of the money that new employee generates. But now you’ve got a lot more responsibility with that new employee and may be feeling like the business growth wasn’t exactly worth it.
You’ve heard people say “you’ve got to spend money to make money,” but scaling is the exact opposite. Scaling an online business means being able to grow your revenue without being bogged down with spending money elsewhere. Your profits increase because your expenses don’t increase at the same rate as your revenue.
For example, scaling your business often means making your current resources more efficient and increasing your capacity without increasing your expenses. Instead of hiring a new employee, for instance, you invest in better systems that make your current employees able to handle more work. Your expenses increase slightly for the costs of setting those systems up but the revenue increases are much bigger than if you’d hired a new team member.
Sounds much better right? You’re making more money in your business without increasing your responsibilities and keeping overhead costs about the same! That’s what a scalable business system looks like.
How to Scale Your Online Business Easily
So how do you actually scale your online business, now that you understand the difference between growing and scaling? If you’re struggling to increase your profits because as you grow expenses just keep going up, your online business will never be able to actually scale.
Most people believe that scaling is all about cutting costs—but that’s a mistake. There’s only so much you can cut before you can’t cut anymore.
Instead, scaling an online business requires a combination of planning, technology systems, and processes to make your company more effective. The bottom line is that scaling your business means you’ll have to invest in one of these areas at some point to make your business increase capacity without increasing overhead.
Taking a strategic approach to scaling your business can make a huge difference in your future success as an online business owner. But where do you even start?
Step 1: Plan Out Your Business Scaling Goals
Planning is a vital stage of scaling your business. No matter what stage you’re at, having a set plan for your goals can help you plan for growth. Asking yourself these questions can help you identify how to scale your online business and what’s most important to focus on:
- What are my financial goals for scaling my business?
- How quickly should I scale my company?
- What resources do I have and what resources do I want to invest in?
- What does success look like for my online business?
It’s also important that your scaling goals are realistic to your business. For example, your business goals could include budgeting, planning to upgrade your ecommerce, expansion plans, investments, or more. Setting stages of achieving these different goals can help you stay on track to scaling too.
Don’t know the answers to these questions? Getting a baseline of financial information and knowledge about your online business is the first step so you can answer these questions. My small business financial course covers how to figure out these answers so you can start scaling.
Step 2: Understanding Your Data
After you’ve figured out your goals to scale your online business, you need to get a handle on the data behind your finances so you can make informed decisions about your goals. Data is everything that sustainable businesses are built on. Good financial data requires having solid financial systems set in place.
Questions you should ask yourself as you’re preparing to scale your online business include:
- Which products or services are most important to my company’s success?
- What time is most profitable in my business?
- What systems do I need to improve to scale my business?
- Where should I invest money to scale?
Good financial data is more than just understanding your financial statement and cash flow. They mean that your finances are easy to understand and makes sense to you. But for most online entrepreneurs, financial statements and reports are mostly a bunch of meaningless stats.
Step 3: Improve Your Efficiency
The key to scaling your online business isn’t just growing—it’s growing with less expenses. Which means that your business has to get more efficient at making money without growing expenses.
Now that you have your data to guide you, figuring out how to improve the capacity of your team and other business resources to produce higher revenue is the next step. Your biggest goal when it comes to scaling your business is to get more output for the same input.
One of the easiest ways to do this is by using technology and better systems. Some small businesses start off using specific platforms and eventually reach a growth ceiling that they feel they can’t move past. Setting up systems that use technology to your advantage is usually the thing that helps online businesses overcome efficiency problems.
I’m betting that your online business has a lot of different software subscriptions—but I’m also willing to bet that you are not using them as well as you could be. That’s where you can create efficiencies that produce more revenue with less resources. Your costs don’t increase, you’re just using the tools your business has better.
Start with a Financially Healthy Online Business
If you’re feeling stressed out about your business finances or are struggling to plan how to scale your business, it may be because you don’t have the financial background and education you need. Most online businesses owners don’t! After all, you didn’t decide to become an online business owner because you love spreadsheets and invoices, right?
The best place to start is with a clear idea of what shape your business finances are in right now and to get clear on where you want to be with your business. After all, the first step of scaling is to define your business goals and part of that process is knowing where you’re starting from.
Do you know how healthy your business finances are? Sign up for my free online business financial health check to see how healthy your business is and what steps you can start taking today to get your business in better financial shape.