Disclaimer: Startup Hive does not provide legal advice, nor do we guarantee any return on investment.
In business, scaling is when you expand at a faster rate than you take on new costs. Scaling is important if you want to serve as many people as possible without putting in the same work each time.
Scaling is more than just increasing revenue; for example, if you are a freelancer, and only focus on revenue, you would have to add more clients to your portfolio. You can only have so many clients because you only have 24 hours a day.
In order to scale successfully, you should also think of ways that you can increase your productivity with less input (including costs and labor). This means finding more creative ways for your business to work without your physical presence required. This is also called leverage: being able to do something once, and get paid for it many times over and over again.
Have an Exit Strategy
Here are some examples of exit strategies:
- Take your business public with an IPO
- Liquidate by selling all the assets
- Sell your shares to your partners or your employees
- Merge with another company
- Pass on the business to a family member
Set up a Formal Business Structure
Take the time to do your due diligence and study all the structures so that you know which one is best suitable for your circumstances. Hire a professional attorney whenever possible.
Make sure to keep your business tax-compliant. Keep a separate bank account for your business to avoid intermingling business expenses with personal ones. Keep track of your income and expenses and hire an accountant or bookkeeper whenever possible.
Four things to consider before planning your estate and choosing a business structure:
- Liability: protect your personal assets from business lawsuits
- Privacy: protect your private information and public image
- Taxes: work with a tax planner who can see your big picture
- Probate: use trusts (there are many types) to pass down your business, real estate, and other assets to your heirs and avoid the long and overrated probate process.
Get Organized
- Business Finances (this includes bank accounts, invoices, and receipts)
- Business Taxes (for both federal and state taxes)
- Marketing Materials
- Legal agreements and contracts
- Time Management (how much time do you spend doing what task?): this is the most important aspect of your organization because you can use this to hire, delegate tasks, and train employees in the future.
Create a Budget and Growth Plan
- Know how much it costs you to run the business: Do this by setting up spreadsheets for both income and expenses so that everything gets tracked properly over time.
- Create a spending plan: Make sure that you have enough money coming in each month to pay for all of your expenses (including taxes). It’s also important that you set aside some money for growth, as well as an emergency fund in case something unexpected happens.
To better visualize and plan out your exit strategy, create a growth plan. Start with your big picture in mind (your exit strategy). Outline your goals and expectations for the next 5 years, and then write down the most important areas to focus on during the first year.
Invest in the Right Tools
Along with tangible and intangible tools (like software and intellectual property), make sure to also invest in:
- Your Education: this is a cost that can never go to waste. Take the time to learn as much as you can about your industry, your market, your products and services, and your target audience. You need to know these things to develop a robust marketing guide for your company.
- Your Story: One important aspect of your marketing plan is how you tell your story. Make sure that your message is consistent across every platform and that you use your words and your story to empower the people around you. Depending on your industry, you may consider investing in hiring a brand consultant, a publicist, or even public speaking lessons.
- Your Network: What you know can get you far, but who you know will get you all the way. You can learn faster by spending more time with people who know something that you don’t. So join local organizations and participate in events that will benefit you and your community in the long run.
- Your Processes: How does a food truck owner scale into becoming a franchisor? If your exit strategy is to own the license to the business model and generate passive income for life, then the most important aspect of your business is the system that you build around it. Take the time to carefully record your fulfillment process and everything that it takes to run your business, including the routes, recipes, uniform, and even the specific words that you use to greet your customers. Once you’ve done that, think of the ways that you can use automation to avoid repeating the same processes.
Conclusion
Not every business is scalable, but all businesses can have an exit strategy. So start there first. Then think of all the possible ways to get you there without repeating the same tasks for too long. See yourself in every aspect of your business and move through them as fast as you can until you are in the position that you want to be in: the owner of a successful organization that functions with or without you in it.
If you need help thinking of creative ways to scale your business, book a Discovery Call with one of our consultants. Our goal is to help you ignite the spark that will bring in at least $100k in revenue within the first year of your business operations.
To your success,
—The Startup Hive Team.
At Startup Hive, we help creative entrepreneurs thrive beyond the gig economy by taking control of their financial life. If you consider yourself creative enough to get at least one of your ideas off the ground, we are here for it.
Schedule a Discovery Call and let us help you help people.
