How to Scale a Business

What Does It Mean to Scale a Business?

Scaling a business means building it so revenue and profit can grow faster than the people, hours and money needed to produce them, while plain growth adds all three at about the same rate.

A useful test is to picture the next hundred customers: if winning and serving them would take the same founder time, senior review and marketing spend per customer as the last hundred, the business is growing but not yet scaling.

The parts that scale are the ones you can repeat without the person who invented them: an offering defined well enough that someone else can sell and deliver it, pages and follow-up that turn a steady share of the right visitors into customers, and a known, affordable cost to win each customer. The founder’s judgment on every deal, custom work quoted from scratch and lead sources nobody can measure usually don’t scale. Volume can also lower some costs per customer, which does more customers equal higher profit margins covers.

Where Do You Start When You Scale a Business?

Start by choosing what you’ll scale, the offering and type of customer that earn the most after the cost of winning them and have room to grow, then make winning and serving them repeatable before you spend more to win more.

We’d weigh room to grow first in that choice, because when McKinsey broke down the recent growth of more than 200 large companies around the world, the market growth of the segments each one competed in, together with revenue gained through acquisitions, explained nearly 80 percent of the differences in growth between them, while gaining or losing market share explained only some 20 percent.¹ The study covers large companies and dates from 2007, but we read it as a good reason to check how fast your chosen segment is growing before a plan counts on taking share from competitors.

With that in mind, work through the six ProfitPaths® steps in order:

1. Choose the offering to scale by gross profit per customer after the cost of winning them, how long customers stay and how much more the market could buy, which the IMPACT Offering page scores.
2. Name the type of customer worth the most over the relationship, described so sales would recognize one on the first call (IMPACT Prospect).
3. Give that buyer something useful enough to ask for, which is the job of a Prospect Magnet.
4. Fix what happens after the click before you buy more traffic, with a page built for that buyer and same-day follow-up (Prospect-to-Lead Conversion).
5. Work out the most you can afford to spend to win one customer from what they’re worth, how early that profit arrives, your cash flow and your goals, then prove one channel against it in your own sales records (Channel Selection).
6. Find the limit that will break first among follow-up, delivery, cash and the owner’s time, then raise spend in steps judged by what each added customer costs, all written into one Marketing Action Plan you review every quarter.

How Do You Scale a Business Properly?

Scaling a business properly means getting more customers out of the money and people you already have before adding more of either, then adding them in steps small enough that you can see what each one brought in.

The order matters because extra spend multiplies whatever conversion rate it lands on, so a leak after the click gets more expensive with every budget increase.

Only after that change did the contractor raise spend, one channel at a time, and the limit it eventually reached was its service team rather than its marketing, which how to scale a service business works through.

How Do You Scale Up a Small Business on a Budget?

Scale a small business on a budget by putting the first money and hours into what raises profit from the customers and traffic you already have, then funding new marketing from the profit those changes bring in.

The cheapest growth we see in small businesses usually comes from these:

• Answer every inquiry the same day, because a buyer left waiting for a reply often hears from a competitor first; how to follow up with sales leads sets out the process.
• Send your best traffic to a page built for one offer and one buyer instead of the home page, which how to design a good landing page covers.
• Sell more to the customers you have, through renewals, add-ons and the next purchase that naturally follows the first, as how to increase customer lifetime value explains.
• Write down the work only you do today, so the first person you hire can learn it from the page instead of from watching you.

Growth costs cash before it pays, because you pay to win each customer up front and their profit comes back over months or years. Before you borrow to scale, work out how many months a typical customer takes to repay what it cost to win them (how to calculate customer acquisition cost gets that cost right), multiply the cost by the customers you plan to add, and check that your cash or credit can carry the gap until payback. If it can’t, grow more slowly or shorten the payback first, for example with annual billing.

How Do You Scale a Business Online?

An online business scales differently because serving one more customer often costs little, so what usually limits it is what each added customer costs to win and what’s left of the order after product, shipping, returns and payment costs, rather than the team’s capacity.

In the online stores and software companies we work with, advertising is often the largest cost that rises with each order, so the margin left after it is the number to scale on. Work it out per order, including returns (are product returns calculated in profit margins shows how), and count customers in your own store or CRM, since each ad platform reports the sales it takes credit for. As spend rises, the newest customers tend to cost more than the first ones did, which why ad sales stop after a spend increase explains, so judge each increase by what the added customers cost.

The answer flips when demand is already ahead of what you can deliver, online or in person. Buying more demand then only lengthens the wait and puts reviews and renewals at risk, so scale delivery first, raise the price (how to implement value-based pricing shows how), or qualify buyers harder so the capacity you have goes to the customers who earn the most.