The business world is highly competitive; we all know that. People are always on the lookout for the next big thing or the next big problem they can solve in their respective industries. In Canada alone, 95,000 companies are founded each year, that’s 260 per day or 11 per hour. That stat is remarkable. When founders develop a unique and viable idea, they create a plan and find funding to launch the business.
From then on, founders need to create strategies that can help cultivate the business, expand it, and bring it to new heights. If they are lucky individuals who succeed (90% of new startups fail) and actually achieve product-market-fit, they need to invest in scaleup strategies.
Scaling up one of the most critical indicators of success for businesses. Here’s what you need to know.
The Nature of Scaling Up
Scaling is one of the most important goals for businesses because it indicates that the company was a successful startup and now has the potential to grow exponentially. Many people tend to confuse scaling with growing, but the truth is, they have essential differences.
You need to know about these two terms as they show relationships between revenue and resources, but each word has a slight nuance in this case. When tackled alone, growth is when the organization increases its revenue (a good thing), but increases costs to do so (not so great).
An example of this is when a company sees a spike in demand, hires more people, accelerates advertising and invests in more distribution to supply the demand. This case shows that an improvement in revenue comes with a surge in resource intensity, which increases costs.
To put it simply, growth is the process in which a business’s increase in revenue is similar to its rise in resource expenditures.
Growth is definitely a good thing because it shows that the company is gaining traction. However, it would be best to remember that it is not sustainable for a young business to keep dedicating its revenues toward adding resources and increasing costs. This can result in your organization being stuck in a cycle of earning revenues and only using it to pay additional resources. This usually leads to a terrible place.
Founders, to be ultra-successful, need to achieve a type of progress that lets their company earn exponentially more than it spends. Your goal should be to achieve scaled growth.
Scaling up or scaled growth is when the business increases revenue with minimal increase in resources. The rate at which you earn incomes should be higher than the rate you rack up costs. A company with scaled growth should bring in money without spending it to sustain such progress. Scale means getting more funding on better terms, attracting higher talent, and is a much better target for a profitable acquisition.
Once your business achieves this, it has already transitioned from a startup into a scaleup. Remember that reaching scaleup status does not mean that your organization should stop looking for ways to scale up.
Marketing Affects Your Revenues
A scaleup business founder is undoubtedly aware of various ways to increase revenues, which require dedicating resources to achieve. Seeing that revenue is a critical component of scaling up, you want to take the necessary steps to improve your revenues while spending appropriately. Investing in the right kinds of marketing is a great way to do this.
Some people have a relatively narrow view of marketing, but it covers a lot of ground in reality. According to Marty Neumeier (one of our faves!), “marketing is the process of developing, promoting, selling a distributing a product or a service.” It is an enormous discipline.
One point that has many people confused is the difference between marketing, advertising, and branding. That is one of our favourite topics, and we promise to write about that one day! Hold that thought. For now, advertising and branding are subcategories under the heading of marketing.
So, how does marketing affect your revenues? Remember that revenues are the company’s entire income from its operations before deducting expenses. Marketing is often a big part of those expenses.
As mentioned, marketing strategies help the company sell its offerings. Whether your business is a startup trying to scale or a scaleup that needs to maintain its momentum, many consider ramping up advertising efforts to achieve their ambitions. While advertising opens many opportunities to increase revenue when done right, it also has the potential to waste resources if not handled perfectly.
Growth Hacking Your Business
BEFORE piling money into more advertising, you might want to consider growth hacking to achieve scaled growth. This process is focused on one thing alone: smart growth. It is defined as the process of achieving growth in a creative, strategic, innovative, and inexpensive manner.
When used correctly, it can help your business scale up. What you need is a growth strategy that works. With the help of a growth hacker, you can develop a plan to conquer your present challenges through ways that can be sustainable in the future to make your expansion and advancement goals come to life.
The thing about growth hacking and creating a growth strategy is when you do this BEFORE ramping up your advertising spend; it makes that advertising work harder, better and more efficiently. That is one of the core promises of growth hacking. It doesn’t replace your other initiatives, it enhances them. You can start by joining programs that help you understand your company better and take the right steps toward scaled growth.
These programs are led by experts who have vast experience in all areas of marketing, with a keen eye to helping founders find the growth they seek.
The Bottom Line
Scaling your business can be a daunting task, especially given our knowledge of success rates in Canada. As a founder, you need to take steps to scale your organization further. You can begin by revisiting, examining and improving some of the foundational work you created as you started your company. There is much richness to be found in ensuring your definition of your ideal customer is tight (and still right!), your company culture drives the right kinds of action, and your brand is focused entirely customer-centric.
Are you looking for help developing a growth strategy to kickstart your ambitious goals? You might want to check out Growth Ignitor, designed to re-connect you with your company, inspire you to persevere and provide you with tools and a process to help reinvigorate your scaled growth and beyond.