Business oriented people talk about building scalable businesses, but what does this mean exactly? Simply stated, it means that your business has the potential to multiply revenue with minimal incremental increase in costs.
Here are some great tips on how to make your startup more scalable and attractive to investors:
- Start With A Scalable Business
As we stated before, you must have a scalable business in order for an investor to even want to invest in your product. A great example would be a mobile app. It costs a good bit to get a mobile app developed, running properly and ready for the public to purchase and download, but after the initial investment, any number of copies can be created at little to no expense. Most consulting services, like marketing, for example, are not scalable. These kinds of services must be delivered by experts, and duplicating experts is a slow and expensive process. Investors do not invest in startups that involve services.
- Build A Strong Team
Often, startup companies utilize friends and family to fill certain positions. This may be fine depending on their experience, but as your company grows, you are going to need people that have specific expertise in human resources, operations, management as well as other areas. Be sure you are building a strong team of the right people with the right expertise to fill these important positions so you don’t have issues down the road. Plan ahead properly to save yourself headaches later.
- Build A Business Plan and Model Investors Will Find Attractive
Be sure you have a good, solid business plan ready to show investors that will really ‘wow’ them! Remember that a scalable business should have high margins over 50%, low support, and minimum staff.
It is important to outsource the tasks that you can. This is especially true if you are wanting to build your company’s presence in different cities or even countries. Separate tasks that you can delegate to one agency located globally and then the tasks that should be done locally as well. Outsourcing your marketing efforts to an agency located in the area you are wanting to focus on is wise. These types of agencies will know how the market in that area works much better than an agency that is in a different country, for example. Don’t try to do everything in-house though, as growing expertise in important areas can be slow and expensive.
- Implement Manageable Systems
To ensure your business runs smoothly, it is important to implement manageable systems. Find the best functional customer relationship management (CRM), time tracking, order management, financial reporting systems that would best work for your scalable business. Using the right platforms to automate certain tasks will increase your overall efficiency and ensure that your well-built team is all on the same page.
- Build It Like You Will Sell It
Finally, be sure that you are building this business as if you are going to sell it one day. While you may have no intention of ever selling your business, if you build it like you are going to sell it, you will be able to see growth issues clearer. Your business should eventually be able to run without you directing all of the traffic. Create this business as a well oiled machine and it will run much smoother and be way more attractive to investors.
Be sure to contact IgniteHQ for any additional help with creating a scalable business!