Delegate, Focus, and GROW Your Business

How to Build Your Business with a Scalable Financial Strategy

Businessman drawing graphics a growing graph

Five years ago, Patrick Rife and Nic China started Pixilated, a company that supplies open-air photo booth rentals that enable high-quality photos to be printed on-site instantly. After enjoying tremendous success supplying their booths for events such as weddings and parties, Pixilated is now preparing to scale up by creating their own custom software, infused by $500,000 in new capital from investors. The additional capital will go toward developing new software that will enable Pixilated to operate on a large scale in the cloud, and will also help pay for new workers the company is hiring as it expands.

Scaling up is the dream of every start-up, but not every business owner knows how to scale up successfully. Here are three keys to designing a scalable financial strategy for building up your business and taking it to the next level.

Test Marketing

A successful financial strategy for scaling up requires being able to maintain a growing profit margin as business expenses grow. One mistake that can prevent this is scaling up production and marketing before you’re certain there’s a demand for your product. In fact, 42 percent of start-ups fail because they’re attempting to sell a product for which there is no market, a CB Insights study found.

Test marketing can help you avoid this mistake. Testing your product on a small scale can enable you to verify demand for your product before you invest heavily in production or marketing. Test marketing can also give you an opportunity to identify and debug flaws in your product before your customers start complaining about them. And test marketing can improve your sales efficiency by helping you determine which benefits and applications most appeal to your target market. Once you’re optimized your product and your sales message and ascertained that there indeed sufficient demand, you can start scaling up with a more realistic expectation of generating volume sales and maintaining a high profit margin.

Automation

Maintaining a high profit margin at scale requires keeping expenses low. One strategy for minimizing your expenses is automation. Automation can help you lower your payroll costs, while simultaneously increasing your efficiency, both of which contribute to lower expenses and higher profit margins.

Any task that your company performs repeatedly is a potential candidate for automation. Survey your business functions to identify tasks where automation would leverage your time or save you money. Prioritize which tasks would save you the most time or money, and then identify automation solutions for those tasks. Examples of tasks that can be automated include assembly line steps, data entry of transaction data into bookkeeping systems and routing of customer service phone calls.

Outsourcing

Another strategy to lower expenses is outsourcing. Like automation, outsourcing can help you trim your payroll costs and boost efficiency. Prime candidates for outsourcing are business functions that are essential but peripheral to your core business functions. For example, you can hire virtual assistant services to handle routine administrative tasks. Other examples include accounting, tax preparation, sales, customer service or IT.

You can also outsource functions where hiring an outside firm would lower costs or improve efficiency. For example, Amway traditionally makes its products in the U.S., but over the years, the company has built a large Asian market for its products. Amway has found that it’s more efficient and less costly for shipping to manufacture water treatment systems destined for Asian customers in Malaysia, even though research and development is still kept in the United States.

Posted on March 28th, 2017 by Rachel Braam, Office Manager

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