Scaling Up: Strengthening Business Capacity for Growth
Building in-house capacityMaximizing your in-house resources should be your priority because it might be enough to build your capacity without needing to dramatically change your business. If you need additional skills in your business, consider re-training or expanding the skillset of existing employees before hiring someone new. Start by auditing your needs and then identify which vital skills are missing. This will form the basis of new job descriptions.
Optimize Your Systems
Accurate bookkeeping will help you understand exactly how your business is performing. It’s easy to track all your expenses and revenue if you use accounting software. Cashflow forecasting will enable you to anticipate a possible cashflow problem before it actually happens. Some solutions include:
- Tight creditor and debtor control (invoicing promptly and collecting debts on time).
- Realistic pricing and costing to ensure every sale is profitable.
Tips for Building External CapacityOnce you’ve streamlined your business, the next step is to take the plunge and increase your overall capacity (checking that any increase in demand is sustainable).
Consider ContractorsIdentify third party contractors or other companies that could take up extra slack to increase your capacity at any time. Doing so can provide you (or employees) more time to work on the other aspects of the business, such as marketing or delivery/production. Outsourcing your tasks can ease temporary capacity issues, before you decide to employ full timers, or buy additional equipment or inventory space.
Review Your EquipmentIf some of your equipment is outdated or obsolete, would an upgrade help improve your overall capacity? You could:
- Lease key equipment or machinery until the capacity issue is solved
- Investigate new technology that removes redundant processes or replaces manual tasks
- Buy new equipment.
Strategic AlliancesForming a business relationship with a partner, or partners, may provide you with several advantages. You may be able to access technologies or patented processes owned by the other partner. Additionally, you may be able to access their distribution network. If you are thinking of forming a partnership, consider your strengths and weaknesses compared with your potential partners. The ideal partnership takes advantage of your core competencies, while strengthening weaker areas of your business.
Well-chosen partnerships can provide advantages including:
- Working in partnership allows you to share the work and commitment
- Complementary skills
- Opportunities for growth
- Access to resources such as specialized staff, finance, and technology
- Access to your target market
- They can provide support and motivation.
Raising capitalIf you decide there is merit in expanding your capacity or improving your capability, it could be worthwhile to invest in making it happen. Some options include:
- Obtaining a small business loan from your bank
- Venture capitalists
- Government and state assistance