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Scaling Strategy: Spend Money to Make Money

When you read most articles that offer advice on how to scale your business, there is a pertinent subject that you will encounter regularly....

When you read most articles that offer advice on how to scale your business, there is a pertinent subject that you will encounter regularly.

How much you need to invest to go a notch higher and what you need to compete with the big boys and girls on the top floors of the corporate world.

By @Comic24Derick

Let’s face it, finance will always be a key requirement to propel your business to dizzy heights and scale the corporate ladder. However, the formula to do that is what differs from one business to the other.

How much you need to invest to achieve that is also open to debate and cannot be exhausted in one article, however, this piece will offer you an imperative insight into that pertinent issue.

One of the respected writers to tackle the issue is Anita Campbell. 

“Learn how businesses grow extremely quickly. Once you’ve identified your endgame, the next step is to figure out what strategy will help you get there,” she wrote in an article headlined: how to scale a business, which was published by the Score.
“You gotta spend money to make money” is especially true when it comes to scaling.”

Campbell added: “We talked with Ferriss about how many entrepreneurs see investment as the perfect solution. However, Ferriss warned us to be cautious about seeking early investment. He told us that investors often expect a 10-fold return, which makes investment the most expensive cash.”

In the piece, Campbell cautions against romping in investors before you are certain of your future returns. In most cases, investors will demand a huge percentage of the profits. 

This could leave the business exposed and vulnerable. Instead of courting stockholders, you should seek other means to inject cash into the business.

The Ring Central also addresses the issue of investors, however, the writer is cautious not to lead business owners to make a certain decision. “The money. Unfortunately, the saying “you gotta spend money to make money” is especially true when it comes to scaling.”

The Ring Central encourages traditional ways to raise money to scale your business before one decides to attract investors, which might take more time and effort to close such transactions.

“Not only do you have new hires to pay and apps and tools eating up some of your budget, but you also need to have the funds to increase production and distribution of products,” the article said, electing not to prescribe a single method to raise income.

“How you find the funds is up to you—you can bootstrap, save up, take on an investor, or apply for grants. But the important part is that you understand the expenses associated with growth,” Ring Central added.

Campbell added: “Find the Money Scaling a business doesn’t come free. Your growth plan may call for hiring staff, deploying new technology, adding equipment and facilities, and creating reporting systems to measure and manage results,” meaning that scaling a business doesn’t come cheap, it is an expense that you must be prepared to finance.

To her credit, Campbell encourages the business owner to find their creative ways to raise funds, but she cautioned that it might take time, which could work against your aspirations and targets.

“How will you find the money to invest for growth? I’m a huge proponent of bootstrapping, but it typically takes years to grow through bootstrapping alone.”

Still, on finance, Tony Robbins says: “Scaling a business may seem impossible if you’ve hit a plateau. The truth is, learning how to scale a business is never impossible, but you may need to change what you’re doing if you want to scale successfully.”

So whichever way you view it, scaling requires money, sometimes loads of it. How much you will require depends on your targets.

“When was the last time your business focused on innovation? When did you last assess what’s holding your company back and tackle those barriers head-on? In business – and in life – if you’re not growing, you’re dying,” Robbins said.

The Start Up Donut warns against cutting on expenditure in a bid to scale the business. “Never compromise on quality or consistency. They both enable growth.”

The process of scaling should not affect any part of the business, instead, it should enhance it for you to meet the next level of challenges.

“There’s no point growing your business if your products or customer service deteriorates because customers will go elsewhere. Having the right processes, culture and staff is key to maintaining quality throughout,” maintains the Start Up Donut.

As you have heard before, mistakes are part of the growth process and you should expect them and be prepared to tackle them as you march to the next level.

“You'll still make some mistakes when scaling, but understand why they happen, learn from them, get better, and don’t repeat them,” the Start Up Donut article concludes.

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