Avoiding the Most Common Business Mistakes When Scaling Your Small Business

Small Business Work

Scaling and generating more revenue without necessarily increasing costs is a good sign for your small business. But with the potential to scale by increasing sales volume comes the challenge of keeping the company’s operations and profitability stable. This is why companies emphasize the importance of operational efficiency. The only way to have a successful operation is if areas such as employee training and retention, financial awareness, customer service, and leveraging technology, all work in tandem. Many small businesses that scale prematurely or unnecessarily fail to adapt to the changes brought about by growth. In order to keep your business viable throughout a rapid growth stage, avoid the following mistakes at all costs:

Overloading existing employees

One way companies can keep their costs low as they expand is by choosing not to increase the size of their team. If you can increase your revenue by, say, $60,000 a year and hire another full-time employee with a salary of $60,000, which is near the average income of California, the profit of your business stays the same. But if you opt out of recruiting, the added sales contribute to your scalability.

However, the obvious downside is increasing the workload of your employees to cover the heightened demand on the business. As the owner, it’s your responsibility to evaluate the impact the additional workload has on your employees and, in turn, your business’s operational efficiency. It might negatively impact your team’s wellbeing, job performance and productivity, which can reduce the success of your growing business.

Before expanding your team, identify the business challenges you’ve experienced with scaling. Knowing what specific skills you require is crucial to forming the right recruitment strategy, specifically the kind of talent you need to be hiring. The upside in this current landscape is that there is less competition in the job market. California’s class of 2020 graduated into a rocky economy with businesses still reeling from the effects of the ongoing pandemic. There are a lot of untapped skilled and young professionals to recruit who can help you form a dynamic team and further the growth of your business.

Neglecting customer service

Businesses that scale too fast too soon often make the mistake of overlooking customer service. They’re so focused on expanding their market size they can end up neglecting their existing and loyal customers. But what you’ll quickly realize as a small business owner is that your customer service must also increase as you scale up.

Amerisleep co-founder and CEO Firas Kittaneh explained the need to remain customer-centric as your small business grows. It’s not just about acquiring more customers to sell more products or services, but also maintaining the satisfaction they get from their experience with your business. This approach should be emphasized during the hiring process to pick out candidates that have the values and personalities that induce a positive response from the customers. They need to have and demonstrate empathy so your customers feel heard and cared for at all times.

Customer satisfaction can also be traced back to employee engagement. As it turns out, employees who are more engaged at work are 17% more productive and more likely to have positive interactions with customers. As more satisfied and involved employees deliver better service, enhancing engagement should be one of the business’s main priorities.

Failing to update the business’s structure

Keeping your business’ structure up-to-date is a must for legal and financial purposes. While incorporating might not yet be on the horizon for your small business, you should consider upgrading to a limited liability company (LLC) from a sole proprietorship or partnership as you expand. ZenBusiness’s guide to starting an LLC in California outlines the steps required to complete the process as well as its unique benefits. These include legal security and proper standing with the government, limited personal liability, tax advantages, and greater business freedom. The tax advantages, which are specific to the state an LLC is formed in, can help offset some of the recurring expenses of the business. Furthermore, being an LLC can help establish your brand within the local entrepreneurial community, and even outside of it.

Waiting to adopt digital transformation

Digital transformation is the process of integrating innovative technologies to improve business operations. In today’s world it’s a necessity for businesses to adopt digital technologies. These enable them to meet evolving consumer demands and market requirements. This means that any scalable business should make room for digital transformation later on or even before they launch.

The high costs of a digital transformation will often turn small business owners away from making this crucial change. However, integrating even small tools can pay off for small businesses. Indeed, business writer Sasha Viasasha pointed out that early adopters multiplied their revenue by two compared to those who delayed it. Waiting to transform your business with tech can also deprive you of an opportunity to stay ahead of the competition.

To begin the process of digital transformation, business owners need to look at the day-to-day operations as well as the big picture. The right tools need not be complex nor expensive — in fact, overly complicated tools can hinder operational efficiency rather than support it. That said, knowing where to start is the main challenge. Our unique business solutions can help you understand how to successfully integrate innovative technology, especially in a highly dynamic and competitive landscape as California. Deploying the right tools can help your business increase profitability and efficiency while delivering exceptional service, all of which contribute to sustainable business growth.

Written by Aileen Hazel Loraine

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