How to scale a small business: Proven tips from our journey

So it’s safe to say that we know a bit about scaling a business. In this article, we’ll share what we’ve learned from our journey so you can learn how to scale your own company. We’ll also highlight how the lessons can benefit businesses of all shapes and sizes.

You scale a business when you grow it significantly and quickly. Scaling isn’t the typical single-digit percentage annual growth experienced by many growing businesses: It’s a concerted action to rapidly grow your customer base in a relatively short period of time. 

When you scale you’ll put in place processes and strategies that generate more sales while also enabling your company to handle the extra customers. 

Why scaling?

Companies pursue scaling strategies because it’s an effective way to build the value of their business. It can lead to lower costs per customer, which makes each sale more profitable. Scaling an existing business can also be an easier way to bring in more revenue than introducing new products or ideas.

Here are some examples of how this could be the case:

1. A SaaS tool: It doesn’t cost much more to develop and maintain a product used by 10 people than one used by 1,000 people. You’ll increase profits significantly when you get more people using your tool. 

2. A newsletter, social media creator, or YouTube channel: Creating content for 1,000 followers costs the same as creating for 100,000, but you can charge 100 times as much for ads. 

3. An e-commerce store: Even a small e-commerce store may pay thousands of dollars to bring a product to market. If they sell 1,000 products, the price per item to bring the product to market is much lower than if they sell 100.  

These are just 3 examples that are likely to be relevant to most of our readers. But the same ideas work for many different kinds of businesses.

Scaling vs. growth

Scaling is of course a type of business growth. But it refers specifically to the type of fast or exponential growth that takes a company from one stage of its development to the next.

In comparison, the phrase business growth can also refer to the kind of more steady approach seen by many established companies. 

Neither option is better than the other. It just depends on the stage your company is in, the market conditions, your business model, and your goals as an entrepreneur. 

Scaling before your company is ready will put significant strain on your business. If the process goes badly, you’ll spend excess effort and money without generating results. If it goes well, you’ll struggle to handle the extra growth which could put you out of business. 

Either way, it’s beneficial to know you’re ready before you start to scale. Here are some questions to answer to consider the scalability of your business. 

Do you have product market fit?

You can only scale your business if people enjoy using your product. Look for signs that this is the case before trying to scale, such as existing and happy customers or other businesses finding success with a similar product. 

If you try to scale before having product market fit, you’ll find that despite spending more on sales, inventory and marketing, you won’t see the expected customer growth. 

Do you have a big enough addressable audience? 

You can only scale a company if there are enough people interested in buying it. You simply won’t be able to generate enough sales to grow at speed if the target market isn’t there. 

Most businesses will have some idea of their addressable audience upon founding. If you don’t, here are some strategies you can use to discover your potential audience. 

• Keyword research: Use an SEO tool to discover how many people are searching for a particular term related to your problem. Ahrefs is a leader in the industry and they have a free tool that shows the search volume for any term you enter

• Competitor research: Look at other brands in your industry and assess their size. Look at social followers, website page views or publicly available data on sites like Crunchbase  

• Industry-specific data sources: Depending on your industry, there may be dedicated sources of data you can use to discover market size. For example, in the U.S. the National Association of Realtors produces tons of data about housing statistics. This is an essential source of information if you run a business in this area

When looking at audience size, also consider factors like whether the market is growing or shrinking, the value of the audience and how both these conditions are likely to change over time. 

Do you have a repeatable process for acquiring new customers?

When scaling you need a method of growth that is consistent and repeatable. The customer acquisition costs should also be low enough to ensure each sale is profitable. Once you’ve found 1 or 2 strategies that fit these conditions, focus your marketing and sales efforts on them. 

Paid social or search ads are a commonly used customer acquisition method for scaling companies. They work because as long as your addressable audience is large enough, you can rapidly increase the amount you spend on ads and, therefore, the number of customers you acquire. 

Other kinds of scalable acquisition strategies include:

• Search engine optimization (SEO)

• Referral or affiliate programs

• Influencer marketing

Attending events is an example of a non-repeatable way of acquiring customers. Even if you can effectively generate customers via events, you’re limited by the number that you can attend.

Do you have enough cash?

Scaling a business, even when done efficiently, will result in an increase in your expenses. This may come via staffing, servers, customer support, real estate, inventory, or advertising. 

You need a plan to cover these expenses. If you are unable to do so, you risk going out of business or having to raise money in unfavorable conditions. Bear in mind that you’ll often have to pay for the expenses before the extra revenue earned from your growth hits your bank account.

Here are 7 tips you can use to scale, as well as an explanation of how we used the advice at MailerLite. 

All the examples come from our co-founder's book Leaving the Base Camp which details how MailerLite grew from a small local startup to a global company and a $90 million exit. 

Businesses that scale come under pressure as processes are stretched to their limits. You must have a business plan before you start scaling that you can stick to as you grow. Identify the main areas you want to focus on and the metrics that will get you there. 

An exercise to clarify your goals

In Leaving the Base Camp, Ilma describes how she was able to clarify her goals through a simple exercise suggested by a colleague. The idea was to write a eulogy for the business if it closed today and one if it closed in 50 years. 

This involved answering the following questions: 

1. Why did the company die?

2. What will customers say at the funeral?

3. How will they remember the company?

4. Which customers will miss the company most?

When Ilma performed this task for MailerLite, it became clear that they’d have to stop providing live chat for free users to focus on the success of paid customers, and ensure the future quality of the product. 

This resulted in three specific outcomes: the team would build community and focus on the customer, they would invest in the product infrastructure required to stay a top tool in the future, and they would measure success via product metrics and Net Promoter Score (NPS).

Hiring is one of the biggest challenges facing any rapidly growing company. It’s extremely hard to hire quality people at speed and then integrate them into your company. And this will be even more difficult if you’re based in an area that doesn’t have a large talent pool. 

What’s more, you often need to hire (or at least start the hiring process) before you need the person. This makes it essential to accurately forecast your needs based on your growth. 

If your predictions are wrong, you’ll end up with either a bloated team that eats into your budget, or with a team that’s too small to handle the increase in customers. 

Remote work has many benefits

The answer for Ilma at MailerLite was to hire remotely. While it seems obvious now, back in 2014 when Ilma made her first remote hire, it was far rarer for people to work outside the office. 

By hiring remotely, MailerLite was able to attract talented people globally which was a huge benefit as the company was based outside the main tech hubs. 

The only problem was that she found traditional hiring processes weren’t as effective for remote candidates. To solve this problem, Ilma came up with the idea of asking candidates to apply for jobs by creating a newsletter with MailerLite. 

This worked because it filtered for people who were interested in a challenge, helping her hire and retain people who truly cared about their jobs. 

Hiring remotely isn’t the only way to meet your growing needs. You could also hire an agency to take care of certain functions like marketing or support. Or you could start by hiring qualified freelancers to perform these tasks. 

Both these strategies can be useful ways to get the extra specialized help you need without committing to the long-term costs of hiring. 

Start with outsourcing then bring in-house

Ilma outsourced several tasks that were then brought in-house. In Leaving the Base Camp, she mentions how MailerLite initially outsourced legal tasks to a law firm before realizing the need for an in-house hire when they started preparing for GDPR.

Be aware that things won’t always go to plan when outsourcing. When MailerLite first tried to provide services for the French-speaking market, the company established partnerships with individuals who would represent the company. 

However, the experience these partners provided didn’t meet the team's standards and because of this the company ultimately canceled the partnerships. They decided that it would be better to be in control of the service they provided to this market.

What's more, in the years since we've introduced MailerLite Spanish. A version of our service in the Spanish language that we created and operate entirely in-house.

Once you’ve hired or outsourced work, you must trust these people to do their jobs. It’s impossible to scale while keeping the same degree of control over your business. What’s more, letting go of some control will free you up to focus on bigger-picture tasks.  

Decentralize decision-making when possible

Initially, you’ll likely hire people to perform specific tasks. But when you’re ready, hiring people in management positions will lessen the amount of time you spend micromanaging tasks. 

MailerLite introduced team leads when the company headcount grew to 50 with the purpose of ensuring clear communication and decentralizing decision-making in order to continue to grow.

Trusting your team will also empower people to spot issues or opportunities you’d have otherwise missed. 

An example of this mentioned in Leaving the Base Camp is when Tautvydas, a developer new to the company, introduced the idea of monthly tech meetups because he saw how they benefited his previous company. 

Clear business processes are essential to successful scaling as they enable team members to take the optimum action independently. This allows your team to work faster while freeing up management to focus on other parts of the business. 

Make sure your processes are clearly documented and in a place where employees can easily find them as this will allow people to get the information they need to complete tasks independently.

Documentation gives people easy access to information 

In order for information to be found, it needs to be in place. MailerLite uses Notion to document all the information and processes someone needs when working with us. 

This helps new employees get up to speed and streamlines remote working when it’s harder to just ask someone in an office for help when you’re stuck.

It’s easy to forget about culture when scaling up as you focus on areas that directly contribute to growth. But as new people join your team, your culture will change too. If you aren’t intentional about how you nurture your culture, you’ll end up with one that doesn’t fit your values.

Be deliberate when setting a culture

Culture is a thing that happens, even if you don’t do anything about it. That’s why you have to both define your values and understand their origin. 

Look inside and think about the type of culture you want to create without the temptation to borrow from other companies. Thinking about your personal likes, dislikes and goals will result in a set of values unique to your businesses. 

For Ilma and MailerLite, this was: 

1. We focus on people

2. We learn and transform

3. We simplify

4. We take responsibility

5. We’re positive

Once Ilma had defined these values, it was easier to hire people who shared them and reinforce each one to existing team members. These values still guide us today, read more about our values here.

Setting KPIs for your company and teams does 2 things: it ensures that your entire business focuses on the factors that will truly push things forward and it lets you and your teams track whether your efforts are paying off or whether you need a change in business strategy.  

Focus on numbers that signal issues early

Metrics like revenue, profit and churn rate illustrate end results. While many businesses have the goal of improving these figures, it can help to focus on metrics that signal issues early so you can take steps that push towards these outcomes.

In Leaving the Basecamp, Ilma talks about how she focused on signups, engagement metrics of emails sent via the platform, product feature use, and Net Promoter Score, a data point that measures whether someone is likely to recommend the product to friends or colleagues. 

These KPIs showed the business what it needed to do to help grow its customers’ businesses which in turn leads to product success. 

After reading this article, you should have a better idea of both what it requires to scale and the strategies you can use to do so. 

The key thing to remember is that scaling companies achieve rapid growth in the short-term, but the biggest challenge is putting in place the processes and strategies that help you handle this growth and set you up for long-term success.