You’ve experienced rapid growth since starting your business venture and now comes the moment when you’re aiming to push for further advancement. You’re in the right because small businesses have to strategically expand or risk falling behind your competition.
The decision to forge onwards with progress brings about numerous challenges; however, even though disruption is almost imminent, you can still minimise it from happening. For small business owners in manufacturing, scaling up also allows you to develop your product line and adapt to market demands.
Since business scalability comes with a high risk for small companies, here are a few concise points to help you successfully grow your manufacturing operations.
Know Your Financial Condition
Startup owners lack the privilege of a steady cash flow, which is why there’s a fair amount of deliberation required before scaling up. When you do so, you’re bound to make several purchases or hire more staff members which can amount to a lot of money.
Knowing where you stand when it comes to your company’s finances serves as a safety net to avoid significant financial loss. Aim for a stable balance sheet where business operations can continue despite a potentially slowing cashflow. As such, you’ll need wider access to financing that will supply you with small business capital at a low cost.
Invest in Production
When you’re in manufacturing, it’s common sense that there be an emphasis on production systems as you evolve. Experiencing a glitch in the production process is a real possibility when you’re looking to expand sales and demand. Although such an occurrence may indicate that your product is popular, it also means it’s one additional headache to deal with.
From the perspective of the consumer, the inability to keep up with demand can be off-putting when they see empty shelves or are notified of a product’s unavailability. This possibility is of great detriment for small businesses that haven’t amassed brand recognition or reputation.
These problems are easily avoidable by investing in your production process and turning to technology. Among the ways you can do this is identifying bottlenecks as well as purchasing advanced equipment so that you can keep up with ample customer demand as well as deliver on the products for retail.
Having technology-based equipment in place can further alleviate potential inefficiencies in the production line, thus preventing a breakdown in the scaling-up progression.
Also make sure that the space is safe and burglar-proof. Invest in fire ducts and smoke detectors, locks and bolt, just to make sure you are protected from the damages unforeseen events can cause.
Be Realistic with Your Sales Forecast
Although you’ve made the bold decision of taking your small business forward, one of the next steps to figure out is how you can achieve a return on investment. As expansion costs can weigh heavily on your cash flow, it’s important that you make a realistic sales forecast.
Considerations over changes impacting the industry and the local economy should be made as this can influence the flow of business.
Once you take into account every detail of the expansion costs, you can follow up with a breakeven analysis so you’ll know if price adjustments for your products are needed.
Hire the Right People
Small businesses have long suffered from a shortage of qualified staff which can hamper growth possibilities. While recruitment makes up one side of the coin, the other side points to difficulties in retaining a skilled team. However, it’s worth pointing out that business expansion may not necessarily require adding more team members.
Depending on your company’s renewed objectives and the company’s budget, you can make do of your existing team roster. It’s quite common for one employee to take on multiple roles in a startup environment.
Further, retaining employees and investing in their skills can help your company increase productivity, therefore helping to improve scalability.
If staff recruitment is the likely route, be sure you hire the right people such as those with innovative skills that don’t already exist among your current employees.
Maintain a Network of Existing Clients or Suppliers
Going from a small to larger business will take some time, and that transition period can spell out tight margins as you target untapped sales prospects. To cut back on these costs, it helps to have a strong network of clients, customers, and suppliers readily available.
It can often be too easy to overlook your suppliers, but by fostering good relations with them, you can easily save money on material expenses, which is integral in the production line as you build up your small business.
Similarly, having good connections with customers and clients will stabilise your balance sheet. Thus, if you’re facing challenges when it comes to garnering new clients during the first few months of the endeavour, at least you can fall back on your loyal clients and customers.
Either way, you should never underestimate the power of client/customer rapport because it can make a difference in the direction of your business.