Most entrepreneurs, from the time they start their business, think about the prospect of scaling. Scaling is the necessary path to improve profitability, expand your reach and solidify your long-term prospects. So, no matter what your main motivation is to become an entrepreneur, chances are you’ll find scaling highly appealing.
But to scale effectively, there are many things you’ll need, including sufficient capital, available resources and of course, a long-term plan. In addition, there’s one golden rule that stands above all other considerations for scaling effectively: Focus on quality over quantity.
Quality Over Quantity
What does that mean? As you scale, you’ll be making a number of investments, and when you do, you’ll need to prioritize the high-quality investments most likely to pay off, rather than to dilute your money by spending indiscriminately.
This may seem like common sense, but once you have investment capital in hand and a strong desire to grow, you may be tempted to invest money in low-quality applications.
Here are just a few examples of how to follow this rule:
Don’t just hire, choose the right hires. Common advice says you should hire like your life depends on it, and that’s generally good advice, but the way it’s phrased can be misleading. Hiring should not be a race to fill up seats in your office to get more hands on deck; this is advantageous only if you need to hit a deadline and more hands will get you there faster.
For the most part, however, you’ll want to be judicious in whom you hire. Taking an extra four weeks to hire someone for a key leadership position, like CTO, may delay your growth for that month (or longer), but in the long term, the better-quality hire will be less likely to turn over, and may well provide more substantial benefits to your company.
Don’t market to everyone, choose an audience and hit them hard. When you’re ready to build buzz for your business, you’ll be tempted to market to everyone, shouting your business’s name from the rooftops and spending your limited advertising dollars indiscriminately.
You’ll also be tempted to attract as many followers as possible, and you’ll get excited to build your web traffic as much as possible. However, it’s better to narrow your focus down to one target audience, and market to those people specifically. Your sheer numbers will be lower, but your audience relevance and the quality of your interactions will be far higher.
Invest in marketing channels that are most likely to pay off. There are dozens of marketing channels out there, and you’ll need at least a few of them to build recognition for your brand. However, if you focus on quantity by spreading your money across multiple channels, you won’t see nearly the impact that you’ll see by funneling that money to the most effective strategy.
So, thoroughly research your prospective marketing channels up-front, and experiment to determine the best place to put your investment capital.
Resist the temptation of “shiny object syndrome.” When you have some extra money in the bank, every new tool looks like a must-have, and every new potential strategy seems like a worthy bet. But constantly chasing after the next exciting thing is what I call “shiny object syndrome,” and it’s a good way to squander your budget.
Instead, consider the bottom-line impact of all your investments carefully, and reserve your funds for where they’re going to be most useful.
Expand with purpose, not in a frenzy. When you start expanding, investing in new offices, warehouses or even new online markets, do so deliberately, investing your money only where it will be most valuable. Though scaling sooner may give you more time to grow and make money, you have to remember that this isn’t a race. One high-quality new store location is better than three low-performing ones.
The main idea is to make the most of every penny you spend, even when you have more money to throw around. If you focus too much on quantity, as many new investors are wont to do, your growth may be stifled. Do your research, invest carefully and you’ll be able to stabilize your business by achieving a profit much faster.