How to scale a business: 8 strategies for scaling a business from scratch

You started with a great idea and some cash. After a lot of late nights and hard work, your startup or small business has enough loyal customers that you’re starting to turn a profit. In fact, they can’t get enough of what you’ve got to offer. Time for you to grow as fast as you can, right? Isn’t that what scaling is all about?

Close, but not quite. In this article, we’ll dive into what it takes to scale a business the right way, from the most important areas of focus to common mistakes. Along the way, we’ll unpack the difference between growing and scaling and discuss how to tell when you’re ready to expand.

What does scaling a business mean?

Scaling a business means increasing its ability to generate revenue or expand operations without also increasing costs. It typically involves developing sustainable processes, systems, and strategies to help your team handle increased demand more efficiently. A business in scaling mode aims to increase either its bottom line or its operational capacity without making big investments in personnel, equipment, or technology.

A business model designed for scaling needs to support growth while controlling costs. This can mean changing operations to maximize efficiency, diversifying revenue streams to generate more income, or leveraging technology to handle increased demand. At its core, a scalable business model ensures that your business won’t reach a point where expansion leads to higher expenses rather than higher profits. 

Any business can go through periods of scaling, but it’s particularly important if you’re a startup or small business. Unless you have investors, you’re likely working on a tight budget and need to make the most of limited resources as fast as possible to survive. 

Scaling vs. growing: key difference 

While “scaling” and “growing” are related concepts—and often used interchangeably—they’re two different ideas. 

When you grow your business, you increase your overall revenue, the size of your operations, or both. It refers to the process of getting bigger, regardless of the resources you spend to achieve that goal.

Example: Acme Corp. hires ten new sales reps to expand into a new region. The company realizes higher profits but also takes on the costs associated with salaries, benefits, and training for the new employees. Acme Corp’s revenues and expenses increase proportionately. 

When you scale a business, on the other hand, you aim to increase your overall revenue while controlling how much you spend to generate that revenue. A business focused on scaling will generally emphasize process efficiency to support continuous growth while keeping costs relatively flat.

Example: BizCo invests in an AI-powered sales platform that allows its current team of reps to generate twice the number of qualified leads in the same amount of time. Revenue increases significantly without the company adding any new staff. 

When should you scale your business? 3 signs

It might seem logical to scale as fast as possible, but jumping the gun can hurt your business. Typically, you’ll begin to think about scaling after you’ve developed business processes and systems to support growth and have a healthy cash flow. 

The rule of thumb? Start thinking about scaling when you have consistently increasing revenues over a period of six months.  

If your startup or small business faces any of these challenges, however, you may want to start thinking about scaling sooner rather than later.

1. When employees can’t handle work

Employees repeatedly dropping the ball because they’re swamped or turning away opportunities due to lack of time and tools can be your cue to start looking for cost-efficient ways to lighten the load. 

2. When leads are increasing fast 

More leads mean more sales, right? Only if you have the workforce and the processes to close and deliver quickly. If your CRM is full of open loops, it may be time to invest in tools to help you capture the increased demand. 

3. When long-term business goals are unattainable

If you’re regularly surpassing short-term targets but can’t see a way to realize your long-term business goals with your current workforce, technology, or equipment, scaling can help you make the leap from good months to great annual results. 

5 business areas to prioritize when scaling   

It might be tempting to overhaul your entire business model when you decide to scale, but you’re probably better served by honing in on specific areas most closely related to increasing revenues.

1. Number of team members 

Expanding your team can come with high costs, like salaries and benefits, but sometimes you need more people to get more done in a workday. To get the most out of your new employees, hire strategically and look for the right mindset. 

A business getting ready to scale will typically focus on building the sales and marketing teams since they’re the most important for growth. Recruit people with an entrepreneur's mindset willing to experiment and take risks to drive the business forward.

2. Workflows 

A lack of clarity and murky chains of authority can cost your team valuable time—and your business precious opportunities. Taking a close look at how you handle key tasks and delegate important decisions can help ensure alignment across functions. It can also smooth out the process from lead generation to sale to delivery of your product or service. 

3. Customer experience 

Scaling doesn’t just mean acquiring new customers. It also means keeping the ones you have happy and ready to buy again. Streamlining your customer experience not only helps you build a full pipeline of sales; it encourages repeat business that boosts bottom-line growth.

4. HR automation

Streamlining workforce management tasks like scheduling and payroll frees your HR team to focus on strategic decisions to drive growth. For example, a recruiter who can rely on an AI-driven recruiting tool to manage job requisitions or schedule interviews has more time to devote to finding the right hires to move your business forward. 

HR automation can also help your business save on administrative costs. An unfunded startup might not have the funds to hire a payroll specialist, but a specialized payroll software solution might be within reach.

5. Finance automation

Like HR automation software, financial management tools support scaling by taking over routine tasks like invoicing, expense tracking, and reporting, giving your employees more time to analyze data and make data-driven recommendations. Using specialized software can also improve accuracy and compliance, thereby supporting better cash flow management. 

How to scale a business: 8 scaling steps

Scaling your business successfully doesn't follow a one-size-fits-all approach, and your strategy should match your business model. The steps below can all contribute to rapid growth, but the order in which you implement them will depend on the specific goals in your business plan. 

1. Invest in technology and automation

Specialized software designed for HR and finance automation reduces the time your team spends on manual busywork and relieves the stress of worrying about compliance.  A tool that automatically runs payroll, for example, relieves your HR team from having to manually enter data, review timesheets, and set up direct deposits.

2. Develop management skills 

Teams need strong leadership to guide them through the sometimes bumpy process of scaling up. Make sure your business leaders have the training and tools they need to support employees, make strategic decisions, and collaborate across functions as you expand.

3. Enhance financial planning 

Go beyond basic budgeting and forecasting and invest in the tools you need to consider multiple scenarios and develop backup plans. Growth isn’t always linear, and you’ll want to ensure you have ample reserves in case your engine temporarily stalls. 

4. Expand your team according to the company’s needs 

Everyone loves a personality hire, but it’s important to look for candidates who bring essential skills and knowledge to the table. Strategic hiring means zeroing in on places where your team would benefit from additional experience and expertise and looking for candidates with exactly those capabilities.

5. Connect with customers 

Your best source of new revenue? People who already know and like your brand. Investing in tools that keep your current customers happy and engaged not only builds loyalty, it gives you an opportunity to collect unfiltered feedback that you can use to identify unmet needs.

6. Conduct a risk assessment 

While you can’t plan for every possible setback, a clear-eyed risk assessment can help you identify likely challenges and plan accordingly. Building a regular risk assessment into your scaling plan keeps you alert to new issues as your strategy evolves. 

8. Identify key expansion opportunities

Your business grows fastest by providing customers with a novel solution to a problem. In short, by meeting an unmet need. To identify these gaps in the market for your business to fill, pay attention to what your current customers wish you included and do a deep dive into what your competitors offer.

Now that you’ve looked at some of the concrete steps you can take to scale, consider how each fits into a larger growth plan for your business. If you’re struggling to prioritize, the tips below might help clarify where you need to dedicate the most time to optimizing.

1. Rely on software that scales easily 

The software that fits your business when you’re a solo entrepreneur or a small team of three might not meet your needs once you begin taking on new hires or generating more leads. Rather than jumping at the first tool you find that fits your budget, take the time to consider whether the software has features that your business will need in the future. 

2. Monitor financial health 

Scalability comes into the picture only after your business reaches a certain level of financial stability. Without a solid foundation, you can’t support growth efforts without risking cash flow issues further down the line. Regularly tracking expenses, revenue, and profits helps you stay in control as you expand as well as spot opportunities to improve efficiency. 

3. Build a scalable infrastructure 

Having scalable infrastructure means you’ve got reliable technology and airtight processes in place to support your team as workloads increase. When you do the groundwork to purchase the right tools and implement the best workflows, you protect your business against operational hurdles and unnecessary spending when demand starts to climb.

4. Outsource non-core functions 

Outsourcing non-core tasks, like payroll or expense reporting, frees up internal resources to focus on growth activities. You’ll also reduce overhead and increase efficiency, both of which make it easier to scale operations.

3 common mistakes when scaling a business 

Even with a thoughtful strategy and a well-defined set of goals, rapid growth presents new challenges for your business. Common missteps include rushing to scale, getting sidetracked, and focusing on immediate gains over future plans. 

1. Prioritizing short-term over long-term goals

Quick wins might boost immediate revenue, but they can cause businesses to overlook the infrastructure and strategy needed to support sustainable expansion. If you spend too much time and energy chasing short-term growth goals instead of investing in key functions, you risk straining your finances and eroding your customer base, both of which hurt your organization in the long run.  

2. Scaling too fast 

Many startups and small businesses that seem like overnight successes are actually the product of months, or even years, of incremental work. Resist the temptation to scale based on projections alone and, instead, hire and invest when a genuine need arises. Likewise, don’t try to scale your business by changing everything about how you operate immediately; slow and intentional change gives you time to make informed decisions and space to assess their impact before making your next move.  

3. Losing focus 

When you lose sight of your key objectives, scaling can become a recipe for wasted resources, misaligned priorities, and stalled growth. It takes a team effort to grow a business, and each member should have a clear understanding of performance indicators and the processes to achieve them.

Boost your business scaling with Rippling 

Looking to streamline core functions as part of your scale-up? Rippling lets you offload critical admin work for payroll, benefits, compliance, IT, and finance, helping your startup grow fast and stay lean.

Most ‘all-in-one’ software consists of acquired systems. These modules are disconnected, and so is your business data. Rippling takes a platform approach, building products on a single source of truth for all the business data related to employees. You benefit from a rich, flexible data source that unlocks a powerful set of capabilities.

With Rippling, you can:

• Analyze, automate, and orchestrate anything.
• Maintain airtight compliance with always up-to-date policies
• Get new hires to peak productivity—faster
• Stay competitive with easy payroll and rich benefits

Scaling a business FAQs 

How do I hire the right team during scaling?

Focus on hiring team members whose personalities align with your company culture and whose skills support specific growth goals. Adaptable people who don’t shy away from taking ownership of their roles and enjoy a dynamic working environment likely have the energy and flexibility required to move quickly and pivot to new tools and strategies. Be sure to prioritize roles that fill critical operations needs and skills gaps.

Should I seek external funding to scale my business?

The decision to seek out investors or bootstrap is highly personal and depends as much on your personality as your growth goals or the scalability of your business model. Doing it all yourself can come with financial pressure, but you won’t need to answer to anyone but yourself. On the flip side, venture capital funds and angel investors can give your business a big cash infusion, but with that funding comes a set of growth expectations you’ll need to meet to keep the money coming.

How do I identify new market opportunities for scaling?

To identify new opportunities for scaling, look for unmet demands and emerging markets by analyzing customer needs, industry trends, and competitor activity. Once you’ve identified potential areas for growth, you’ll need to use market data and customer insights to decide which gaps your business can fill.  

How can I ensure my business is financially ready to scale?

To ensure your business is financially ready to scale, develop a realistic budget and cash flow plan to manage your costs and revenues as you grow. If your current numbers don’t support scaling, prioritize building a cash reserve or securing access to the capital you’ll need to grow without sacrificing profitability.

This blog is based on information available to Rippling as of December 18, 2024.

Disclaimer: Rippling and its affiliates do not provide tax, accounting, or legal advice. This material has been prepared for informational purposes only, and is not intended to provide or be relied on for tax, accounting, or legal advice. You should consult your own tax, accounting, and legal advisors before engaging in any related activities or transactions.