Essential for growth, but difficult to execute. The importance of getting it right can't be understated. The reward is growth that’s roughly 20 percent faster according to a Startup Genome study. Scaling also expands the business in such a way that it’s better able to meet demand and broaden your reach, enhancing your long-term success.
There’s a lot on the line. Especially when you consider how stacked the deck already is against new businesses. Roughly 20 percent of new companies fail within the first two years, with only 35 percent making it for 10 years and 25 percent lasting for 15 years according to the U.S. Bureau of Labor Statistics's data.
Roughly 20 percent of new companies fail within the first two years, with only 35 percent making it for 10 years and 25 percent lasting for 15 years according to the U.S. Bureau of Labor Statistics's data.
Scaling done correctly helps companies increase the odds of success. Many factors need to come together, including having a long-term plan, plenty of capital and resources that are at the ready. However, ask any successful entrepreneur if there's one guiding principle that comes before all others and you’re likely to hear about the importance of focusing on quality over quantity.
It Keeps Cash Flow Top of Mind
Research suggests that more than 80 percent of business failures are caused by poor management of cash flow, and scaling isn’t cheap. It’s a process that requires making investments along the way. It’s all too easy to lose track of spending and forget about the importance of keeping the cash flow on point.
You don’t want to find your business doubling its sales and still sinking deeply in the red. That’s why quality over quantity matters so much. If your focus is on quantity, you’re more likely to spend haphazardly on assets that aren't going to do anything to contribute to your cash flow or your bottom line. By focusing on quality instead, you'll naturally prioritize the investments that are going to pay off.
You’ll Have a Stronger Team
If you’re hiring just to put heads at desks and racing to get as much help as possible, you run the risk of ending up with a lackluster team. Bad hires can cost you big with lost productivity and potentially impacting your company culture and affecting other employees' performance.
Additionally, having to fire employees that don't fit puts extra costs on your plate with recruiting and onboarding the replacement for each non-quality hire. The average cost for hiring each new employee is $4,129 according to the Society for Human Resource Management. Taking a little more time to find the right fit for each position may slow your growth a little, but it will ultimately provide more benefits in the long-term.
It Helps Build Long-Term Demand
What would be more effective: Getting your message out to as many people as possible or getting it in the hands of a laser-targeted audience? One of the mistakes that entrepreneurs and founders make is focusing on ramping up their marketing efforts at warp speed. But this is a classic example of the quality of quantity.
Mass marketing can cost more. More importantly, it won’t build long-term demand the same way that choosing a target audience and directing efforts to them. It might take you longer to attract social media followers and ramp up your web traffic. But each follower and visitor you will get will be there because they're interested in what your company has to offer. Audience relevance and quality interactions will soar and long-term demand will begin to build even as you scale.
Less Shiny Objects, More Purposeful Strategy
There are new tools and tech debuting all the time. When you're scaling with a quantity mindset, you'll be eager to get your hands on everything that promises to be the next big thing. But when you're scaling with quality in mind, you'll only invest in tools that will support your goals and make the best use out of your funds.
The same goes for expanding into new online markets, retail spaces, warehouses, and offices. Each move you make while you're scaling your business should be filled with purpose. And that purpose should be to invest your money in the things that will yield the best return and provide the most value to support your goals.
Scaling a business isn’t a race. High performance is preferable and ultimately more stabilizing and profitable. Focus on getting the most out of every dollar you spend while scaling your business to avoid stifling growth in favor of creating a successful company.