Updated: Jun 29, 2022
Business growth and reduction call for realigning production and resources in order to meet the customer demand.
When we talk about scalability, we’re discussing capacity and capability. Can your organization's systems, team and infrastructure handle rapid growth? Alternatively, can your organization scale down operations quickly and efficiently when a crisis hits?
The COVID-19 pandemic highlighted the need for businesses to first scale down, then shift, and then, for the lucky ones — or those organizations able to quickly meet new demands —scale up operations.
Scalability touches all areas of operations and can meet resistance both in the C-suite and on the “floor.” For reductions, team members worry that their jobs will be scaled down, project managers watch as new projects fizzle, and leadership may not react to changing metrics quickly enough.
At times of growth, new projects, processes, project managers and teams can also cause stress. And the dangers of scaling up too quickly are big — resource and revenue shortages can turn new customers into angry ones when a company can’t fill the orders behind the rapid growth.
Boost Midwest specializes in strategic change management using evidence-based metrics unique to your organization using their Operations Audit through their AIM methodology -Analyze, Innovate, and Manage.
The 6 key scaling strategies
It may come as a surprise that scaling strategies are similar whether your organization faces rapid growth or sudden reduction. This is because the same 6 key strategies hold true when the demand for products or services change — whether you have 3 employees or 3,000. It’s the processes to implement these strategies that may look different. The key strategies hold true no matter your organization’s size.
1. Manage cash flow.
Critical for operations always, when sudden change occurs cash flow becomes more crucial than ever. Can you or your investors handle a sudden need for new equipment, employees and outside vendors? A change in scale can require all of these, even during a reduction.
If money is tight, as often occurs during change crises, pay close attention to your accounts receivables. For new clients, inquire about an upfront deposit to protect your cash flow and help establish a solid working relationship from the first order. For current customers, be insistent regarding overdue payments. Renting instead of purchasing equipment — and hiring freelance or contract employees — help keep a healthy cash flow during scale-up costs and scale-down revenue losses.
2. Look for new clients.
This is the right time to be resourceful in wooing new customers and keeping current ones. Look to diversify your customer base in creative ways.
Your organization likely has ideas or resources that can help other businesses struggling with specific issues like the supply chain, warehouse space, products and services and even employees.
Benjamin Zelweig, COO for Active Staffing and a Forbes Councils member, advises increasing your business development and relationship building “by looking at industries that are growing, and think of ways you can add value.”
Finally, keep communication open with current and former clients to learn how business has changed on their end and how you can both work together.
3. Change how you spend.
Growth often entails unanticipated expenses, and often the largest cost is new employees. You may even need to create a new department like a project management office.
Scaling down a business often calls for the opposite — your lease or payroll is cutting into your cash flow and revenue.
Both scenarios call for a change in the cost of human resources.
Shifting to a remote or partially remote workforce eliminates the need for leasing office space and frees up funds for critical resources, including employees.
It’s also helpful to evaluate your organization’s workforce. It’s well known that automated processes save costs. Does every position require a body or could it be automated?
While an initial investment in technology is needed, remote employees and automation can free up cash flow for organizations scaling up or scaling down.
4. Get impartial advice and insights.
Whether an organization looks to leaders in the business community, an outside consultant or perhaps the Small Business Administration (if your business has fewer than 1,500 employees), an objective perspective is essential to help manage sudden and rapid change.
This is because leadership is often too personally involved and even financially invested in the change to have the clarity needed to evaluate data, the current strategic plan, and what’s essential to execute the plan.
“It’s like a great golfer. When you are having trouble with your swing you turn to other golfers and coaches to help you – people from your world,” noted Boost Midwest President and CEO Marie Stacks.
5. Communicate with stakeholders.
Precisely what information you share with internal and external stakeholders depends on if your organization is scaling up or down. But either way, communication is critical in steering business through both positive and negative change.
Instead of shielding customers from why an order or project schedule or cost has changed, sharing information creates a stronger business-client relationship — and you may even receive unexpected help.
6. Stay calm.
While this is easier said than done, it can make a crucial difference in your organization’s culture and employee morale. Uncertainty causes stress, and revenue loss — even in times of rapid growth — causes incredible stress, especially if there is no quick or simple solution in sight.
On the other hand, fostering a culture of adaptability and teamwork will help in steering your organization through change crises when they occur.
“What a leader says, how they say it, and who they involve in those conversations is extremely valuable and certainly always noticed,” Marie Stacks notes.
Boost Midwest is a “change champion”. They are ready to help your organization manage rapid change. Call with Boost Midwest today: Quick Schedule Link here.