Opinions expressed by Entrepreneur contributors are their own.
For any successful business, deciding when to start scaling is the most challenging time. Just as time cannot stand still, businesses must also keep moving, which means expanding when they are doing well. Put simply, a competitor will step in to fill the gap.
During my journey as a business leader, I have always seen the need for expansion as an excellent problem to have. It is proof and testament that things are going well and that the next stage of the company’s evolution already needs addressing. The key is to get ahead of it and plan the expansion. For me, there have been seven key markers.
Related: 7 Common Mistakes to Avoid When Scaling Your Business
1. Secure the right funding
Cash is king, and having it means you get to grow your business. The type of capital you choose should align with your specific business goals. Choose partners wisely, especially early on. Having now been part of two startups with very different experiences, I would say it is important to have like-minded investment partners when looking at equity rounds or growth capital. Are your investment partners really partners, or are they just access to a checkbook? Are they genuinely excited about your mission and vision and want to help you be successful? They will not run your business for you, but they unquestionably come with a breadth of experience in seeing what works and does not work when growing a business.
I always want my investors to stay with the business throughout the entire journey. Venture capitalists have an obligation to realize a return to their investors on a five- to seven-year time horizon, so sometimes, these interests are only aligned with a specific stage of the business.
Never underestimate the vast amounts of non-dilutive capital that are available, such as small business innovation research grants from the U.S. government, charities, high-net-worth individuals and even friends and family.
When considering debt, it is always important to consider your interest rate. Unless you have a sure bet on being able to pay back that loan, debt has priority when a company struggles. The government offers low-interest loans as well for specific types of businesses, which can be attractive depending on your type of business.
2. Prioritize strategic spending
How will you use the funds? Can you self-fund or bootstrap without delaying your timeline? This is a fundamental question that you can not avoid answering. I am often plagued between the balance of being thrifty versus losing speed.
My mother always said: “Don’t be penny wise and pound foolish,” and this phrase has stuck with me. Spend money if it gets you to your goals faster, and don’t if you aren’t sure. If the dollar you spend is not generating a 5x return on the value created, don’t spend it.
3. Validate product-market fit
Do you have a product-market fit? If the answer is no, you are not ready to scale. The “build and they will come adage” is false and always has been. You are not building a temple. You are building a business that creates a product people want to buy, so make sure they do.
I always ask: “Does my product offer value to the customer, and are they willing to pay for it?” This applies regardless of whether you’re B2B or B2C. Flat sales indicate a need for more traction, and rapid growth is not sustainable. Shoot for smooth and steady growth, and learn what works and what doesn’t as proper channels to exploit your business.
Related: 5 Tips for Expanding Your Small Business (The Right Way)
4. Master your pitch
Pitching is an art. Do you have your pitch down? One thing I will never forget reading was that Steve Jobs used to prepare 90 hours for every hour pitch he gave. That is humbling to me. For me, practice is 100% key. Something is wrong if you cannot pitch your business or deliver your pitch even when starving, dehydrated and under the desert sun.
The best business leaders tell a convincing story. Create a compelling traveling story that gets investors, consumers and buyers wanting more and feeling FOMO if they are not taking advantage of it. I have always spent hours and hours refining my pitch, getting better, fine-tuning and trying different words and phrases to see what resonates the most with the listener or audience. You have to crush your pitch, so give it the time it deserves.
5. Develop an execution plan
What’s your execution plan? Businesses fail because they run out of money from poor execution. Write it down. Write … it … down. The whole thing. This could be on a notepad or a 275-page slide pack — whatever works for you and your team. Follow your plan. Only deviate from your plan when learnings from your execution plan say that you need to make a pivot or try something different. I always follow my plan. Oh, and be patient.
6. Realistic valuation
It is a mistake to get hung up on valuation. We are no longer in the 2021 bubble. So, focus on getting your operating capital and executing your plan. The right investment partners will always make sure that you are taken care of, as they make money if you make money. I always say if your idea and business are impactful, then the money will come.
Related: 5 Strategies to Know As You Scale Your Business
7. Practice self-care
Do not burn out. Burnout is real, and if you are too burnt out after your raise to run your company, what is the point? Practice self-care, do yoga, eat salads, get mani-pedis, go out for cocktails or mocktails with friends. I understand your life is your business, but without you, there is no business. Recharge if and when needed, and step away from your company for a bit. I am the worst at taking this advice, but I promise you, nothing will fall apart if you take a long weekend to visit family or sit on the beach soaking in the sun. Do it for yourself, and your business will reap the dividends.
Following these seven markers, which are not in order or priority but simply as a checklist, should bode well for any successful entrepreneur looking to build an empire.
