Operating a successful business can bring a great deal of satisfaction. The company’s hard-working entrepreneur has been involved from the beginning. They laid the physical and logistical groundwork and put in countless hours before even opening the doors.
Once up and running, the business gradually attracted a following and built its credibility in the marketplace. Now, the entrepreneur wants to expand their company but is hesitant to turn some operations over to carefully chosen managers.
Daniel Shin is a successful South Korean entrepreneur who has (so far) launched three companies in his native country. Over the years, he has conquered his own scaling challenges, giving him a firsthand perspective on the steps involved in growing a business. Here, Daniel Shin offers five tips to business owners ready to step up to the next level.
5 Factors Set the Stage for the Scale-Up
Entrepreneurs who don’t create a solid growth strategy will find it difficult (or impossible) to scale their businesses. To avoid this potentially expensive mistake, business owners should meet five key conditions before launching their scale-up plans.
Established (and Favorable) Brand
Daniel Shin emphasizes that the company should have a recognizable brand that has been well-received by customers. Specifically, the business should obtain analytics data on how customers regard the brand compared to its competitors.
Analytics tools can also display the company’s website engagement rates compared to industry benchmarks. Finally, most social media channels have their own proprietary analytics tools that measure customer engagement and growth. For already established brands, tracking the brand with analytics as you scale is key.
Robust Product or Service Demand
An entrepreneur considering expansion should objectively evaluate the demand for their company’s product or service. Ideally, says Daniel Shin, the business operates in an industry with at least five years of projected growth.
A steady increase in sales indicates that the market is receptive to the company’s offering(s). A customer survey that confirms this trend is another positive sign. Taken together, these factors indicate a robust demand for the business’s product or service.
Adequate Physical and Virtual Infrastructure
Before embarking on a scale-up plan, an entrepreneur should decide whether their company has the necessary infrastructure to support the additional business. Areas of evaluation include all materials, equipment, and human resources necessary for everyday operations.
Companies also work with outside vendors and service providers. Examples include accounting firms, insurance brokers, attorneys, and technical support services. The entrepreneur should determine whether these service providers are equipped to handle the additional business that the expansion will likely generate.
Sufficient Cash Flow for Scale-Up Operations
Before beginning an expansion, the entrepreneur should ensure that the company has adequate cash to cover the additional expenses. These costs typically include additional workspaces, computer hardware and software, inventory and supplies, and new hires, among others.
The necessary cash reserves will vary by industry, logistics costs, and product or service offerings. With that said, experts say the company should have twelve (or more) months of expenses before beginning a growth cycle. Daniel Shin agrees, as trying to expand a cash-crunched business will not produce an optimal outcome.
Personal Commitment and Business Mentorship
Scaling up a business involves logistical issues, extra work and expenses, and a degree of uncertainty. Before jumping into the fray, an entrepreneur should consider their motivation for expanding the company. They should also ask whether they’re up for this formidable challenge.
Ideally, the entrepreneur will have a business mentor who can guide them through this nonlinear process. This business mentor should have a long record of successes under their belt. For perspective, Service Corps. of Retired Executives (or SCORE) research determined that 30 percent of entrepreneurs with one (or more) mentor interactions experienced business growth.
Scaling a Business: 5 Proven Tactics
Attempting to scale a business without a well-thought strategy will likely result in operational inefficiencies and higher-than-necessary costs. In contrast, a well-crafted plan builds a solid foundation for the company’s expansion.
South Korean serial entrepreneur Daniel Shin recommends that businesses implement five time-tested (and effective) strategies when gearing up for an expansion. These tactics work for any business type and industry.
Perform a New Competitive Analysis
During the company’s initial planning stages, the business owner likely performed a thorough competitive analysis. Besides analyzing each company’s offerings, the entrepreneur noted the competitor’s market position.
Most likely, some of these factors have changed, causing the need for an updated review. New competitors may have also entered the market since then. Daniel Shin recommends that the competitive analysis include these six questions:
- What is the Business’ Clear Value Proposition?
- How Does the Business Meet Customers’ Needs?
- What Are the Marketing Plan’s Strategies and Components?
- What Is the Business’ Product or Service Pricing Strategy?
- Does the Business Have a Customer Loyalty Program?
- How Can Customers Engage with the Business?
After concluding the competitive analysis, the entrepreneur should put their ego aside. They should objectively note areas in which other brands perform better and take inspiration from them. Conversely, the entrepreneur should capitalize on areas in which they are superior to competitors.
Delegate a High Percentage of Tasks
Daniel Shin notes that entrepreneurs who prioritize high-value tasks and delegate the rest of them to subordinates have more time to devote to company growth. In contrast, business owners who regularly immerse themselves in the company’s operations have little time for goal-setting and strategic planning.
Delegate to the Right Team Members
Identifying tasks appropriate for delegation, and determining the team member best equipped to handle them, is key. Daniel Shin provides a four-step delegation template:
- List Business Owner Tasks vs Tasks Appropriate for Team Members
- Choose the Most-qualified Team Member for Each Project
- Define Each Project’s Standard of Success
- Provide Feedback and Recognition Where Appropriate
Put the Marketing Flywheel into Motion
Daniel Shin notes that the three-part marketing flywheel showcases a dynamic method of business growth. Simply put, a satisfying customer experience results in repeat purchases and referral business. Once the flywheel gets in motion, it consistently generates a flow of happy customers who steadily help to expand the business’ reach. The marketing flywheel has three well-defined steps:
Solve a Common Customer Problem
The business identifies a common customer problem and provides an innovative solution. The company publicizes this offering via blog posts, videos, and social media posts. Free product trials and paid advertising are also part of the campaign.
Cultivate a Relationship with Customers
Build a solid connection that encourages customer loyalty. Begin by publishing engaging, informative blog posts that provide value to customers and prospects. Strengthen the connection with a customer loyalty program, free product samples, and/or advance notice of new product offerings and promotional events.
Provide a Superb Customer Experience
The business should elevate customer experiences during every phase of the buying cycle. Communicating the company’s mission, offering superior products, and providing great customer service are key elements. Satisfied customers will lead to referral business and a growing customer base. This sustained expansion can propel the company to the next level.
Adopt an Omnichannel Communications Strategy
In today’s technology-fueled business landscape, an expanding company should consider adopting a customer communication method that honors the customers’ preferences. Known as “omnichannel communication,” this method delivers the same customer experience regardless of the communication channel.
To illustrate, a customer may purchase a company’s product from the business’ retail store. After the sale, the customer has a product quality issue that spurs her to call the customer support line. Later that week, she has another question and this time she conducts a conversation with the company website chatbot. Daniel Shin says most forward-thinking companies also offer SMS/text messaging, email, and social media messaging capabilities.
In an omnichannel communication framework, all support associates share real-time information on the customer’s issues. Therefore, the customer will enjoy the same seamless experience regardless of their communication channel. This promotes higher customer satisfaction and retention while also increasing the chances of referrals.
Focus on Growing Effective Leaders
Prioritizing employee development throughout the company helps to elevate team members’ knowledge and promote professional growth. Over time, these employees are well-positioned to step into leadership positions. Daniel Shin details four ways to promote leadership development:
- Initiate Energizing Quarterly Team-building Activities
- Build Knowledge Bases to Enhance Customer Experiences
- Prioritize Employee Educational Opportunities and Reimburse Part (or All) of Professional Skill-building Event Costs
- Launch a Company Book Club that Promotes Team Members’ Professional and Personal Growth
Review and Retool the Company’s Goals
Changing economic conditions, demographics, and consumer tastes necessitate a regular review of the company’s mission and operational goals. Every quarter, the business’ leaders should determine whether its existing product or service offerings are performing as expected.
If not, the executive team should decide whether introducing new offerings or revamping the marketing plan is the right move. In certain cases, operational processes may also need to be retooled.
An Advisory Board Can Play a Key Role
A pro bono advisory board can offer company executives expert advice, directional guidance, and mentorship. The company’s CEO should select a well-rounded group with proven business operations and strategic planning expertise. Over time, the advisory board’s knowledgeable guidance can help to drive the business’ continued growth.
About Daniel Shin
Successful entrepreneur Daniel Shin serves as PortOne Global’s founder and co-CEO. Based in Singapore, this rapidly growing payments facilitator works with businesses throughout the Southeast Asian market.
Prior to his current venture, Daniel Shin founded TMON (or Ticket Monster) in 2010. TMON is South Korea’s second-largest mobile commerce company. In 2012, Daniel Shin co-founded Fast Track Asia. This South Korean business is a start-up incubator that has already debuted five fast-growing companies. Each business has been sold or is venture-backed.
How Daniel Shin’s Entrepreneurial Journey Began
Although Daniel Shin was born in South Korea, he spent his younger years in the United States. In 2008, he earned a B.S. in Economics from the University of Pennsylvania’s Wharton School.
After graduation, Daniel Shin utilized his education while working as a McKinsey & Company business analyst. This position offered him business world exposure that he would later apply in his successful companies. Returning to South Korea in 2010, Daniel Shin began an entrepreneurial journey that continues to generate positive results.
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