Scaling isn’t easy. It’s even more difficult to scale to profitability.

Any average entrepreneur can expand the business, hire more staff and increase production. They may even succeed in increasing revenue. But only few entrepreneurs are able to scale while remaining profitable.

Scaling to profitability starts from having the right foundation for your startup, building up that foundation and remaining laser-focused as you work with your action plan.

To get you started, here are essential tips to set you off in the right direction.

1. Develop a Bookkeeping System

Adequate bookkeeping will keep you in the know of your profitability. You could decide to hire someone to do it for you. Or you could do it yourself with Excel or Quickbooks or Wave, or cloud-based options like Bench Accounting.

2. Pick your battles wisely

All business owners and entrepreneurs take risks. The difference between being successful and failing in business has to do with if a person makes calculated or reckless risks. For every potential business relationship, project or new venture, have enough facts. Do your research. Picture the worst-case scenario, and develop back-up plans. Then make a decision.

3. Develop a Cash-Flow Strategy

Always have an eye on your cash flow. A lot of startups die because they run out of money. Make a living document containing all expenses. One-off expenses like building a website, office equipment etc and recurring expenses like rent, electric, salaries should be included.

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You should have at your fingertips, your business’ daily operational cost. If you’re having a hard time, try SCORE’s break-even chart. It will help you to track your profits and see how to increase them.

4. Increase lead generation and conversion

The more customers you have, the more sales you record. More sales mean positive impact on profits. Just make sure to watch your marketing budget. You want to acquire more customers in a cost-effective manner. In a manner that minimal cost is incurred for each customer acquired.

By the way, word of mouth is one of the most effective ways to attract and convert new customers. So keep your current customers happy.

5. Optimise your operations and eliminate wastage

Over at Business2Community, they recommend some easy ways to increase your business efficiency and eliminate wastage in your business. They include, cutting down your power costs; negotiating to ensure that you are getting the best deals from your suppliers; ensuring that space is being optimally utilized, and ensuring that your current premises rental expense is the most cost-effective option for your business.

6. Expand into new markets

Launching into new markets will grow your customer base and increase your sales. It’s never a bad idea so long you have your unit economics down.

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7. Start Analysing and Improving your numbers

Using the information gleaned from your KPIs, take appropriate steps to increase profits. For example, let’s take Gross Profit Margin which tells you how much of your profits are being lost to costs.

To improve Gross Profit Margin, you can raise your prices, market more high-margin products, negotiate cheaper rates with suppliers or find a cheaper supplier.


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