Recognizing Growth Indicators in Entrepreneurship: How to Know When You're Ready to Scale

You’ve managed to successfully wade through the often murky and confusing waters of starting a business, and now? It’s time to grow!

When you’re thinking of scaling, you’re looking to increase your business’s ability to facilitate and sustain a heightened level of growth, revenue, and volume. To scale successfully, your business requires a different set of skills and a deep understanding of your positioning in the market. Scaling at the right time is essential to achieving sustainable momentum, and there are several signs that will inform you that it’s the right time to take your next steps forward. 

Keep reading for the six key signs that let you know your business is ready to scale, with insights from members of The Forum community who have successfully scaled their businesses.

Consistent Revenue That Continues to Grow

If you’ve built your business enough to generate revenue consistently, that’s a feat to be celebrated in itself. However, if you want to scale, a key indicator that signals you may be ready is if your revenue is consistent and grows steadily over a prolonged time period. If your sales have been growing for anywhere from six months to one year—with profit margins as high as 50% or more—this is a positive sign that there is a strong demand for your business’s offerings, and it is healthy enough to support expansion. 

A real-life example is from Kate Suh, Co-Founder of Wunderkids, and The Forum community member, who shares that stable numbers helped inform her decision to scale. "Over the last year or two, I saw that numbers were stable,” she says. “Whenever I tried to do something new, it always had stable results. It gave me more confidence and told me there was consistent demand for what we were offering.”

You Have Built a Loyal Customer Base

When you’re first building your business, you do a lot of heavy lifting to attract new customers. When your business is ready to scale, it’s not just about finding new customers; it’s about customer retention. Loyal, returning customers prioritize spending their money with you, provide a consistent stream of income for your business, and happily promote your business to others. If you’ve managed to secure a strong, repeat customer base that continues to grow, this also indicates that you are speaking directly to and are serving a segment of your ideal audience. By scaling, you’ll be able to expand your reach and serve more of your key target market.

For Kate and her business, she mentions that a growing international customer base was a clear indication of her next steps. "We were getting encouragement from U.S. customers who were saying, 'Can you please ship your items here?' People were actually doing extra work to get our product. Now, we have warehouses in the U.S.," she explains.

The Demand for Your Product or Service is Outgrowing Your Capacity

Is the interest in your product or services so large that you have difficulty keeping up with the demand? This could be another sign it’s time to scale. While a strong interest is a positive thing, consistently running out of stock, working endless hours to support the demand, long wait times for restocks and deliveries, and disgruntled customers are not. Experiencing any one of these roadblocks in your business can quickly change customers’ perceptions and turn your business from one that’s highly sought after to one that consumers are wary of purchasing from.

To mitigate any missteps, start thinking about what you would need to do to meet the demands of your audience while maintaining a standard of service. Do you need to invest significantly in more inventory? Hire more people? Standardize systems and processes? Scaling can alleviate some of the pressures and challenges your business has to serve your growing audience.

You Have Financial Stability or Resources for Funding

Having a solid financial foundation is one of the most critical indicators that your business is ready to scale. To grow your business, you may need to make financial investments in different aspects of your business, from technology to legal support to new staff. If you have a healthy and stable cash flow, you can easily manage the cost of any expenses without it being a threat to your business.

In addition to having strong cash flow, you have a thorough financial plan that includes resources for accessing capital. Your plan should include a budget for future expenses, but don’t forget to have a generous budget for unplanned expenses. 

For women entrepreneurs, a significant funding gap makes accessing capital more challenging and complex, with the average amount of financing for male-led businesses being approximately 150% higher than that for women-owned companies. Gender stereotyping can also make it challenging to secure funding. Women’s business initiatives are often viewed as riskier, and overall, women entrepreneurs are unfairly viewed as less competent, even when pitching the same business idea as a male entrepreneur. Additionally, since entrepreneurship is still often viewed as a masculine endeavour, women are often viewed as risk-averse and less confident.

Tessa McLoughlin, Founder of KWENCH and The Forum community member speaks about the ramifications of gender stereotyping when attempting to secure funding. "I think men are encouraged to scale faster than women. They’re encouraged to take those risks and believe in their vision," she says.

Arming yourself with a compelling brand story, solid data, and a strong pitch strategy helps investors understand the opportunities your business presents. Seeking out programs like The Odlum Brown Forum Pitch also enables you to connect with folks who are aligned with your vision and are ready to support you. 

Read this to see how you can transform your business metrics into compelling stories that secure funding.

You Have Strong Systems and Operations

To scale, you need to ensure your systems, operations, and technology can support a new phase of growth. For example, you will reach a point in your business where continuing to manually package every order, being present for every service provided, or doing all of your marketing yourself will not be sustainable. Evaluate your methods of operation, your processes, and the technology you use to run your business. What will it take to have your business operating like a well-oiled machine, no matter the size or stage of growth? Investing in new software, outsourcing, or automating certain tasks may help take your business to the next level.

Ravy Mehroke, Founder of Bombay Brow Bar and The Forum community member mentions that managing her systems was particularly challenging for her as she scaled her business. "Trying to keep our systems updated as we grew, evolved, and changed has been difficult," she says. The current setup you have in your business may not work once you scale, and it’s imperative to have a plan in place for accommodating and adapting to any and all changes. 

You’re Aware of the Market and Any Potential Risks

Just because your business is doing well doesn’t mean it’s the right time to scale. Before you make the decision to expand, have a thorough understanding of the market. What are the current trends? Is there still a growing demand for your product or service? What are your competitors offering? Are there any risks or areas of concern in your industry? Having a comprehensive understanding of where the market stands—and where it is likely going—will help inform your readiness to grow.

How The Forum Can Support You

When you’ve decided that you’re ready to scale, The Forum is here to support you. For example, The Forum Mentor Program is available to entrepreneurs seeking personalized advice from established business owners and leaders who can tailor their insights to you and your specific business needs. The Odlum Brown Forum Pitch is an intentionally designed program that connects women entrepreneurs to the right community, contacts, and resources that can help them secure funding opportunities when looking to scale. 

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