Ways a Small Business Can Scale to Profitability

Ways a Small Business Can Scale to Profitability
Ways a Small Business Can Scale to Profitability

Ways a Small Business Can Scale to Profitability

You’ve got a great business starting up. It’s generating enough awareness, it attracts new customer every month, and the sales volume numbers look impressive. Yet, after you’ve done all the bookkeeping and calculations, the profits aren’t as big as you thought it would be.

Ring a bell? Actually, this problem is common for many small businesses, and many entrepreneurs being too busy without generating a significant profit.

How to improve this situation then? The answer is to get your business a healthy profitability and program it to scale continuously to achieve even better profits.

Here are some of the ideas that might help you achieve such feats:

1. Realize That Your Biggest Asset Is Your People

Contrary to how most businessmen and entrepreneurs think (and possibly you), your business’s greatest asset is not your product, your service, or even the company itself, but your human resources.

Scaling your business to profitability, first and foremost, should be centered around building a competent team. Depending on many factors, the size of your team might vary, such as the size of your business itself, the type of industry you’re in, and the current market demographics and competitions.

However, you should remember, that as a business leader, you are the most important part of your human resource, and you should base your team building around our expertise and experience.

For example, if you are a strong sales person, while you lack in managerial skills, you might want to partner up with someone with a good managerial experience or build a managerial team to complement your abilities.

One thing you should also remember regarding team building is knowing the right time. Investing in human resources can burden your company, so knowing when to recruit, and invest in building your team will be an essential part of your overall strategy.

You might already know that your revenue will grow with a strong marketing and sales team, and you already found a great candidate to lead them. But, will it be a good idea to hire them now when your product development is still ten months away from completion?

Knowing who to hire, how to maintain top talents, how to develop your team (remember, including developing yourself), and when to recruit, will be the essential keys to building a strong team to scale your business.

2.Don’t Run Out Of Money

Managing cash flow is a very basic business practice every entrepreneur should focus on. After all, you won’t be able to run your small business without a steady, sufficient amount of money, much less expanding and scaling the business.

Although cash flow strategy should be unique to each and every business, here are a few ideas that might act as your building block:

-Increasing Revenue

It’s a no-brainer that to have more cash, you will need to increase your sales. Although there are a countless revenue generation, sales, and marketing strategy, increasing sales always comes down to two very basic questions:

1. How you can sell more to your existing customers?

2. How can you capture new customers?

Each answer to the questions will generally have their own costs tied, and your job as a leader is to determine a strategy to maximize the revenue generation while managing the costs.

-Managing Receivables

Depending on your business model and industry, some of your cash might still be in the form of receivables. Is there any way you can speed up collecting receivables from your customers? Do you have too many customers with credit extensions? Is there any way you can encourage your customers to pay faster, such as giving discounts if they pay early? Those are some of the questions you might need to answer.


Will you need to secure a loan, or getting a new investor to fund your daily operations, as well as your plan of expansions? If managed right, getting both short-term and long-term loans can benefit your business. Picture a clear cash flow goals, and act accordingly with your financing plans.

3. Building Your Brand

No matter the kinds of businesses and the types of industries you are in, in this digital day and age, brand building is more essential than ever.

You can start by building an online presence through your own website, social media networks, and depending on your industry, e-commerce platforms.

Posting blogs,newsletters, and other forms of content marketing, as well as participating in trade shows and interviews, can help in building the customer trusts, which arguably, is the most essential currency for success in this day and age.


4.Know Your Metrics

In this era of big-data, knowing how to gather your data, what to read, and how to turn it into a profitable strategy are highly essential. Although the essential metrics for each business will be different, here are some of the most notable ones:

-Analyzing Your Gross Profit Margin

Gross Profit Margin= (Revenue-COGS)/Revenue

Knowing, and managing your Costs of Goods Sold (COGS) will be essential in determining your gross profit margin.

The healthy standard for a gross profit margin will be different for each industry, so make sure you do a bit of research to understand the standard.

-Analyzing Return On Invested Capital (ROIC)

ROIC=Net Income/(Debt+Equity)

Debt here usually refers to long-term ones, but can vary with each business.

ROIC determines how productive your business is in turning investments into profits, with 15% or higher being a healthy number.

-Understanding Your Asset Turnover

Asset Turnover=Total Revenue/Total Assets

The bigger the asset turnover number you have, the better your business is in using its asset to generate income.

Knowing your asset turnover can help direct your strategies to achieve goals faster, and more efficient.

There are many more data and metrics that you can use, and they will vary with different businesses. Understand what types of data will help you making better decisions and plans, and start utilizing them in your strategies.

5. Increasing Lead and Conversion

This is arguably the most important part in scaling your business to profitability. Yet, you can only achieve it (in a healthy way), after you’ve dealt with the other four we’ve discussed above.

In the end, scaling your business will be all about getting more customers, which in turn will generate more revenue, which with proper management, will translate to more profits.

To achieve this, you will need to attract interested customer prospects (lead generation), and convert them into paying customers (lead conversion). Check out our FREE marketing guide for ways to achieve better lead generation and conversion here. (Link to lyftyourbusiness marketing guide)

Bottom Line

Arm yourself, and your business, with the proper knowledge, expertise, and know-how to build a more profitable business with a great scalability.

Remember, that you shouldn’t always face the problems alone, and we are here to help. Don’t hesitate to contact us for a 1-hour FREE consultation here (link to liftyourbusiness contact), we will help you to generate plans and strategies to help your business achieve scalable profitability faster, and more efficient.