15 Mistakes Business Owners Make When Scaling A Business

Table of Contents

Scaling a business is always an exciting and nerve-wracking step for any business owner. You’ve invested countless hours, money, and love into growing this baby from the ground up, and it’s wild to think about it finally achieving the growth you always envisioned.

However, scaling your business is no walk in the park—any business owner who claims otherwise is LYING to you. I have personally built and sold two businesses, one of which grew to over $25 million in revenue, which then sold for 8+ figures. And let me tell you, it was hard; rewarding, yes, but challenging.

I see many business owners that when business is good, and the revenue is flowing in each month and steadily growing, they’re itching to scale. The trouble is, a lot of them aren’t in control of key components of their business, have no idea what’s actually involved in scaling up a business, and end up finding out the hard way when everything starts falling apart in front of them.

So, what are the challenges that face a scaling business, and how can you make sure you’re fully prepared for the climb ahead of you and avoid making these common scaling mistakes? 

15 mistakes to avoid when scaling your business

Scaling too soon

“I have never seen a company die because it didn’t scale fast enough.”—Guy Kawasaki. 

When Mark Zuckerberg and his friends first launched Facebook, they didn’t make it national or global right away. They started really small and only made it accessible to people with a Harvard.edu email. Gradually they added more colleges to the list, eventually opening it up to anyone with a college email address. It wasn’t until after this that they launched to everyone.

Although Facebook might seem like a company that scaled quickly, the reality is it didn’t. They took their time, they grew gradually, and the company is now worth over $900 billion.

When your sales are continually rising, it’s tempting to scale based on projections, but usually anticipated sales don’t happen as quickly as you thought they would.

The result? You’re left with hefty employee overhead costs and a dwindling cash flow.

Don’t make this mistake as a business owner. Only expand when you need to hire more employees to manage the demand of existing sales, not projected ones. 

You're too busy to grow

As a business coach, one of the common challenges I see people make when scaling a business is being so stuck in the weeds of day-to-day tasks that they literally have no time to even think about expanding.

Your job as a business owner and leader is to always think of and implement better systems and processes to help the business run more efficiently and grow. And if you don’t have these seamless systems and processes in place, you cannot scale. What’s working for you now will not continue to work when the business expands.

So, think about where most of your energy is currently going. If it’s mostly spent on admin or putting out fires, here’s how to fix it:

Not thinking about the future

Scaling any company requires a business strategy that centers on anticipating and planning for the future of your business. Failing to plan and prepare is a mistake most business owners make, which can quickly lead to you going out of business.

Markets and industries change, global events impact your business (hello, Pandemic), and it’s on you as the leader of your company to have one eye on the future and one eye on the now.

Is the cost of goods or labor set to rise? Is a recession looming? Are tax rates changing? Is technology transforming the way people in your industry do business?

These are all factors you need to be on top of and monitor so that you’re fully prepared for what may lie ahead. Instead of fighting fires, you want to prevent them from happening in the first place. Focus on being proactive instead of reactive.

Mismanaging your money

Business owners usually fall into one of two categories:

You probably know which camp you fall into.

No one likes to see money lying around in the bank, not doing anything. So, are you the kind of person who always spends extra cash on new software, marketing, or fancy sh*t for your office?

Spending money is fine if it’s justified and will immediately help you grow your business. But spending money on stuff you don’t need right now is a waste, and it can quickly put you in debt.

Ask yourself, can I wait a little longer before I make this investment?

But being too tight with your purse strings can be just as detrimental to your business.

For example, if you and your team are currently using outdated, slow computers and software to do your day jobs, but business is booming, and you have customers or clients pouring in, this is preventing you from working as efficiently as you can. It’s only a matter of time before you, your staff, and your customers become frustrated and leave you.

The moral of the story? Look for smart ways to invest your money back into your business to help you grow.

Messy accounting

Want to scale your business? Then you must have a solid understanding of your financial numbers, including profit margins, sales conversions, taxes, trends, projections, etc.

Small business owners often find this fairly easy because the company is still in its infancy. However, as your business grows, it becomes a much larger job to stay on top of your accounting. It’s all too easy to end up in a mess. And if you don’t know where you stand when it comes to your finances, how can you properly steer your business forward? That’s like trying to steer a ship in the dark and hoping you don’t hit a GIANT iceberg.

As your business grows, it’s essential that you hire a CPA (either on a full-time, part-time or freelance basis, depending on your needs). It’ll be far too much for you to deal with along with your main responsibilities; plus, this isn’t what you excel at, so leave it to someone who can do it in their sleep.

Once your accounts are under control, you’ll have peace of mind and more time to focus on what you do best. 

The Essential Role of a CFO in Scaling Small Businesses

Incorporating the expertise of a Chief Financial Officer (CFO) into your team is crucial, especially for small businesses aiming to scale effectively. This role is pivotal in managing the financial complexities that come with growth.

A CFO for small business can oversee cash flow, ensure financial strategies align with business goals, and provide insights into financial planning and risk management.

Their knowledge is essential for making informed decisions, optimizing operations, and identifying investment opportunities to support expansion.

This addition to your team can lead to better financial health management, allowing you as the business owner to concentrate on your company’s broader vision with confidence.

Scaling a business when your product still has kinks

If your product still has some errors you’re trying to fix, make it a priority to improve all of those issues before you try and scale; otherwise, you’ll end up scaling a crappy product that requires even more energy to fix. 

Be patient. Perfect your product. Get it to the point where you fully believe in it, you want to use it, and you can’t help but shout about it from the rooftops because you know this product is a life-changer.

It’s equally important to have a solid understanding of who your target customer is, which may be different from who your existing users are. Check if there’s enough demand for what you’re offering before you think about scaling your business.

Hiring the wrong people

As I mentioned, I’ve personally built and sold multiple businesses of my own and helped thousands of other companies grow over the last 20 years. This important to choose a business coach with a proven track record in business. I’m not just talking the talk; I’ve walked it.

This is what you need to look out for when hiring anyone in your business. Trying to scale with the wrong people in seats will lead to disaster. Ineffective hiring methods are one of the biggest roadblocks to success in business—read more about this here in my free Six Winning Strategies Ebook. 

So, find out whether a person is a good, cultural, long-term fit for your company. Do they share your vision and mission? What mindset and beliefs do they have? What are their personal goals? And do their ethics and morals align with your own?

You want to focus on hiring people you want to remain in your company forever (and who want to stick with you). These kinds of employees are the ones you can trust and always count on to deliver. If possible, hire people who have scaled businesses before, are familiar with your industry, and have the knowledge and expertise needed to help you grow.

It’s equally important that you develop strong leadership skills so that you can effectively nurture and lead your team.

Or thinking you don't need to hire anyone!

“If you want to go fast, go alone. If you want to go far, go together.”—African proverb.

Many business owners start as a company of one. You’re doing everything: sales, marketing, copywriting, web design, service work for clients, running finances, and more.  Doing this makes it near impossible to have a healthy work life balance.

But one of the common mistakes business owners make is believing that they can carry on this way when scaling a business.

You may have been great at handling everything by yourself up to now, but if you want to build something great, you need a great team that you can delegate to so that you can focus on more crucial areas of your business.

Scaling without a clear goal in mind

What does scaling your business look like to you?

What numbers are you hoping to reach?

Do you want to make a 6-figure profit or a 7-figure profit?

What does success look like for you?

Because this is different for all business owners.

Don’t drift and hope for the best!

Once you know what you want, this enables you to set clear, specific goals to help you reach your target. Once you know your long-term goals, you can break them down into smaller, more manageable goals and start working towards them.

Focusing on short-term sales rather than long-term demand

Another danger when scaling a business is putting all your focus into marketing and driving sales as quickly as you can. This can lead to too much emphasis on turning a profit and not enough attention on your actual product or service offering, as well as customer experience and the value you’re providing them.

It doesn’t matter how many sales you make—if your customer isn’t 100% happy, they’re unlikely to turn into repeat customers or help bring new business your way, which means those sales won’t be sustainable. Long-term demand is far more important than bagging quick sales today.

Another issue when scaling is investing in the wrong kind of marketing. The key to growing your business is not throwing more money at marketing; it’s ensuring you’re investing time and money in the right kind of marketing for your business. You can read more about this here in my Six Winning Strategies Ebook. 

Not leveraging technology in your business scaling strategy

Technology is changing and evolving every minute of every day. If you’re not leveraging this in your business, then you’re falling behind your competitors, and it won’t be long before you fall so far behind that you end up out of business.

Don’t be old school when it comes to embracing new ways of working that can save you so much time and stress! Yes, it may take some time to get your head around new software and ways of working, but it’ll be worth it in the long run.

Make a list of any outdated processes you’re currently using in your business. Are there tools or software within your budget that can dramatically transform these processes and help your team be more productive and efficient? If so, what are you waiting for?

Scaling a business by competing on price

Many business owners believe that by increasing production, they can cut their price, remain profitable, and increase their profits by becoming the cheapest on the market. Sometimes this can work, but more often than not, you end up in a race to the bottom, which is not where you want to be!

Instead of competing on price, compete on quality, value, and experience. Position yourself as the very best in your industry rather than the cheapest, and make sure you show your customers the value you’re providing. This will enable you to maintain your price points (or even raise them) and not have to worry about finding yourself in a price war in the future.

Not designing a new management structure following growth

Scaling a business always presents new challenges, one of which will inevitably arise in your team structure. The management structure that you have in place as a company of 25 people may not be suitable when you grow to 50 people or 100 people, and so on. A flat structure is common for small businesses, but medium and large-sized companies eventually require a layered structure. As you grow, it’s important to prepare for necessary changes to your leadership team and how your business is structured.

This links to what I said earlier about being future-oriented and proactive in running your business. If you know your team will expand soon, start thinking about what your new management structure will need to look like.

Ignoring problems that arise

The nature of scaling a business means that everyone is thrown out of their comfort zone (including you). This will inevitably result in issues related to your staff, processes, or products. The most important thing to remember when this happens is to confront issues when they arise instead of ignoring them and hoping they’ll disappear (they won’t).

Forgetting that scaling your business is sometimes about reigning things in

Scaling a business is not just about expanding and growing upward and outward. It’s also about reflecting on current processes, structures, and employees and stripping back anything that’s no longer working. Trimming the dead-weight is important because anything that isn’t helping you grow is only keeping you stagnant.

Ready to scale your business?

Want to know more about how to scale your business the right way?

Book a complimentary strategy session with me. We will utilize my proven system to identify areas of your business that can be improved and lead to the fastest POSITIVE impact on your profits and time.

More Great Articles:

Latest Podcast Episodes: