When you’re preparing to scale up so as to accommodate an increased level of business, it’s important that you examine all your needs from the standpoint of whether they are actual business needs, or whether they fall on to your ‘wish list’. Here is a practical approach to calculating the cost of scaling up to meet your expanding business needs.
The A, B, C Exercise
In this exercise, A represents the figure you originally start out with as a calculation for what it will cost you to scale your business up. Now take a hard look at that figure and cut it in half. Would you be able to accomplish your business requirements if you had only half that amount to accomplish all your scaling?
Now take your original calculation and reduce it down to one-quarter of the original amount, which is the C figure in our exercise. By taking a very hard look at all scaling costs involved, it might very well be that your A figure was overblown. Even if the C figure is too little to get the job done, it could be that the B amount is still capable of accomplishing all your scaling, and if so, it would have saved you half the amount that you needed for a loan.
Which Answer Is Correct?
Obviously, there’s no way to know in advance which of these three figures is the most appropriate for you to embark on your scaling operation with. However, the whole point of the exercise is to get you to take a very hard look at all those costs which are absolutely necessary and discard all those which are not. Once you’ve done this, you will automatically discover which of the three figures is most appropriate for your upcoming scaling operation.
Scaling Up Your Business?
Sometimes the cost of scaling up can be tremendous, especially if you haven’t been planning for it. We might be able to help with your scaling costs at Rotay Capital Finance, so please contact us and let’s work together to find ways that may work for you.