Increased profits. A wider client base with whom to share your goods and services. The chance to have a greater impact in your community. These are just a few of the doors that open when you are successful in scaling your small business – successful, of course, being the operative word.

We’ve all heard stories of businesses that tried to scale too fast and too soon, only to end up losing ground and setting their progress back instead of driving it forward. As CPAs who specialize in working with small businesses, at BradyRenner we’re dedicated to helping business owners navigate the nuances of scaling to avoid pitfalls and capitalize on opportunities for growth.

Welcome to the first in a six-part series designed to equip Maryland small business owners with the knowledge they need to scale strategically and successfully. Read on to learn more about the number one mistake businesses make when scaling – and how to avoid it. 

It’s About Time

It may surprise you to learn that the most important thing about scaling is not necessarily how you do it, but when you do it. There are few things that can set a business back on its heels faster than choosing to scale at the wrong time — and few things that can drive growth better than matching internal readiness with market opportunity. So how do you know when it’s time to accelerate, and when it’s time to pump the brakes?

A seasoned small business CPA is the best resource to help you read the signs within your own company and the market. The following are a few of the factors they can assist you in assessing as you develop a strategic plan to scale your business:

Do You Have Enough Financial Leeway To Scale?

There’s no way around it: Scaling your business costs money. Depending on your product or service and your business model, you may have to invest in hiring and training new personnel, purchasing and gaining proficiency in new technology or equipment, expanding your current physical location or acquiring a new one, or increasing and diversifying your marketing efforts.

It’s vital to have a full understanding of your financial bandwidth to support these measures — and to have enough of a cushion to sustain them and your business even if it takes you longer than you hoped or anticipated to realize a return on those investments.

How Reliable Is Your Sales Process?

Being able to count on steady revenue intake and cash flow is key to funding your scaling efforts, and keeping your business in the black while you’re investing in the new people, processes, and places that will eventually take you to the next level.

A trusted CPA will partner with you to evaluate the trends that can be gleaned from your P&L sheets and financial statements over time so that you have a clear grasp of just how predictable your income is.

Have You Reached A Profitability Impasse?

A thorough analysis of your business’ performance will include three pivotal questions:

1. Are you outpacing your sales quotas?
2. Are you finding yourself having to turn down opportunities because you hit a wall with product inventory or human capital?
3. Are these things happening consistently?

If the answer to all three of these questions is yes, a small business CPA can help you determine whether this means you have truly outgrown your current goals and have the resources in time and funds to scale up to the next level.

Are You Prepared for the Unknown?

This is a question every business owner should pay attention to, whether they are considering scaling or not. While our businesses and the economic landscape have many aspects that a skilled small business CPA can analyze and glean insight from to drive strategic planning, the bottom line is that some things will always be unpredictable. 

From pandemics to recessions, the well-advised business owner will know how important it is to plan for the unknowable, as even one bad season can prove catastrophic for those who are unprepared.

When you’re scaling your business, this foresight and attention to mitigating risk are even more crucial. This is where you’ll want to partner with your CPA to:

• Assess the consistency of your sales and the stability of your sales processes.
• Shore up relationships with your investors, customers, and other stakeholders so that they will stand by you through changes and perhaps challenges.
• Ensure you’ve built up a healthy financial buffer to help you weather whatever may come your way.

BradyRenner CPAs: The Trusted Experts for Maryland Small Businesses

Small businesses in the Baltimore-Washington region have been relying on the expert advice of BradyRenner CPAs for decades. Known for both our in-depth understanding of what small businesses need to thrive and our approachable and friendly service, we’ve earned the trust of business owners in industries ranging from healthcare and construction to professional services and more. 

If you’ve got your sights set on scaling your small business but want to avoid the time and cost of making an ill-timed move, we’re here to help. Give us a call today, and stay tuned for the next article in our series, where we’ll explore how a CPA can help CEOs avoid losing sight of their goals while scaling.