How To Scale Your Small Business in 6 Steps

As a small business owner, your eyes are always on the horizon, seeking out growth opportunities wherever they come. You've figure how to start a business, now it's time to figure out how to grow it.

Growth is good, but growth isn’t always sustainable. That’s why we’re talking about scaling—growth that is deliberate, long term, and fully in your control.

To scale sustainably means going in with a plan and being prepared to handle any challenge that’s thrown your way. It’s the difference between getting a sudden spike in sales and every process falling apart, and getting a sudden spike in sales and handling every order smoothly with great customer service to boot.

It takes planning, expertise, and sometimes funding to get it done. We’ll walk you through how to craft an iron-clad plan for your future.

Meet your experts

Say hello to two brands that have successfully scaled their business from humble beginnings. We interviewed them for practical advice on scaling that you can apply to your own business.

Katie McCourt, Co-Founder of Pantee

Katie and her sister Amanda are the brains behind Pantee, a line of underwear and bras made exclusively from dead-stock t-shirts and t-shirt fabric. They launched in February 2021 after a successful Kickstarter campaign and have only grown since, adding new products and seeking further investment to keep up with demand.

Sustainability is at the heart of Pantee and plays a role in every part of its supply chain. The brand’s challenge is staying true to that ideal while scaling up.

Matt Mundt, Founder of Hug Sleep

Photo courtesy of: Sony Pictures Television

Matt started Hug Sleep with an idea, a dream of entrepreneurship, and $2,500. The Hug Sleep is known as the blanket that hugs you back—a cozy, soothing experience based on the science of weighted blankets. The company has exploded since Matt founded it, thanks in part to an appearance on Shark Tank, where he and his wife, Angie, walked away with a $300,000 investment.

Matt has had to grapple with a rapid increase in demand for what started as a solo venture he worked on after his corporate job ended for the day.

Signs you’re ready for the next stage of growth

Growth doesn’t just need the right plan, but the right timing. Growing too quickly can lead to expenses you can’t pay, employees you don’t actually need, or a supply chain that’s grown out of control. Conversely, not scaling at the right time could mean orders you can’t fulfill and tasks going unfinished.

Here are a few questions to ask yourself to help you decide if it’s time to make a plan for sustainable scaling.

Are you ready for the next step in entrepreneurship?

You should only take your business to the next step if you’re truly ready for a bigger enterprise. Scaling up means your company is going to take more time, resources, and expertise that you have to be prepared to give. Scaling up is an exciting time, but you’ll need a level head to get it done in a way that’s sustainable for your business.

Ask yourself:

Are you ready to take on more strategic challenges? That could mean expanding your product lines or selling globally.
Will you be able to dedicate more time to your business without other parts of your life suffering?
Do you have the financial resources available that you’ll need?
Do you need outside help? You may be at a point where having someone else handle marketing or customer service would make your day easier.
Do you need more employees to get the work done? Struggling to make your business work with your current team—which might be a mighty team of one!—is a great sign that it’s time to scale up.
Are you having trouble keeping up with orders? Having a higher volume than your business is prepared to handle means falling behind on packaging and deliveries, customer service gaps, and a whole lot of stress for you.
Are you falling behind on inventory? If you’re constantly finding yourself sold out, with customers clamoring for restocks, it’s definitely time to scale up.

Lastly, some businesses are meant to be small businesses. It’s OK if you want your side hustle to remain a side hustle. It all comes down to your personal priorities, lifestyle, and financial situation.

6 steps to scale your business

There’s no one formula for scaling a business, because every business—and founder—has unique strengths and challenges. Scaling up a clothing business, for example, is going to look different from scaling up a skin care empire. But there are some common threads to consider:

1. Make a plan for your future

If your company started as a hobby, like in Matt’s case with Hug Sleep, you may have just been going with the flow up until this point.

However, to scale sustainably, you need a business plan. It will not only help you understand your business, but it will be something you’ll need to show if you ever seek out outside investment.

There are different ways to format a business plan, but a basic one should include:

Executive summary
Company description
Market analysis
Management and organization
Products and services
Customer segmentation
Marketing plan
Logistics and operations plan
Financial plan

In particular, you’ll be creating a strategic marketing plan, with a forecast for the future outlining your plans for growth. What’s a realistic revenue goal for a year from now? What about five years from now? What’s your plan for increasing your marketing capacity?

“That was actually a really valuable part of the process for us—sitting down and saying, ‘Where do we want to be? Where do we want to be in five years? What do we see from this business? And where do we think it can go?’” says Katie.

Photo courtesy of: Pantee

“I think that, from day one, we’ve really felt that Pantee has huge potential to become a household name brand.”

Nail down where your business is right now, as well as where you want your business to go. Use the resources below to get started and consider the next steps in scaling as you create your plan.

📚 Resources

2. Evaluate your supply chain

Scaling up means a higher volume of sales and your supply chain needs to be equipped to handle that. What works right now might not work as well at scale.

Pantee, for example, was originally inspired by creating underwear from thrifted t-shirts. They then turned to dead-stock t-shirts, but they can actually be slower to process. Already-made shirts take longer to cut and evaluate for quality, so the brand has since expanded its source materials.

“We don’t just use the dead-stock T-shirts, we also use dead-stock rolls of fabric,” says Katie. “It’s the exact same grade of material, it’s just taken at a different point in the supply chain.”The fabric rolls allow for faster production but with the same commitment to sustainability. It’s even become a feature—getting their hands on a particular color lets them create a limited time collection drop that customers snap up.

Pantee goods are manufactured in Bangladesh at a factory with working conditions that Katie and Amanda vetted, but going overseas might not be the right move for your supply chain.

Matt scaled Hug Sleep while remaining with the same manufacturer in his home state of Wisconsin. In fact, a more local approach can help ease the stress that the COVID-19 pandemic has placed on global supply chains.

In either case, evaluate whether your current sourcing and manufacturing processes still function well at scale. If not, you’ll need to figure out next steps.

3. Hire strategically

Scaling up means you may no longer be able to do everything yourself, or with whoever you’ve recruited so far to make your business work.

Katie says Pantee has been running for the last year or so with just her and her sister as full-timers, supported by contractors. With a round of investment under their belts, Pantee is about to take on its first full-time employee.

Specifically though, they decided the most impactful choice was to hire someone to take care of brand and community management.

“Our strategy is very heavy on influencer marketing, ambassador marketing, and our partnerships, and it’s a very, very time consuming element of the business,” says Katie. Taking that workload off Katie and Amanda means more time back to focus on the core of the business.

If hiring is part of your scaling strategy, you should hire where an extra person would be most effective. For Pantee, it was marketing, but for your business it could be someone to work on product or customer service, or sales. Employees are a major financial commitment, so they should be focus on an area that will bring in the most return.

“We’re really excited to see what we can do sort of with an extra 40 hours a week put toward the business,” says Katie.

4. Outsource for efficiency

If it doesn’t make sense to hire your own employee, there are ways to outsource tasks to streamline your business as you scale. Matt, for example, doesn’t have any full-time employees. Instead, he uses an agency to handle all his marketing because he realized it was something a third-party would be better at.

“My background is in mechanical engineering,” he says. “I’m a numbers guy and a data guy. I thought there’s no challenge that I can’t get over.” So Matt tried to teach himself how to launch ads on Facebook, Instagram, and Google.

“I tried, and it didn’t work all that well.”

Photo courtesy of: Hug Sleep

By talking to agencies, Matt finally realized that they could create a more sophisticated campaign than he could, so he outsourced.

He also hit a wall on order fulfillment. He used to pack all the orders himself and drop them off at the post office on his lunch breaks. But that doesn’t work at scale. He now uses the Shopify Fulfillment Network to do the heavy lifting.

Whether hiring an agency or an employee, you should consider where you most need help. If you’re struggling with marketing a small business, it’s only going to get more challenging as you scale up. Decide what aspects of your business would benefit from expertise you don’t have and look into third-party services that can help you out.

📚 Resource: Find the expertise you need with Shopify’s network of expert partners.

5. Automate where you can

Getting things done faster or more efficiently at scale can be made easier with tools designed to automate your workflow.

These can be simple fixes, like how Matt created scripted responses to deal with a heavy influx of customer service inquiries after he appeared on Shark Tank.

Another example for streamlining customer service is using Shopify Inbox for communicating with customers. This tool allows you to utilize live chat—which we know is a fantastic way to increase conversions—in a way that keeps all your conversations in one place, allows for saved responses, and gives you metrics so you can track impact.

Check out these handy bots to learn more about how to automate your business.

6. Seek new capital

Scaling costs money, and you might need to identify the right time to seek outside investment to see your plans through and keep your cash flow flowing.

That timing is crucial. Capital is something you want to secure before you act on plans to grow, rather than when your business takes off and you’re left scrambling for the funds to support it.

Katie knew early on that Pantee would need investment beyond that initial Kickstarter campaign.

“With what our goals were, and the sort of early traction that we had seen, we knew very early on that it was not something that we could do ourselves and continue to bootstrap,” she says. “As much as it really works for some businesses, I think, for ours, it was just too out of scope for us.”

Last September, Katie and Amanda started trying to raise the £200,000 ($261,000) they projected they’d need.

“It's a difficult process. I think that we both found it to be one of the most challenging things that we’ve done,” she says.

The pitching process means having a solid plan (which is why a business plan was the first step) and fielding question after question from potential investors. Expect some ups and downs—Katie said some pitches went better than others, but they did reach their goal in the end. Once they started hearing “yes,” it gave them confidence to go out and pitch more.

Matt, on the other hand, made a big splash by appearing on Shark Tank. The show actually approached him, and he walked away with a $300,000 deal from two of the sharks.

Capital is something Shopify can help with. The Shopify Capital program is a way to secure funds that skips lengthy applications and allows you to repay using a percentage of your sales. Since 2016, Shopify Capital has made over $3 billion available to thousands of Shopify merchants, and our data shows that shops with this funding average 36% higher sales.

We also know that women and people of color have more trouble securing capital, and Shopify Capital is working to close that gap.

Don’t lose the big picture

There’s a reason you’ve gained the traction you already have, and you can’t lose sight of it, even as you scale.

Long-time customers of Pantee are drawn to its commitment to sustainability, so they remained committed to that philosophy. To do away with any of that while scaling would defeat the purpose of trying to grow your business and impact.

Katie says Pantee doesn’t see their relationship with customers as purely transactional—they’re a community. The brand’s early customers, the ones who’ve come along for the whole journey, are a pillar of support that have helped it get where it is today.

“Don't undervalue your community,” Katie says. “Ask them for guidance to really bring them on that journey. It does really pay off.”

Do right by your biggest fans and they’ll stick around as you shoot for the stars.

Illustration by Alice Mollon

Scaling a Small Business FAQ

How do you scale a small business?

Increase Your Marketing Budget: One of the most effective ways to scale a small business is to invest more money in marketing. This can include everything from increasing your social media presence to launching more targeted advertising campaigns.
Automate Your Processes: Automation can help you save time, reduce costs, and free up resources to focus on new growth opportunities. Consider automating tasks such as customer service, accounting, and inventory management.
Focus on Customer Service: Providing excellent customer service is a surefire way to scale a business. Make sure your customer service team is well-trained and equipped to handle customer inquiries and complaints quickly and efficiently.
Invest in New Technology: Investing in new technology can help you streamline processes and increase efficiency. Consider implementing new software solutions that can help you increase productivity and better manage your business operations.
Hire More Staff: If your business is growing, it may be time to hire more staff. This can include hiring additional customer service agents, salespeople, marketing professionals, and other administrative staff.

What is a scaling strategy?

A scaling strategy is a business plan for increasing the size of a business or organization. It involves developing an action plan for growing the business, including expanding into new markets, hiring additional staff, increasing production capacity, and investing in new technology. The goal of the scaling strategy is to achieve the highest level of growth and profitability possible.

What does it mean to scale a business?

Scaling a business means increasing its ability to grow and generate revenue without being constrained by its structure or available resources. This involves expanding operations, optimizing processes, and leveraging technology; for example, investing in automation tools, entering new markets, or improving supply chain efficiency to handle larger volumes.