5 Downsides to Operating at Scale (and How to Overcome Them)


Insights for ProfessionalsThe latest thought leadership for Management pros

Wednesday, January 6, 2021

Growth is perhaps the ultimate goal of any business. In most cases, it’s essential for the sustainability of an organization, and if companies aren’t adequately prepared for what growth brings, they can encounter obstacles. At best, these roadblocks can halt any scaling plans in their tracks. At worst, they can endanger the future of the business.

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5 Downsides to Operating at Scale (and How to Overcome Them)

As you set out on the journey to grow your business, it’s important to be aware of the risks that may come with operating at scale. Scaling up isn’t just about ambition; planning, funding and putting risk-management systems in place are vital to promoting success. It needs to be a long-term process that takes full account of a business’s current and potential capacity.

Below is a list of the 5 most common downsides that can come with operating at scale along with tips for how to overcome them.

1. Revenue management

As you look to grow your business, you’ll inevitably have to invest in additional resources and capacity. In cases where this investment requires advanced payments, the cash flow of your organization could become tied up. Failing to adequately plan for this stage could lead to a dangerously imbalanced cash flow. Traditional ways to solve these issues include opening up new revenue streams or seeking bank loans. In addition, it’s important to regularly review budgets during the scaling process to ensure it remains sustainable.

2. Growing pains

Scaling up quicker than your business infrastructure can handle is risky. According to a study by Start-up Genome, high-growth start-ups have a 74% failure rate due to premature scaling. The key to avoiding this failure is by focusing on the optimization of internal processes to build a robust and flexible infrastructure capable of scalability.

Robotic process automation (RPA) can offer vast improvements to current operating models, instilling speed and agility and freeing up your human talent to focus on the creativity and collaboration required to drive successful growth. Tasks such as data entry and analysis can be handled by digital workers informed by advanced machine learning techniques, while smart platforms can reduce the time employees spend on other administrative tasks, like setting up meetings or communicating key information.

In a digital age, intelligent automation is being adopted at breakneck speed and can mean the difference between falling behind or gaining the competitive edge.

3. Staff management and burnout

This is another area where RPA can assist with your growth plans. If your company is expanding capacity rapidly, existing employees enduring increasing workloads are at risk of suffering burnout. This can harm productivity and damage the growth trajectory of the business. One way of solving this is to restructure or hire new employees.

However, intelligent automation can help by introducing digital workers to take care of time-consuming, rules-based tasks to ease the workload burden on your human employees. Implementing RPA tools can also reduce future costs of hiring and onboarding new staff, which is sometimes a process of trial and error.

Scaling up, of course, means hiring additional staff. Nevertheless, by defining a focused strategy that considers the value RPA and a digital workforce can bring, you can avoid the traditional pitfalls associated with hiring new resources, while helping your current employees avoid burnout.

4. Legal jeopardy

As your business grows, potentially expanding to new regions or markets, you need to be fully aware of the legal obligations this brings. Different geographical regions and commercial markets have different regulations, so it’s important to understand how these changes can impact your business as you scale.

While smaller companies may sometimes fly under the radar when it comes to compliance, as businesses grow the need to manage compliance effectively grows too. Hiring the right people with expertise in regional or international compliances and regulations can help. It may also be advisable to look at finding a service partner with built-in compliance provision.

For example, some software-as-a-service companies provide intelligent tools that automatically update and align business activities to meet compliance requirements, which can save you time and logistical headaches with improved accuracy of output.

5. Working with unknown entities

As you look to grow, you’ll inevitably be dealing with new buyers and the markets in which they operate. You may also be trading in new products, including purchasing and selling. This poses its own risks, as you don’t want to extend credit to an unreliable buyer or enter a market your business doesn’t have the infrastructure to serve.

Again, process automation can use machine learning to assess new markets, identify key trends and issues and identify the creditworthiness of new buyers. This can help you avoid making the wrong decisions as you grow and encounter unknown entities, protecting the revenue of your business and reducing the traditional acquisition risks associated with growth at scale.

Future-proof your business

While operating at scale can be both exciting and scary, the rise of intelligent automation tools has the potential to reduce most of the risk from the process, allowing you to focus on areas where unique human value can maximize that growth.

The risks mentioned above are all part and parcel of operating at scale, the caveats to increasing sales, boosting revenue and improving your market share. But with expert guidance and many new tools available, you don’t have to let these complexities hinder your growth ambitions. Instead, you can use these tools to future-proof the infrastructure of your organization, reskill your employees and unlock the myriad benefits of operating at scale.

By confronting these downsides, you will not just overcome them but identify areas of fragility within your business, leading to a stronger overall operational model and resilience against potential crises and rapid market evolutions.

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