How can ‘Scaling Too Fast’ affect the growth of your D2C Brand?
You have to believe us when we say that we understand how, as founders and owners of a D2C brand, it is super exciting to see your business grow. Nothing gives a better adrenaline rush than seeing your brand boom into explosive growth!
Everybody likes success. But the tough part about it is how it takes a lot of time to arrive. However, when your brand gets that success in just a matter of time, it’s only natural that you wanna do a little celebratory dance.
But wait, before you get all moving, let us burst the bubble for you. Growth may be good, but Scaling TOO FAST is not always the best way to survive the market. You need to know WHEN and HOW FAST to scale. And being capital efficient and able to identify profitability is a harmonious way of ensuring that.
Here are 3 ways to know if you’re scaling too soon!
Your cash outflow and profit margins are unrelated & unbalanced.
Your growth is calculated by first-time adopters and not recurring users.
You’re not being able to focus on keeping your costs stable.
So if you actually ARE scaling your business too fast, then what next?! What should you do to take precautionary measures so that when the scaling actually happens, you can be ready for it?
We’ve got you covered. Continue reading to look into the steps that will make you alert before you step into the puddle.
Here are the 5 facets to look out for before you scale your D2C brand
Below are the 5 key questions that you need to ask before pursuing that full scaling mode so that you can keep your guards up.
1. Am I able to capture accurate data & insights?
A common mistake that most business owners make is ignoring the data when they see positive growth in their business. As long as there is an increase in sales, they think that the data is all good and don’t bother checking out the statistics unless the sales fall.
But this mistake could come at a heavy price for you.
You should always keep monitoring your metrics, be it growth or downfall, likewise. You should do it especially during your growth period as there’s a chance of discovering insights that might help you grow even faster, or fix your funnel so more leads convert and purchase. Capturing accurate data on things like your retention rate, churn, and CPA, all will come to good use for your business growth.
2. Am I investing enough in retention?
It’s crucial for you to pay attention to your buyer experience in order to retain those new customers as you scale. Keep a closer eye on every step of the buyer’s journey. Analyze where you can improve. If it means creating a loyalty program, starting a subscription service, or capturing emails for your newsletter - do it all. Even your skyrocketing growth won’t be sustainable if you have an equally skyrocketing churn rate.
3. Is my target audience the right type of audience for helping me grow?
Before starting the tactics to scale your business, make sure you target the right audience, appropriate for your brand. This is equally applicable to your marketing, sales, or any other external communications that you put out when growing. Your ideal customers should be the ones who will demand your products, and whose pain points your products can solve. They are the ones who will leave you great reviews, recommend others of your products, and will repurchase time & again.
If you target the wrong group of audience, your buyers will call in to complain about the product not being what they expected. Because of customers thinking they were buying one thing but ending up with something else, you could also see an influx in low reviews.
If you’re growing with the wrong kind of buyer, growth isn’t necessarily a good thing.
4. Are my logistics capable of handling my growth?
Before diving right into a full-fledged business model - producing, crafting, packing, shipping, etc., make sure you have all the required equipment and logistics. In case your sales were to grow, you should be ready to satisfy your customers with the perfect products and/or services, that too delivered to them at the right time. Otherwise, you might spoil your first impression.
Also, make sure that you have a backup ready, because all these technical things can break down or go wrong anywhere without any prior notice. So, even if accidents happen, the show mustn't stop!
5. Do I have the right platform?
There are several platforms out there for D2C Businesses - Shopify, BigCommerce, WooCommerce, etc. Make sure to take a look at your current platform setup and determine if it can handle growth, and how you can optimize it for your growth.
Before starting to invest in growth, make sure your platform, including all the plugins you’ve installed, and other sales tools, can handle that growth spurt and is optimized for scale.
The Closing Lines…
By being able to identify profitability and being capital efficient, you can set your business up for long-term success. We hope that after giving this article a read, you’ve understood the ways you need to be careful of ‘scaling too fast’. Don’t forget to ask all those questions that we discussed, before scaling your business, so that you can be ready when success knocks on your door! ;)