Starting a business, let alone one that is successful, is no small feat. With so many uncontrollable variables that can have positive and negative effects on your business, knowing when it’s time to scale can be tough. While some businesses wait until they have the backing of venture capitalists, others may feel that there’s no better time than like the present to make things happen. But since approximately 50 percent of all businesses fail within the first five years, acting too soon or not soon enough can impact a company’s longevity. Even with little to no room for error, there are ways to know whether it’s the right time to take things to the next level.

Meeting Benchmarks

Surpassing quarterly and annual goals is the first indicator that a business should consider scaling. Goals need to made with success in mind; however, they shouldn’t be so easy to achieve that a company struggles to accurately gauge overall growth.

Goals should be ones that are challenging to reach, yet rewarding for the same reason. This way, they allow companies to see consistent growth over a set period of time. Note that in most cases, benchmarks will differ between businesses. Some businesses want to see quarterly advancements while others look at things on an annual basis.

Increased ROI

Return on investment (ROI) is another clear indication that it’s time to grow. Making a profit is not the only reason to consider scaling. There’s a huge difference between seeing an increase in ROI and being able to measure reliable and accurate data. It’s the data that should be the deciding factor as to whether a business is ready to grow.

In addition, businesses also need to project where they see the business in the future. Whether it’s four months down the line or four years, a solid business plan with objectives and alternatives. If scaling tactics don’t lead to the expectations you have for your business, it’s time to realign your tactics and adjust your expectations.

Supply and Demand

The gap between supply and demand can make or break a business. When demand is low, businesses take a hit, often being left with excess supply they cannot sell. However, when demand is high and a business cannot keep up, that’s the time to consider scaling. A thorough understanding of constraints on supply and demand for your business can help illuminate whether or not you have the resources and capacity to scale.

Scaling a business to its maximum potential takes time. It also takes a multi-faceted business plan that clearly identifies the pros and cons, as well as an alternative solution, just in case the growth doesn’t match the projected growth.