How to Scale a Business: Think 3PL

Programs like Shark Tank and funding sites like Kickstarter have put a spotlight on entrepreneurs who have an idea and an appetite for growth. Top of mind for these new companies is how to scale a business.

tree growthThese entrepreneurs have plans in place to seek capital and get traction for their product in the market. What many don’t have, however, is a plan to scale distribution operations if revenue even comes close to matching the charts they show to investors.

Third party logistics providers (3PLs) are the ready-made answer to this missing link in the business plan.  They provide “infrastructure on demand” – warehouse space, transportation, inventory management systems, and everything else required to get products to market.

3PLs help tackle the problem of how to scale a business

Many 3PLs will offer their infrastructure on a “pay-as-you-go” basis. Space and labor expand and contract based on need.  This way, the entrepreneur’s logistics costs parallel the revenue stream. Other benefits of 3PLs for scaling a business include:

  • Avoid capital investments – 3PLs have already made investments in systems and equipment and spread these costs across many customers.
  • Economically manage volume surges – 3PLs are experts at managing short-term labor requirements.
  • Get professional advice on key strategic questions – for instance, 3PLs can recommend the most economical place to locate fulfillment centers.

Perhaps the most valuable benefit that 3PLs provide to growing businesses is the know how to scale a business and its distribution operation. To look at volume projections several years out and predict the space, equipment and automation that will be required.  In other words, to have a distribution operations plan that matches the financial plan. This level of detail provides a comfort level to investors who may be concerned about the company’s ability to scale operations to meet growth goals.

Let entrepreneurs be entrepreneurs

Let’s face it, most entrepreneurs are focused on growth, not infrastructure. And that’s not a bad thing.  After all, without an idea that captures the market’s fancy, who needs a CAD drawing of a future warehouse layout?  3PLs provide the infrastructure and know how that allows entrepreneurs to be entrepreneurs, while the logistics experts take care of the critical details of product distribution.

If you are wondering how to scale a business and are looking for an experienced logistics partner to help your company grow, consider North Carolina-based Kanban Logistics. We work with many small businesses, including QVC suppliers, to help them get to the next level of growth.  Contact Kanban today.

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