181: Scaling Your Subscription Box: The Path to True Growth

Today we're diving into a topic that could make or break your subscription box business: scaling. If you've been wondering why scaling is so crucial, or if you're stuck in the day-to-day grind and feel like growth is just out of reach, this episode is for you. I'm gonna break down why scaling isn't an option, but a must for long-term success and how it can transform your business and your life. Let's jump in.

Welcome to the Launch Your Box podcast with weekly tips, tricks, and strategies to start, launch, and grow your subscription box. Now here's your host, Sarah Williams.

Hey everybody, welcome back to the Launch Your Box podcast. I'm so excited about today's topic because we're really diving into something that can transform your business, and that's scaling your subscription box. I'm going to take you back to 2017 when young, fresh-faced Sarah was starting her subscription box. I launched with 44 subscribers. I had a goal of 50. I launched and I got 44 subscribers. And in that moment, when I go back to 2017, I never ever thought that I would be here in this moment. I couldn't imagine packing thousands of subscription boxes a month. I couldn't imagine having my own fulfillment warehouse. I couldn't imagine having a team of people that would pack this. You know, 44 subscribers was me personalizing and packing each box with love and care myself. And my goal when I started the subscription box was to have 100 subscribers, and I thought that was going to take me forever to get there. And what that 100 represented to me was that people loved what I had. It also was a number that would pay for my overhead expenses of my, of my retail store. So those fixed expenses like rent and utilities. And so that was the goal. Little did I know that very quickly 44 would turn into 400, would turn into thousands, and I Those were also the challenges that I faced as I was scaling. I grew fast, I grew fast, I planned growth fast, and I was growing faster than I could keep up with. And I wasn't willing to admit it at that time. And I needed to slow down and catch up to the business. I grew so fast in the period of 18 months, I almost grew myself out of a business. I almost just was burnt out and couldn't keep up because I didn't know what I needed to know to scale this business effectively, and I needed to slow down that growth so I could catch up to the business. When I was having hundreds of subscribers, probably near 1,000 subscribers, I had one employee. I had two embroidery machines. I would literally sit behind the embroidery machines for 10 hours a day, 10 days straight. This is me. Running the business and embroider the monograms for the subscription boxes. My logistics were so far behind the growth of the subscription, and it was really hard. And so we're going to talk about scaling today so that you understand, you know, how to do that more effectively than I did, the lessons that I learned along the way, and really to understand if you're ready to start scaling your own subscription box business. Now, scaling isn't just about making more money. So it's not about— we say scaling is growth, right? It's about creating systems and processes that allow you to grow without burning out. I wasn't scaling. I was growing, but I didn't have the systems and processes in place to actually scale my business. So what I was experiencing over that 18 months was just rapid growth, but not scaling. And so scaling matters because when you have these risks of staying small, right, there are risks when you play small. There's mindset shift that you need. And we're going to talk about how to recognize if you're ready to start scaling. Okay. So let's look at really growth versus scaling. I'm talking about growth. I was growing, but I wasn't scaling. Growth is about adding resources. Like I was adding time, I was adding money, I was adding effort and I was increasing my revenue. That was growth. But scaling focuses on increasing revenue significantly without the proportional increase of resources. So if I was scaling in those 18 months, I wouldn't have been sitting behind an embroidery machine for 10 hours a day for 10 days straight. I would have scaled my resources along with the growth of my business. And that's what happened. There's a difference between growth and actually scaling, and we're going to talk about that in this episode. Here's an example to give you. So growth would be packing 100 subscription boxes and then maybe 100 other orders. I'm growing, people are buying more things. I'm, I'm packing 100 subscription boxes and then I've got to go pack 100 one-off orders. Scaling is really packing 200 of the same subscription box orders instead of one-off here, one-off here, one-off here. And this maximizes your resource because, you know, if you're listening to this, you're probably a product-based business owner. You know the difference in packing 100 of the same thing versus 100 different orders. It's a big difference. So if you've got a product that's scalable, like your subscription box, you're not having to add double the resources to double your subscription box. You just have to get some systems and processes in place so that you can maximize your resources that you have and be efficient in packing those 200 of the same thing. So that's really what scaling is. Growth comes— scaling of one particular product is what we're talking about, and we're talking about that in the form of subscription boxes. Subscription boxes rely on the consistency and scalability to stay profitable. We know that we get better pricing when we buy in bulk. We know the more boxes we buy, the cheaper they are. We know the more pieces we buy, the reduced cost is on that product. So subscription boxes rely on being able to scale scale to increase our profit margin as we grow. Without scaling, it's really easy to hit a ceiling where your costs are break-even sometimes, and that's why it's important to focus on scaling that one perfect product, and that one happens to bring recurring revenue to you. And so that's what we're going to talk about. So I like to talk about the benefits of scaling first. We're going to talk about a lot of different things in this episode, but let's just talk about the benefits of scaling. The first one is the financial freedom that you're going to gain. When you start to scale your business, scale your subscription box, you're unlocking higher profit margins because your cost per unit decreases as you go. So while you might be starting at a 40% profit margin, as you scale, you're going to get 50, 60, 70% profit margin. So that's going to build a lot more cash flow back into your bank account. When you're ordering 1,000 custom items, the cost of that is way less than ordering 100 custom items. Do you see what I'm saying? So this is bringing in a bigger profit margin for you and it allows you to free up cash flow so you can reinvest in marketing, you can reinvest in team building, you can reinvest in new products. So it's hard to do those things when you don't have the systems of scale. When you're just at, say, 100 subscribers, there's not a lot of extra cash flow to build off of. And think about your business. If you've got 100 subscribers right now, think about the profit in dollars from that one month of 100 subscribers. When you have 500 subscribers, You still have the money to do what you need to do as far as buying products. Now you're getting them cheaper. Now there's also excess for you to hire some help. There's also excess for you to market to grow your business even further. You are capped with those 100 subscribers right now. You might have enough money to buy the product for the next box and pay yourself a little bit and pay the bills of your shop, but you are not going to get to growing your business if you keep that box at 100 subscribers. Okay, so financial freedom is the main benefit for me. Number 2 is that you get to serve a larger audience. Think about the impact that you have when you have 100 subscribers. You're essentially impacting 100 people. When you have 1,000 subscribers, now you get to serve and impact 1,000 people. Scaling helps you reach more people who love your offer. Next week on episode 182, you'll get to hear Betsy's story of scaling. So she went from 118 subscribers to 1,800 subscribers in a period of about 2 years. Her Instagram went from a few thousand followers to over 300,000 followers, and the people that were following her were actually taking time to learn and watch and do something for themselves. So Betsy's niche is lettering, and she has wax seals. So when we were talking for her episode, you know, lettering is a skill that you can develop over time. So she's teaching people how to develop a skill, and so people are doing that for themselves. That's the impact she's having. People who thought they never could letter are learning to letter from her business. But also she talks about these wax seals and how anyone can do it. And that's why she feels like it's grown so quickly, is because anyone can watch her videos and do the exact same thing that she's doing. It doesn't require a built-up skill. And what her impact is, is she's taking something that she loves doing. She's showing it to the world. She's showing them how easy it is. And now it's such a simple niche, but people, they have an outlet. To learn lettering, to craft with the wax seals, to send mail with them, to— she did some things in Christmas time to put them on your gifts. Like, there's so much you can do with something so simple. And that's her impact. That's the impact that we have. What is our impact? My impact is that I have thousands of women who get to put on the items that I curate for them in their boxes and feel good about their bodies, feel good about the way they look, feel put together when they walk out the door. That's the What is the impact that I have? And while you think, oh, I'm just providing cute clothes or cute accessories or cute things, or I'm just doing this, think about the person that's receiving that and why that's important to them. And that's what you're doing. Your impact is a huge benefit on scaling. You have a bigger impact. And the other thing is that you're going to get your time back. When you start to scale, you're going to get your time back. So scaling creates a business that can really thrive without you doing all the heavy lifting. Last week, I was in Palm Springs hosting my mastermind for the week out there. And I remember telling them that I haven't heard from the warehouse team at all for the week. It could be burning to the ground or it could be thriving. And it was thriving. Nothing was wrong. But they don't need me anymore. I have scaled the business up enough where I can hire enough people to do all the jobs and the business does not need me in an everyday capacity anymore. That gives me time freedom. So I have financial freedom, I have time freedom, and I am creating an impact for the ladies that subscribe to my subscription box. And so That's, that's just what I wanted to do. And if you would ask me 10 years ago what I wanted from this business, you know, the goal would be just to make the things and not have to be the laborer. I was the laborer in my business for a very long time. And so now I don't touch the products anymore except to look at the sample and approve the manufacturing. I don't touch the boxes. I don't touch the products. I have amazing people that work for me that take really good care of my baby, that subscription box. And that has created— because of scaling, if I would have stayed at 100 boxes, I would be packing those boxes, I would be monogramming those boxes, and I would be living paycheck to paycheck still. And so scaling has created a lot of freedom for me in my business. It also can really make your business more valuable and potentially sellable in the future. You know, I'm not a spring chicken. I am not going to do this for the next 30 years. So how do I set my business up to be, you know, sellable? The numbers matter. The scalability matters. Taking me out of the equation of the business matters for someone else to take it on. And I can show them how it runs without me on a regular basis. So those are all part of the benefits of scaling. Scaling your subscription box. Now, on the flip side, let's talk about some risks of not scaling, okay? And the first one that I can think of that I feel like I've seen over and over again is the burnout. Many subscription box owners think that they can just do it all— packing, customer service, marketing, curating— but all of this leads to burnout fast. And we do all these jobs, we do all of these jobs. In the beginning, I did every one of these jobs for my business, plus personalizing, plus shipping, plus, you know, all the things I did, every one of those jobs. I know what that's like. And I did it into hundreds or thousands of subscribers. I know what that's like. And I was so exhausted and I was so burnt out and I was so just reactive instead of proactive in my business. And I don't know how long that would have been sustainable. Right. And people do that because they say, I don't want to hire. I don't want to manage people. I'd rather just do it myself. It'll save the headache. I don't have to deal with people's personalities and attitudes and all the things, right? That's what we say. I don't want to hire people. And then I don't want to manage a warehouse and a team of people and all the things. I said that. I said that for a long time. I'd rather just stay small. I don't have to hire a bunch of people. I don't have to rely on other people. I don't have to manage a big warehouse and all of the things that come with it. But that wasn't what happened for me. That wasn't in the cards for me. I realized that I couldn't sit behind that machine 10 days a month when I was exhausted. I, I basically took half of my month every month and did nothing for the business except stitch. I was covered in thread all the time. My back hurt, my hands hurt, my It was so inefficient. I needed to start to scale the business and catch up to the growth of the business. The other really risk of not scaling is plateauing. When you don't scale or you don't plan to scale or you don't try to scale, you're going to reach a point where your growth stops and this is going to put limits on you. Okay. If you don't want to scale or you don't put the infrastructure together to scale, here's, here's an example. Oh, but I work from my home. I can't hire anyone because I don't want them in my home. Right. This is something common that I hear a lot. You're choosing not to scale. You're choosing not to create growth in your business because you don't want to hire people because you don't want someone in your home. So what's the answer? We have to get a building outside of our home. I get not wanting people in your home, but you're choosing to cap your business. This limits your income. So this is going to limit your financial freedom. This is going to limit your time freedom. And it's going to, it's going to limit the ability to reinvest in your business. And that's what we need for true growth. That's what we need to truly scale. We've got to be able to reinvest in our business. And when we say I don't want to hire and I don't want to manage more products and more space, then we're not going to scale and we're going to plateau. And that's fine if you just need some little side money and you're making that, that's fine. But if you truly want a business that has long-term success, pays you well, and is sustainable over time, you've got to start thinking about scaling your subscription box business. And a lot of it comes from your mindset. A lot of it comes from that internal fear. Right? What if I fail? What if I hire people and I can't pay them because I'm not actually growing? What if I rent a building and business starts to drop? What if I fail? What if I can't handle the growth? What if it comes too fast and I'm not able to figure it out? What's gonna happen? But scaling is not about having it all figured out and being perfect. It's about the progress. It's about the systems and processes. And we don't have it all figured out overnight. But if you want to figure it out, if you want to scale, it's part of the journey. We figure it out as we go. It's also like being a mom, right? You don't always know how to be a mom when you have a baby. You figure it out as you learn your child, you learn yourself, you learn how to be a mom. It's not about being a perfect mom, it's about progress. It's about your journey of being a mom. I, I relate being a parent to being a business owner so much because I feel like it's the same thing to me. We have to remove the scarcity mindset and really put ourselves in the abundance mindset. We have to start investing in tools, in people, in systems to be able to scale. And that feels risky and that feels scary. But if you don't ever do it, you don't ever know, right? Instead, you're sitting behind two embroidery machines trying to monogram 1,000 pieces in 10 days. By yourself. Instead of worrying about what happens if I grow, I want you to think about the benefits of your growth. Can I hire someone to sit behind that machine so I don't have to? Can I hire someone to pack so this isn't solely dependent on me? What happens if I get sick? Are the boxes going to get out on time? Is this business too dependent on you? And if that's the case, you're the bottleneck of your own business. You're never going to scale if this business is too dependent on you. I need you to view these challenges as opportunities to learn and grow and stretch. And you're going to have setbacks. We're all going to have setbacks. And any time we stretch ourselves, you have to be uncomfortable to feel the wins. Riskiness is uncomfortableness. You have to be uncomfortable in order to grow. There were a lot of times I was uncomfortable. Do you know how much an embroidery machine costs? $20,000 to $25,000 my machines cost. I had two, which was a huge investment. I'm paying payments on these two embroidery machines. As my business started to grow, I could pay cash for for a third one and a fourth one and a fifth one and a sixth one. Do you know how great that felt to pay cash for these embroidery machines? Because my business could absorb that, and I needed it to get monogramming done quicker. And I'm still growing. And there are times I had setbacks. There's times that I made a $10,000 sourcing mistake, and I had to eat that in my business. There will be setbacks. There's been product loss in the ocean and I had to figure it out. There's been packaging late, not show up or come all damaged. All these things happen whether you're at 100 subscribers or 1,000 subscribers. The problem is the cost is just bigger. But you're going to— you're going to grow from that. You're going to learn from that. And that's where I need you to flip your scared mindset, your scarcity mindset, your fear into a growth mindset. Let's talk about how you know when you're ready. So there's a few signs of you knowing when you're ready to scale. First one is you've got proof of concept. You are— you have launched your subscription. You are— you have a great retention rate. You're selling new subscriptions regularly. And you have that steady, consistent subscriber base that is growing. It might be growing slowly. You might be kind of plateaued a little bit, but you're at the point where you know that what you have is scalable. Okay. What you have, people want. That's where we need to be before we push the gas on scaling. Okay. You also have a clear audience understanding. So you know what your customers love. You're asking them regularly. You're adjusting based on their preferences. And you know what they're willing to pay for. You know what they're not willing to pay for. You also know what they're willing to pay for, and that takes time. You can't just launch a subscription and start scaling the next month without really knowing your audience. If you've had an audience for a long time and the subscription launch is new and it's taking off, it's because you know those people. You've had that audience. The other signs that you're ready is that you're ready for solid processes. You start to systemize parts of your business like payments, like how, how are the payments processed? How do we do recovery? How do we follow up? You're starting to create those systems. You might have a system based on packing. Okay, this is how we do packing days. That was one of the first systems and processes I put to place is how are we going to pack? Everybody packs one. We pack one item at a time as a team before we go to the next one. We have a system and process in place. I had a process in place for monogramming. It wasn't great, but I had it. And then like, what's your process for customer service? If you can start to get little processes started, that's when we know we're ready to scale because we're ready for more systems and processes. There's things I want you to think about when you're thinking about scaling. Like, do you have a vision for where you want your business to go? What do you think about when you think about the rest of this year for your business? Where do you want to be at the end of this year? Where do you want to be with your business in 3 years, 5 years? Like, what does this look like for you? If you want to have a business 5 years from now, we got to talk about scaling. And the other question I really want you to reflect on is, are you ready to let go of some of your control? To gain some of your freedom. I think this was hard for me. Not that I'm a perfectionist, because I'm very much not, but this was my baby and I'd worked so hard for so many years doing all the things, making it perfect. How would anybody else make it as perfect as me? But the reality is, is that I was so exhausted that I was making mistakes. Because I didn't have help. And so of course someone can pack a box, of course someone can monogram, of course someone can answer somebody else's questions on customer service, of course someone can follow up on the billing, billing systems. That's why I had to create systems and process. Okay, if I want the box packed like this, this is our process. This goes first, this goes second, this goes third, this goes fourth. This is our process. All All I had to do is teach someone the process. Okay, this is how we monogram. Everything's the same. Every one of these monograms is stitched the same. It's the same thread, it's the same design, it goes in the same place. All we have to do is have checks and balances that we're embroidering the right size with the right initials. And I had to create that system and process. Now I can teach someone how to do that system and process. Now I have multiple people that can do that system and process. Are you ready to let go of control to gain some freedom? I need you to ask yourself that. Let's talk about what scaling could look like for you. It often starts with reaching a larger audience. So I want you to think about expanding your marketing efforts. So when, when we say, okay, I'm ready to scale, that means we have to scale our audience first because we need more traffic. We need more eyeballs. We need more things that can happen through paid ads. That can happen through going live more. That can happen through collaborations. There's so many ways that this can happen, but we've got to expand our marketing efforts. That might mean being on more platforms. That might mean doing more, reaching more people, being more vulnerable on a live, getting people to know you. That's what we need. We've got to expand our marketing efforts. So what you're doing now, we've got to expand. Expand that. We've also got to streamline our fulfillment. So this is where, for me, to truly scale, I needed more machines, I needed more equipment, and I needed someone to run them so that I was not behind them 10 hours a day for 10 days. And so I bought the one, and then I made more money the next month, and I bought another one. And then I took the profit from the next month, and I bought another one. And then a year later, I bought another one. So I had to reinvest in my business so that I could streamline fulfillment. Okay, then there was a point I had grown so fast, I had grown out of the space that I was in, and it was no longer efficient for me to be in that space, and I had to go to the warehouse, and that was 2020. And so you have to realize, what do you need to truly scale your business? That might also mean outsourcing your fulfillment to a fulfillment center. And I know a lot of our Scale Your Box members and mastermind members who use a fulfillment center because they have scaled their business. They don't have to touch a thing anymore. They don't have to spend a week packing anymore. They just get to work their business. So instead of managing a warehouse full of people, does it make sense for your business to go to a fulfillment center? Are you— do you have enough subscribers? Do you have 300 subscribers or more so that you can be packed by someone else? And if not, maybe that's the goal. When I get to 300 subscribers, I can move this to a fulfillment center and I'm going to get my time freedom back from this business. That's a great goal to have. And then really the other strategy to scale your business is adding some more revenue streams. This could be add-ons, upsells, upgrades to your boxes. This could be limited edition boxes. This could be providing exclusive member perks. But this adding more revenue streams to your business also helps you in scaling. So this is what scaling could look like for you. Fulfillment scaling, marketing scaling, revenue scaling. All those come into play. In all reality, scaling allows you to grow without burning yourself out. It allows you to serve more people and really build a long-term sustainable business. If someone tells me they don't want to scale, it means this is a hobby business for them, and that's okay if your subscription box business is a hobby business. But if you want it to replace your income and be a long-term business for yourself that pays you well, gives you financial freedom, gives you time freedom, and gives you the impact and purpose that you want, we've got to consider scaling and we have to do it sooner than later. It's about creating systems and processes, having the mindset that supports the growth. And, and if you're ready to do that, all we have to do is jump in. So I want you to reflect on where your business is today. And where is it that you want to go? What is your first step towards scaling? Maybe that's hiring some help. Maybe that's getting a fulfillment center, a small location, a warehouse. Maybe that's building some systems and processes. Maybe you're still doing everything and you thought, okay, how would I build a system for this so that I— when I hire someone This is how I'll teach them to do it. Maybe it's being a part of a community where everybody around you is working on scaling. If you've been listening to this episode and you're ready to start scaling your subscription box, I want you to head over to joinsyb.com. That's joinsyb.com. And I want you to learn more about my program called Scale Your Box. Because if this hit home for you, I know that I can help you with scaling your subscription box. All right, and don't forget, next week I'll have Betsy on the podcast talking about how she scaled her subscription box business. All right, I'll see you next week. Thanks for joining us on the Launch Your Box podcast. If you're looking to grow your audience, head over to launchyourbox.com subscribebox.com and grab the 10 steps to help you start building your audience guide. It's packed with practical tips to help you connect with your future subscribers. Until next time, keep launching and growing on your subscription box journey.