What Does It Mean To Scale A Business?
Growth is the primary benchmark of a business’s success and often a prerequisite to staying afloat in a competitive industry.
Scaling, a buzzword in the business world, is not a synonym for the idea of growth.
Scaling doesn’t just mean growth – it means growth without limit.
If you’re wondering, “what does it mean to scale a business?” It's all about creating a rock-solid foundation. But we’ll explain the process further in this article.
Whether your business is a new startup or has begun to scale already, you can use the same concepts to increase profits and spread brand awareness.
So, once you’ve learned a set of techniques that work for you, you won’t have to go back to the drawing board. You can keep returning to your strategy, adapting it as your business grows.
You might have been misled to believe that scaling your business always means giving away startup advisors’ equity. But this isn’t true.
A business can secure dramatic growth without handing over equity, suffering substantial overheads, or overworking its employees.
Business Growth Vs. Scaling
Traditionally, growth is a linear process. You add extra resources and boost your revenue through increased amounts of:
Capital
People
Equipment
Products
Capacity
That might be via an equity release to draw external funding, or you could go the route of crowdfunding. If you’re not sure what that means, look here for an explanation of Go Fund Me. You might find that the latter is more helpful if you can’t afford to give away equity.
So, why choose to scale rather than grow?
Well, if your business is growing, the costs of your inputs increase on the same trajectory as your profits.
But if you’re scaling, you achieve an increased turnover without exponential input costs and efforts.
A great example is digital marketing.
You’re going to spend the same cash whether you send your campaign to 10 people or 100 million, so the effort is equal, but the returns are not.
How Do You Scale Up A Business?
There isn’t a one-size-fits-all solution to growing a business, nor is there a well-trodden path to successful scaling.
So, unfortunately, we can’t give you a road map that guarantees you’ll scale your company. But we can give you some pointers to make it possible to scale up.
You can begin by looking carefully at incorporating your company; there are many pros and cons to consider.
Or, to examine different trading structures, you could have a cooperative business explained to you. Although cooperatives are unconventional, they are growing in relevance and might just be perfect for you.
Different trading structures will vary, so it’s great to examine which type aligns with your scaling aspirations.
Google is a perfect case study. It has a tiny number of products compared to any retailer (usually about ten current releases).
Yet, Google applies the same functionality of those products to over a billion people - including free users, business clients, industry professionals, and individual customers.
Google expends no extra effort; it’s got a globally used product and a staff of less than 140,000 at the last count.
The Challenge Of Creating A Scalable Business
Perhaps the most obvious hurdle is that you’ll need investment of capital.
Regardless of how astonishing your idea is, no business can scale or get started without resources.
Most businesses with no funding work with venture capitalists through either:
Series B funding: an investment to help a company grow to meet consumer demand.
Series C funding: investments in late-stage startups to help them grow as quickly and as profitably as possible.
Initial startup investments usually want to prove the product’s viability and establish whether the business is a good market fit. Only after these conditions are met will venture capitalists invest.
Creating A Scalable Company Culture
Another considerable challenge is ensuring you can preserve your company’s culture when you scale up, as you don’t want to lose your core values.
A scalable product is ideal because it appeals to new customers who aren’t served by the existing competitor market.
However, to ensure a fast-scaling strategy doesn’t get out of control, you also need things like:
Flexible internal processes
Employee management strategies
Cohesive communication policies
Therefore, scaling your business isn’t just about having a fantastic product or service.
It’s about digitizing processes that won’t break under increased demand and reinforcing your fundamental purpose to avoid losing the message in all the noise.
Critical Steps To Scaling A Company
While it might all sound a little conceptual, scalability is a defined objective, and there are several things you can do to support it.
Plan, Plan, And Plan!
If the business isn’t ready for rapid growth, then don’t take the steps to start scaling.
For example, if you saw your order volume increase tenfold overnight, would you be able to manage?
Planning involves growth forecasts, creating realistic expense breakdowns, and stock-taking your people and infrastructure to make sure you’re in a stable position to expand.
Consider Automation
As we’ve seen, an essential requirement for scaling is that you have the processes in place to deal with rapid growth without losing quality.
Technology can solve this problem as you don’t always need more labor to expand your reach.
Automated processes are an excellent opportunity to minimize manual interventions, reduce costs, and improve efficiency.
If you think your business is scalable, look at your systems and how they could accommodate substantially higher volumes in every part of the business - without extra work.
Pick Your Moment
Finally, scale up only when you know that you’re ready. Rushing into things headfirst without a proper backup is destined to fail.
It can be a huge risk that makes your entire business extremely vulnerable.
When you feel the time is right, you need to go for it, all guns blazing - and once you reach that first peak, you’ll know it was worth the wait.