A scalable business is a model that focuses on replicating its capabilities and increasing revenues while lowering the total cost of ownership. By specializing in one area and refining its methods, a business can easily scale up to different market sizes, thus increasing its revenue and profits. Scaling is a key goal for every company. Unfortunately, many businesses are stuck in this stage of growth because they lack the funds and direction to achieve this goal. In order to scale up, entrepreneurs must develop a business architecture that focuses on achieving these goals.
Companies that are scalable have a group of leaders who are responsible for managing the company’s growth. They also have consistent brand messaging, which prevents the company from losing sight of its core value. One example is Yahoo, which scaled up but lost sight of its core value and floundered. These companies also have effective measurement tools that enable them to operate efficiently and allocate capital budgets. The right measurement tools and processes will help them achieve their scalability goals.
Another important quality to look for in a business is scalability. Companies that scale up should have the capability to meet increased market demands, without disrupting the business’ structure or resources. This means that they can increase their revenue without increasing the costs of producing it. The cost of growing is essentially offset by increased profits. And if you want to continue to grow, you can easily scale your business without sacrificing quality.
Another aspect of scalability that is critical to success is the ability to outsource. Outsourcing peripheral tasks to a third party will allow you to focus on core strengths, while outsource the rest. This is a valuable way to reduce costs while maximizing efficiency. Outsourcing your payroll and benefits programs to an outside company is a good way to outsource this task to an external company. And because outsourcing can help you grow your business, it’s always better for you to invest in your team rather than your employees.
Besides being scalable, you must also consider scaling when you have reached a certain point. While growth may increase the number of customers or outputs, it does not mean that your business can meet the additional workload. If you cannot deliver on the increased workload, it will hurt your business. So scaling means assuming the extra workload without straining your business and making it comfortable with it. The key to scaling is knowing when to shift tactic.
When scaling your business, you should understand the importance of discipline and focus. You should be committed to your customers and your mission, not to the ego of individual employees. The same goes for the team members. Founders must recognize that they must focus on what is important and how to balance competing forces. They must also understand that success is never guaranteed; it must be continually earned. For scaling to succeed, it’s essential to have a broad community of employees, customers, investors, and fundamentals.
