Business scalability is a fashionable concept in the marketing world. For start-up founders, this is the main dream, although 70 percent. of them admits that he has a problem with its implementation. What is business scalability and how does it relate to success?
- What is business scalability?
- Business scalability versus development and growth - is there a difference?
- Business scalability in the examples
- Tools useful for business scaling
Business scalability to some extent can be planned and developed with an appropriate strategy. Here's a handful of inspiration from successful tech giants and one company that grew 11,200 percent over three years before collapsing spectacularly.
What is business scalability?
Business scalability is a situation when the company's revenues and its value increase, although operating costs do not increase or there are no more employees. This concept is related to passive income, which is fashionable today. In the online world, many coaches, trainers and celebrities have switched from 1: 1 advice or occasional advertising collaborations to publishing e-books and finally releasing courses. This allows you to scale your business, significantly increasing profits, and you can still run your business practically alone.
The moment for scaling a business comes especially when the entrepreneur has the impression that he is reaching the end of his strength. There is no more time to accept new clients in the same work model. It has to change the modus operandi, e.g. by offering additional products or services. The Internet offers interesting opportunities here, because a lecture or lesson can be conducted for one person as well as for thousands of people.
Business scalability versus development and growth - is there a difference?
Revenue growth can occur regardless of whether the business is scalable or not. Development is also a relative concept - a one-man business as well as a corporation can develop, and one can smoothly or suddenly transform into another. Business scalability allows you to develop without expanding the company's structure. For example, at the Dwór Korona Karkonoszy hotel, only by changing the strategy, it was possible to obtain 1,500 new requests for events per year. This goal could be achieved traditionally - by employing dozens of new marketing, sales and advertising specialists. Instead, new ones were put on on-line and off-line customer paths, sales supportas well as diverse marketing communication channels.
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Business scalability is only possible for some of them business models. The linear development model, in which costs increase in direct proportion to profits, does not belong to them. For example, an aircraft manufacturer, in order to sell 50 more of them than a year ago, has to purchase 50 times more steel and hire more subcontractors. A person selling more on-line courses than before does not have to drastically increase operating costs during this time.
Business scalability in the examples
Business scalability can be described on the example of Nasty Gal, founded in 2006 by Sophia Amaruso. It is best to learn from the failures of others, and those in the company's history have not been lacking. Amaruso was initially selling clothes on eBay. Over time, she managed to open her own store. She started making real income while still acting alone. In just a few years, she started hiring more than a hundred employees. She received 9 million. hole. support from investors. At one point, the company grew 11,200 percent in just three years. When it seemed that nothing could threaten her anymore, Amaruso stumbled on business scalability.
Instead of an unrestricted creation, the founder had to deal with filling out reports and answering to investors. Known for its loose and unpredictable style, the store began to resemble a corporation in which every step must be consulted on many levels. The gigantic operating costs made it impossible to act with fantasy. Tired, Amaruso handed over the director's chair to other hands. The impression was that he had nothing to say in his own company, which went bankrupt in 2016. After buying it, the store still exists, but on a smaller scale and without Amaruso. In this example, you can see that growth is not the same as business scalability, which has clearly outgrown founder Nasty Gal.
And positive examples? There is no shortage of these in the Big Tech world. Google, Microsoft, Facebook - most of these companies started in the proverbial garage with just a few people. As the number of users increased, more functions were added and the system was improved. This brought more users, and then new functions appeared. New employees were already recovering when it was actually impossible to continue the operation with a few people. It is worth noting that these companies are developing, but in a gradual, sustainable manner. In the example of Nasty Gal, the growth was sharp but did not translate into business scalability - the company soon collapsed under its own weight.
Tools useful for business scaling
People who want to know more about it, can learn more about the concept of internal and external business scaling. They are determined by the BMI Scalability Matrix. With it, you can calculate the internal scalability of the business, i.e. how efficient the company is (how many more customers can be acquired at the current cost level).
External scalability allows to assess how friendly the business environment is to such development. Practical tools include various automation systems. For example, the CRM system allows you to manage customer relationships in a much more organized way than a notebook with numbers. Basic systems are available for free. Email automation systems or chatbots have a similar meaning - you can answer thousands of people at the same time, instead of spending your precious time separately on each interaction. In short, business scalability in the online world is possible largely due to process automation. It is worthwhile to review them and see which of them can be scaled and which require personal commitment. contact us - we will check it and propose the implementation of effective tools.