What does it mean to scale a business?

You probably heard the term “scale a business” and perhaps you’ve even uttered the words as in “I’m looking to scale my business”, but do you really know what this buzzword means? Today we’ll take a peek at the difference between growing vs. scaling because it’s not the same thing!

Growing a business simply means that your company is adding resources or infrastructure to handle increased demand, at a cost which is more or less equivalent to the level of increased revenue coming in. You’re growing revenue, but not necessarily profit.

Scaling a business happens when you’re generating greater revenues, but without incurring a similar increased level of cost . At this point profits should be soaring.

So if you were able to quadruple your revenue without adding a single employee, that’s scaling.

But if you generated $100k in additional revenue, but it took $80k in additional staff, infrastructure, and marketing, you generated an additional $20k in profit, but this wouldn’t be a good model for scaling.

So if you want to know if your business is scalable, you need to dig into what you’re selling. What can be reproduced at a rapid rate without generating increased costs?

Often you’ll hear about scalability in the tech industry. Let’s say you’ve developed an app. The difference between 10,000 users and 100,000 could generate a huge shift in revenue, but it might not cost that much to manage those 100,000 users well. You follow?

But even if you aren’t a tech company, there are still ways to build scale in your business. A few examples are to…

Standardize the things you offer so they are more easily repeatable by you & your team.
Establish recurring revenue with existing customers & client so you’re not constantly hunting for new business.
Automate processes that currently require a lot of human-touch.

Questions? Thoughts? Let us know what kind of growth you’re pursuing with your business!

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