Nobody starts a business only to witness everything come crashing down halfway. Even if your business came forth out of the formalization of a hobby, once you have put the word out there that you are ‘in business’ — you will want it to succeed. In an effort to summarize the efficient handling of business operations, finances and staff the word scalability is often thrown in. But what does scalability really mean?
To quote Investopedia, scalability is “a company’s ability to grow without being hampered by its structure or available resources when faced with increased production”.
In simple terms, to be scalable means you are able to take on the increased workload in a cost-effective manner and meet the demands of your business without suffering or overstretching. It’s about getting a comfortable handle on the increased workload, customers or users and then delivering. –
Any business, regardless of size, has a fear of large-scale changes that could impact them, as well as economic downturns. Even a mild recession could mean the end for many businesses. But when they’re scalable, it also means they’re equipped to adapt to changes.
“A lot of what Google does is about being super-cheap”. Google is forced to maniacally control costs because it has learned that “anything that scales with demand is a disaster if you are not cheap about it.”
Another technique Google employs is to automate everything possible. “We’re doing too much of the machines’ work for them,” he said.
Many technology companies, like Google, Apple and Microsoft, have perfected a highly scalable business model. Their initial costs for developing an advertising platform or operating system are high, but once it is on the market, they can sign up users or sell many copies of the related software with relatively minimal cost increases.
Fun fact: large companies are innovating and maintaining their dominant positions through innovation, scalability, and first mover advantage. — Source
But why bother if you are not looking to grow?
Of course, not every entrepreneur aspires exponential growth for their business. Scalability means flexibility, allowing you to better address specific business needs as they arise.
All businesses need to be scalable on one or more levels in order to hold onto the market share they do have. Even so, small businesses have the greatest need for scalability because they are the ones with the biggest potential for growth (because hey, objectives can change right?). They are the organizations that have to be more careful with the limited resources they have, the ones that go through metamorphoses as their leaders become more familiar with the business game. Many small businesses fold directly because they fail to foresee what they might need or where the market can take them, having too much of a here-and-now mindset. –
Ultimately, the importance of scalability for businesses isn’t just about growth or increasing revenue. It’s also about flexibility, versatility, and agility. These are all necessary elements for a successful business in today’s modern, fast-paced environment. –
Having a consistent focus on improving the scalability of your organisation, will never be a waste of time or effort.
The businesses that are ready to adapt quickly and seamlessly are going to have a competitive advantage. Maintaining a scalable framework at all times can help you do the same.
#ShoutOut — Do you run a business in the Netherlands with a team of 10+ and revenues over 1 million Euros? With the help of ScaleUp Company here in the Netherlands, hundreds of entrepreneurs have found out just how accelerating and liberating it is to have their businesses operating like a well oiled machine. You can thank me later.