It comes as no surprise that most of the business owners around the world seek to grow their businesses. It is only logical that one would try to increase the operations for their business, however increasing your operations can also come with the added disadvantage of increasing your costs. How does one, then, grow their business in a way that increases their profitability?
I am Barrister Faisal Imran Malik CPA (Ontario) Canada, and I have extensive experience as a c-suite executive in several conglomerates from around the world. As of now, I provide affordable finance consultant services to small business owners to help them achieve their business targets. In this blog, you will find insights into how you should be making business decisions regarding scalability.
What is scalability
Scalability is the ability of a business to change in size without affecting the quality of its operations. In other words, scalability is your ability to increase your sales without decreasing productivity or increasing costs, leading to an increase in overall efficiency. As a business grows, so do the overhead costs of operations. Therefore, to make a business grow realistically, one needs to increase its efficiency as opposed to simply adding more resources and gaining more output.
Why it is important
The ability of a business to be able to scale up on demand is important for several different reasons:
- Once a company starts doing well and delivering on their promise, the demand for their products and services grows. To take advantage of that, a business must amp up production. However, simply increasing production would also increase costs, therefore increasing efficiency helps ensure you are always making a profit while your overhead costs continue decreasing.
- Being able to quickly change one’s production capacity in response to the market forces is crucial to a growing business. Businesses that can adapt faster than their counterparts have a higher chance of surviving in a competitive market.
- It makes your company ideal for investors, as agile companies that can grow exponentially are always sought out by investors from around the world. Comparatively, companies that have remained at the same scale for years often don’t attract too many new investors.
How to scale
Have realistic goals and make plans to achieve them
Growth, as a business leader sees it, is never seen the same way by other people. This usually means that the business leader lacks the necessary skills to convey their point to someone else properly. However, it could also mean that the goals are unrealistic or simply unattainable. To achieve growth, one must analyze their business properly and come up with sustainable goals that they can achieve.
Furthermore, the leaders must also inform everyone in their organization about their goals for the future to get them motivated.
Increase Sales
Although increasing sales isn’t the main goal behind scaling, it could help you achieve your desired size. Increasing sales is one of the best ways to scale up a business, as it provides you with the necessary motivation to start increasing production.
This could be done either using marketing to increase the number of customers that come to you but could also be achieved by increasing the revenue generated from each sale. To apply any of these strategies, however, a business leader must convey their intentions clearly to the sales team, as well as clearly defined goals.
Invest in Technology
Technology was developed to increase our productive capabilities, and as such, can be used to scale up your business very efficiently. For example, a lot of administrative and repetitive tasks can be easily done by a system that specializes in that, leaving your human workers to put their brains to work elsewhere, thereby increasing your organization’s efficiency.
However, overreliance on technology, or not using it efficiently, could make your investment backfire. For example, if an organization were to discard all human management and replace them with electronic workers, there would be no one left to scrutinize their decisions. This might not bode well with the humans in this organization as electronic managers would not have the same views regarding workers’ rights as human managers.
Give customers something to come back for
The extremely competitive economies of today combined with the free flow of information over the internet have brought us closer than ever to the speculated “perfect competition” that economists describe in their theories. In a perfect competition, all firms must compete for customers, as all customers have access to the same information regarding all the sellers. Furthermore, all firms in perfect competition sell their products for the same prices at minimum profits because there is an unlimited number of firms competing against each other.
In such a business environment, the power falls in the hands of the customers. This is quite similar to the position most e-commerce firms find themselves in, and the best way to get out of that rut is to offer the customers something no one else is. This could be additional services, better quality, lower prices, or a combination of all of these. Anything that can help you achieve customer loyalty or brand recognition is bound to help you scale your business in the future.
Outsource what you can to experts
Finally, the last thing you need to keep in mind when looking into scaling is that it's fine to not be able to do everything. No matter how much you diversify or specialize, there will be some things that others will be better than you at. A leader has the power to identify their weakness just as well as their strengths, and once you identify these, you will realize what type of projects you can take on, and what projects you should outsource. As long as you don’t compromise on quality, you will have nothing to worry about. Just know that you are never too far away from all the information in the world.
In conclusion, scaling a business is a complex and arduous process that requires you to analyze your business from top to bottom. Furthermore, one must be willing to invest even more time and money into their business whether in the form of capital or technology before they can consider scaling it. Finally, one must work on increasing their brand loyalty to not lose their previous customer base. Many affordable finance consultant services can help you analyze and overcome these obstacles in the best way possible. All you have to do is go find them.
