When starting a business, one of the main questions is how it will grow. Some businesses have the potential to grow exponentially, while others cannot grow beyond a certain level. This is where the concept of “scalable” comes into play. What is a scalable business? Why is it important? How is it different from non-scalable businesses? Read more about;

What is a scalable business?

A scalable business is a business model that is capable of growing exponentially. That is, the cost per unit decreases or remains constant as sales increase.

Examples of scalable businesses:

• Software/Apps (e.g. WhatsApp, Netflix) – Once built, it can serve hundreds of thousands of users.
• E-Commerce (Amazon, Flipkart) – More products can be sold using the same store logistics.
• Online courses – The same content can be sold to thousands of students.

Characteristics of a scalable business:

• Does not require recurring investments to generate more profits.
• Relies on automation and technology.
• Can easily expand to markets around the world.

What is a non-scalable business?

Non-scalable businesses require more effort and expense to grow. These include additional costs per unit of sales.

Examples of non-scalable businesses:

• Restaurant business – requires more space, staff, and menus to expand from one location to another.
• Manufacturing – additional material and labor costs for each product.
• Consulting services – a consultant can only serve a few clients at a time.

Characteristics of a non-scalable business:

• Growth comes at a higher cost at each stage.
• There are physical limitations (space, labor, and supplies).
• New locations will need to be opened to increase profits.

Why is scalability important?

• More profit at lower costs – Scalable businesses can generate higher margins from higher sales.
• Global expansion – Online businesses can reach users around the world.
• Consistent revenue – Models like SaaS (Software as a Service) can generate recurring revenue.
• Stay ahead of the competition – Scalable businesses can quickly capture the market and stay ahead of others.
• Tips for making your business scalable
• Use technology – Reduce costs with automation, cloud computing, and AI.
• Recurring revenue models – Encourage subscriptions and memberships.
• Outsourcing & partnerships – Focus on your core business and outsource other tasks.
• Digital Marketing – Reach more people at a lower cost using social media, SEO, and online advertising.

Building a scalable business will pave the way for massive growth and profitability in the future. Design your business model based on technology, automation, and innovation. Non-scalable businesses can also be profitable, but their growth will be limited. So, start small, but think scalable!