If you have a business, surely it is not among your plans to maintain the same level of sales for the next five or ten years. Assuming the risks of undertaking and sacrificing your current income for a project that could remain stagnant forever does not make any sense.
For this reason, we all have to bet on building scalable businesses that have the capacity to increase their production capacity while maintaining a healthy cost structure. That is, they can generate more income and more profitability.
To understand what the scalability of a business consists of and how to develop it from its origin, we have prepared this article with some fundamental concepts. Let’s see what this is about.
How is a scalable business?
A business with the capacity to grow in a healthy and profitable way has the following characteristics:
- An agile infrastructure capable of producing more or accepting a greater number of clients or users ; without this implying significant investments or additional costs in the short term.
- It makes intelligent use of technology , for example, cloud systems that allow it to react to a sudden increase in demand , the number of branches or the generation of important information (such as accounting).
- It has defined and ordered processes for the different areas of production and administration.
- Its owners seek constant improvement, innovation, new opportunities and cost optimization.
- It has the potential to spread into new territories .
What factors ensure the scalability of your company?
A business is ready to expand with new product lines or into new markets when it has a sound cost structure, proven processes, in-demand products or services, and an efficient business model.
To take concrete steps towards scalability, you have to apply the following actions.
1) Start with a scalable business model
This is the first challenge faced by small businesses that are built around the expertise of the founder. It is the typical case of the chef who decides to open a restaurant, but is personally in charge of preparing each dish; or that of the pastry chef who refuses to share his preparation techniques with his employees for fear of losing his “formulas”. Analyze if your business is capable of selling more without having to produce something new all the time .
2) Focus on a large target market
Unless you sell a super-luxury product and with very high purchase tickets, it will be difficult for you to have a jump in your income if your market segment is very small or if your customers are going to purchase your products and services very sporadically (like once by year).
3) Multiply sources of income
Sometimes it is not possible to scale a company with the original offer of products and services or with the same marketing scheme. Explore new options to generate additional sources of income ; for example, through an online store or a warranty, maintenance and repair service.
4) Start small
Always bet on a minimum viable product ( Minimum Viable Product or MVP , in English) that allows you to confirm interest in a new product and service; as well as discover areas for improvement without having to compromise the current budget and future income of the company.
5) Develop the most appropriate financial structure
Although, a business is scalable when it can grow with minimal costs, since these new expenses will exist, and it is necessary to ensure that the necessary money is available during the different stages of growth. Among other sources of capital or credit, he analyzes options such as a new partner , a venture capital fund, a bank loan or simply the corporate credit card.
