With the debut of several great television shows like Shark Tank, The Profit and Bar Rescue, the term “scalability” has entered the small business arena in a big way. Essentially, scalability is the capacity to grow.
Some business owners are quite happy running one shop and fostering a comfortable home-town feel. These are typically patron favorites.
The topic of scalability is more relevant to those who desire a fast-paced, large-scale growth and high profitability environment. These people must be comfortable in the face of challenge – there’s often high reward but there’s also high risk.
Here are a few key points about fast growth and scalability:
1) Product pricing and placement
It’s critical to have a desirable product. The product is typically, but not always, sold at a relatively low price point and is relatable to a wide audience. Think about things you use every day or something that would make a common task easier or more pleasant. These items can often be trend or time sensitive so it’s important to have a solid business plan and an exit strategy with easily identifiable benchmarks so you can get out while still profitable.
2) Strategic Thinking
Achieving scalability is easier said than done. You have to accept the responsibility for making money from the fruits of other peoples’ labor. A strategic thinking mindset is critical. The entrepreneur needs to keep a close eye on industry trends in relation to his or her operation. While efficiency in the minute aspects of operations is important, it’s probably best that the entrepreneur does not become embroiled in daily operations but is instead focusing on high level opportunities and concerns. Hiring great people to mind the details is well worth the effort.
3) Cash Flow
For businesses with a product this can be relatively simple if supplies are available in the right quantities and production facilities can handle the volume. Look for benefits of bulk order discounts or quantity shipping rates. At the same time, you may have to hire people and deal with the balance of cash flow and payroll expenses, advertising, inventory and breaking into new markets.
This is often where an investor comes in handy…in order to win investment in your business you need a viable plan and demonstrated sales and income.
If you are trying to scale up your business, visit our blog for more information or give us a call. We’re here to help you build a bigger, better business!