WHAT IS SCALABILITY?
Scalability can fall under both financial and business strategy contexts. In both cases, it stands for the power of an entity to resist pressure as a result of growth, without being hindered by its resources or structure. Scalability continues to achieve popularity, especially following advancements in technology that ease communication to customers and increase the efficiency of doing business.
As an entity increases the number of its sales, it’s a challenge to keep up or increase the extent of efficiency and profitability. However, growth demands that these levels are maintained or raised for the steadiness of the business. Stakeholders within the business, like investors, also long for the purpose of growth since it means more business and profits. Entities should thus create scalable systems beforehand in anticipation of the purpose of growth. Those with scalable and versatile systems in situ will easily withstand the pressure as a result of increased volumes without harming their profitability and efficiency within the process.
Ready to scale is after you have a proven product and a proven business model, getting ready to expand to new geographies and markets.
SCALABILITY AND TECHNOLOGY
Scalability and technology blend well and are inseparable for an efficient transition during growth. A system could also be considered scalable if it can adapt to the changing needs or patterns of its users. it’s often a symbol of competitiveness because a scalable network or system is prepared to handle increased demand, trends, and needs, even with the emergence of the latest competitors.
Technology eases the method of scaling an entity.
Technology links businesses directly to clients, especially within the advertising world where the digital platform makes advertisements easy and affordable even for small and medium-sized enterprises. This makes technology a strong tool that will benefit even those enterprises that aren’t directly connected to technology. Therefore, technology becomes a necessity in every business, with many businesses incorporating an IT department into their enterprises. It provides a platform to extend the customer base through online advertisement and signups, with some businesses even opting to go entirely online with none physical stores. The financial sector continues to extend its online presence by investing in online banking where customers can enroll and transact without physically getting to the bank.
WHAT ARE SCALABLE STARTUPS?
A scalable startup is one that begins with a lucrative and innovative idea and adopts a profitable business model that will grow quickly into a hugely profitable company. This includes entering an outsized market and creating a distinct segment for the company’s products. They then pose significant competition to the incumbent businesses within the same industry and locality. The startups can grow rapidly into huge, scalable, and profitable businesses despite their limited resources. Innovative startups aim at not only creating a product for the industry but also creating their industry for others to introduce products into.
Scalable startups are often seen from a mile faraway from the perspective of an experienced business within the same industry. The startups can receive multiple offers for buy-out because of their uniqueness. They aim to attain growth beyond the industry and competition from incumbents. they will seek assistance from banks or traditional financing for resources a bit like the other business. Scalable startups differ greatly from small businesses within the vision and model of the business, even initially. Scalable businesses start small but grow rapidly over a brief period, unlike a small business, which stagnates over time. A small business might be sufficiently paying the owner and other stakeholders, but a scalable business grows to dominate the market.
Here’s how you’ll prepare your startup to scale up.
1. Get the basics down
Before you even worry about scaling your startup, confirm your fundamentals are foolproof. As per a survey of 3200+ startups, 74% of failures are often explained by premature scaling. So ensure you’re covered for the following:
Make sure your core line of products reaches “market fit”. you’ll make gradual improvements through product iterations based on user feedback and data.
Find out your largest core users.
Find out the marketing channels with the largest ROI and scaling potential by testing with smaller budgets first.
Make sure you’ve got the resources to scale. Seek an extra round of funding if necessary. you cannot worry about profitability while scaling, and therefore the final thing you would like is to run out of cash.
2. Automate Everything
Automate to the max. A startup that’s labor-intensive and staff intensive isn’t scalable. Start early watching production automation, proven process technologies, and minimum staff approaches, before you start scaling. Document processes and build online training videos so new people can come online quickly and consistently.
If you’re spending a protracted time “setting up” your business, then good for you.
Even though it takes an extended time on the forepart, this activity can pay for itself within the long run. you will be ready to access data faster, hire faster, market better, pay easier, and streamline operations for a really scalable model.
3. Boost marketing
How can a business scale if nobody knows about it?
Focus on marketing, and indirect channels to urge the message out quickly and scalability will follow. But not every type of marketing is scalable. As per Forbes “direct marketing is…not scalable” and “word-of-mouth doesn’t scale.”
Content marketing, on the opposite hand, is one of the foremost scalable growth methods. Content marketing has evergreen value and viral potential, making it the growth-hack method of choice for many startups.
These days, heavy marketing is usually required to create your startup visible and scalable amid the flood of information from all sources to all customers.
4. Outsource non-essentials
For big corporations, the name of the game is “in-house.” they have in-house graphic designers, developers, conversion optimizers, SEOs, CPAs, lawyers, and even janitors.
Startups can’t afford that luxury, and if you would like to be strong enough to grow, you will need to outsource all non-essential roles.
Outsource what’s non-strategic to optimize leverage. Smart entrepreneurs never outsource their core competency, and never consider intellectual property they don’t own. They also don’t attempt to do everything in-house, since growing all the expertise you would like is slow and expensive. Scaling requires leveraging outside resources.
This lean approach is what allows a startup to interrupt into a massive time. When you’re nailing it together with your core competencies, you’ll start to scale up.
5. Keep a watch on social media
Every new startup is within the limelight. Whatever happens on social media is going to be examined by the world.
It’s important in your startup days to observe your social media carefully. Fledgling startups can’t afford to take a serious PR hit with a social media flap. Big companies could be able to weather the storm, but your startup isn’t ready for it.
Scalability is about surviving, as much as it is about growing. If you hit a PR fiasco, you’re limiting your chance of survival and scalability.
6. Hire the correct people (and only the correct people)
A business is scalable, only if it has the proper people on board.
First, though, you’ve got to hire only the people who are necessary to the operation.
Build a powerful team to take yourself out of the critical path. If you’re still spending most of your time working “in” your business, instead of “on” your business, then you’re not yet able to scale. Show that you simply have and may still hire the correct people to run the scaled business without you being everywhere and making every decision.
Here are other pragmatic recommendations on how to make your startup more scalable and investable:
- If you would like investors, start with a scalable idea. simply because all of your buddies think a concept is cool, that doesn’t mean it’s scalable. Investors like ideas based on marketing research from outside experts. These are more likely scalable and investable.
- Build a business plan and model that’s attractive to investors. It’s hard to create and scale a business on free high-support products. Scalable businesses have high margins (over 50%), low support, and minimum staff.
- Use a minimum viable product (MVP) to validate the model. No product, even with an outsized opportunity, is prepared to scale until you’ll show it working, with multiple customers paying the complete price, to validate the business model. estimate multiple pivots with real customers, before you get it right before you raise investor money to scale.
- Attract and relish investor funding. Organic growth (reinvesting profits only) won’t allow you to create the “hockey stick” growth curve desired by premium buyers at the exit, or financial analysts positioning you for the general public stock sale. you’ll hand over some control with investors, but their expertise and knowledge is typically more than worth the cost.
- Consider all possibilities for licensing and franchising. Many markets have already got major players, so deciding a way to make them partners is far more practical for scaling than trying to out-market them. In other areas, once you’ve got a documented and proven model, franchising will allow you to scale much faster than managing every location.
- Define a business that’s open-ended and continuously improving. If your startup seems like a one-trick pony, it won’t be perceived as scalable. Don’t attempt to solve every customer problem at an equivalent time, but build a technique and plan that shows continuous innovation, resulting in follow-on complementary solutions well into the long run.