Let’s start by distinguishing between two terms – scaling and growth. In general, we think of growth in linear terms: a company adds new resources (capital, people, or technology), and as a result, its revenues grow.
Scaling, on the other hand, is when revenues grow without a significant increase in resources. Processes “at scale” are those that can be done en masse without additional effort – if I send an email to 10 people or 1 million, my effort is essentially the same. This is why businesses use email marketing so heavily. Another example that shows scaling, for example, is when an insurance company that scaled business operations by simply switching to a cloud-based business phone system.
But that’s just a technical distinction between the two words. Let’s take a closer look at what each looks like in practice.
It’s worth adding that for successful scaling and growth, you’ll need proper planning, which will be much easier with Magento. You can learn more about this at https://x-coding.pl/rozwiazania/magento/
Generally seen as the definition of a successful company, growth refers to an increase in revenue as a result of doing business. It can also refer to other aspects of a business that are growing, such as the number of employees, the number of offices, and the number of customers served – these things are almost always associated with revenue growth.
The biggest problem, however, is that it takes a lot of resources to maintain consistent growth. Take, for example, an advertising agency that currently has five clients, but is about to take on another five clients. Increasing the number of companies it sells to will bring in more money, but chances are it won’t be able to do the work without hiring more people.
For this reason, financial growth can only be achieved with more losses.
Companies offering professional services like the above advertising agency will always face this problem. Taking on more clients leads to hiring more people to serve them – while it increases revenue by adding clients, it must simultaneously increase costs.
Scaling the business
Because of the costs associated with growth, modern founders are obsessed with the idea of scaling. The key difference with growth is that scale is achieved by increasing revenue without incurring significant costs. While adding customers and revenue exponentially, costs should only increase incrementally, if at all.
A great example of a company that has successfully learned to scale is Google, which has been adding customers (both paid business customers and ad-free users) in recent years while being able to keep costs to a minimum. In 2017, the company had seven products with over a billion active users each, and only employed about 88,000 people.
The difference between growth and scaling becomes most clear when a company is no longer a startup, but also not yet a large corporation. At this critical stage, it will have to decide whether to grow at a regular pace or move to scale the company faster.
If the company wants to have a chance to make a lasting impact on the industry, and perhaps even on society as a whole, it must do so without accumulating large overhead costs.
Unfortunately, there is no clear path to successful scaling – if there were, building a multi-million dollar company would be much less impressive.
Main article photo: Designed by FreepikLeave a comment