How to Build a Scalable Business- 8 Tips for Business Owners

Scalable Business November 09, 2020

Jin Hyun

Writer

To remove the ceiling to growth, every business must think big and understand how to adapt to increased demand and production without leading to more costs and inefficiency.

In order to create systems that can handle inevitable growth, planning to scale the business from the outset will ensure that the company is ready for this expansion and can respond in the most strategic way.

What is Scalability?

Scalability is closely related to the business term economies of scale, which describes an organization's ability to decrease their production expenses while increasing their profitability as the company increases its production volumes and expands.

Scalability is a financial and business strategy, referring to whether a company can handle the pressures of operational growth in workload and scope without resulting in resource or structural challenges.

With technological advancements, enhanced communication, and automatic software offering business innovations, scalability is becoming more accessible for businesses of all sizes and industries.

When there are flexible and scalable systems in place, organizations will be able to withstand the challenges and pressures of increased order volumes without sacrificing the overall efficiency.

How to Build a Scalable Business

In order to adapt to increased workloads, market demands, and production without profit or productivity loss, companies must develop strategic ways to scale their business.

The following tips outline how organizations can design their processes for growth from the first day of operations.

1. Strategic Hiring

Building a strong team is the foundation for success, as the employees are the backbone of a business. Hiring people with the expertise to work towards the company's goals is imperative from the start of operations.

Empower the team to make decisions and take on leadership roles so that they are ready when the company begins to expand. This ensures that the business owner doesn't become overwhelmed with all of the high-level tasks in the future.

2. Build Partnerships

Owners should also consider creating tactical partnerships with existing businesses in the local market. By teaming up with a company with similar target demographics, both businesses can set mutually beneficial objectives and co-host events to increase customer reach.

3. Marketing Strategy

Sustainable scaling requires strong marketing to reach the maximum amount of potential consumers. Restricting marketing to local regions, promotions, and advertisements will not help to scale the business.

Building a loyal customer base through social media and other digital marketing is key. With the global reach that technology enables, businesses can take advantage of various social outlets and paid advertisement platforms.

4. Leverage Technology

With labor-intensive data management, scalability will be difficult. Investing in automation will allow the company to handle the data and financial management that comes with expansion.

Automation software is especially useful to lighten the team's workload and allow for a more efficient workflow. Though software can involve a considerable upfront cost, the expenses saved on labor will make it worthwhile.

5. Outsource Operations

Tactical outsourcing of labor and resources can help to save time and money. Third-parties focused on critical skills are equipped with the relevant procedures, teams, and technology to reach the company's objectives. This saves the business from hiring new labor, sourcing technologies, and creating new systems internally.

Operations that are best outsourced are once-off additional jobs or roles that are far out of the scope of a company's regular operations.

6. Adjust the Business Model

Some business models are more ideal for scaling than others. If the company is finding the labor, production, and supply chain to be too limiting, there may need to be a shift in the business model as a whole.

7. Make Changes

When a company is unable to shift its entire model for exponential scalability, minimal adjustments can be applied to existing operations instead. Seek out ways to reduce redundancies, especially in the production phase, by automating processes as much as possible. This can help to decreases human errors and expenses in the long run.

For service-based industries, which can pose additional challenges for scalability, it may be beneficial to consider automating processes where possible or find supplemental revenue streams that do not require additional labor hours.

Building a scalable business is not always easy. Organizations may experience difficulties in increasing the volume of sales while maintaining high levels of efficiency and profitability.

For the stability of the business, the levels of productivity and revenue would need to be raised or maintained, at the least. Implementing some of the recommended scalable business ideas and remaining flexible will allow businesses to withstand external pressures even as sales volumes continue to grow.