Skip to content Skip to footer

Understanding Scalability in Business

One of the most important reasons to integrate technology and automation into a business is to facilitate scalability.

With automated workflows, you’re developing a business that operates on autopilot when it comes to day-to-day tasks. For example, the integration of an automated accounts payable solution into your business helps you stay organized, reduce human error, and cut down on the time dedicated to repetitive administrative work.

When business leadership grasps the value of scalability, they can turn their attention to specific technology solutions to help them build with an eye toward scaling up.

The following are some of the key things to know as far as scalability in a business.

What Are the Biggest Factors in Scalability?

Most people would say that when you’re discussing scalability, while other factors are relevant, the two biggest are IT infrastructure and software, and then teams and processes.

Scalability can also be divided into a business and financial strategy context.

Both require that a company can withstand growth-related pressure without limitations due to structure or resources.

Something else to note about scalability is that the ultimate goal is both expansion and revenue growth while you’re simultaneously minimizing any increases in your operational costs.

Building a Foundation

Scalability isn’t possible without a strong foundation. That means that you’re investing in systems that will allow you to grow without holding you back.

Automation isn’t just for big businesses in this sense. It’s something every small business should look to as they’re building a foundation of scalability. With automation, you can avoid some of the time-consuming details that might bog you down, and you can focus on the areas of your business that are strategic and growth-centric.

This can’t be emphasized enough—a scalable business is ultimately one that uses tools to create efficient operational processes.

If you have an existing business, you should evaluate where you’re spending the most time or where your employees are, on repetitive tasks, and then automate them whenever possible.

In addition to the automation tools that drive efficiency, there should be tools used for measurement so that you can quickly make changes or shift strategy as needed.

Understanding Scalability in Business - 1

Avoid Overcomplexity

While using the tools available to automate processes is important when it comes to scalability you also want to avoid a common pitfall, which is using too many options all at once that don’t truly solve your problems. These can become like a maze of systems that end up hampering efficiency.

It’s better to build your foundation on a few strong areas of technology.

Focus on Your Strengths

Once you have a technological foundation, then you can start to be more strategic in your thinking.

As far as what you do as the owner of your business, do the things that you’re best at. Outsource the things you’re not as good at or maybe not as interested in.

This, again, can tie back into the idea of using automation as a basis for scalability.

When the monotonous everyday tasks are automated, then that does give you the chance to leverage yourself as a key resource and to identify experts when you need to.

Features of a Scalable Business

The following are necessary features of a scalable business:

  • A low customer acquisition cost: This means that your product or service is a good market fit and can be driven largely by word-of-mouth, organic growth. That helps reduce your customer acquisition cost, and a truly scalable business shouldn’t have to dedicate a massive segment of its budget to marketing or sales.
  • A scalable business doesn’t need a massive team to operate. The right people in the right positions are the focus.
  • A scalable business will have high gross margins and also be able to modestly raise prices without losing customers.
  • A business that requires a lot of regulatory approval to grow is not one that would be considered scalable. Any business within a highly regulated environment is going to face hurdles that prohibit scalability, but at the same time, it also creates barriers to entry for businesses that would otherwise become competitors.
  • A scalable business doesn’t have a lot of customer churn. These businesses know the value of maintaining existing customers and put a lot of effort toward reducing churn.

Finally, many scalable businesses don’t own or warehouse inventory, but if they do, they manage it effectively to avoid putting too much of their cash towards it only to keep it sitting.

Of course, not all of these features are relevant to every business, but in general, these are some common threads you’ll see in scalable organizations.

Leave a comment