You’ve probably noticed that leaders like to use the terms “scale” and “growth” when describing business goals and strategies. If your company is flourishing, you may even notice that “scale-up” and “grow” are used interchangeably by employers and managers alike. If this is the case, you may be surprised to learn that the terms don’t mean the same thing.
Let’s take a look at the differences between growth and scale, how growing or scaling up can benefit your company, and strategies you can use to do both successfully.
- What is growth?
- The benefits of growth
- How to grow a business
- What is scaling?
- The benefits of scaling up
- How to scale a business
What is growth?
Growth means increasing revenues at any cost. It can also refer to other aspects of a company that are growing, like the number of employees, clients, and amount of office locations. Growth is often a measure of success, but takes a lot of resources to sustain. To grow, a company needs to add new resources like capital, people, and technology.
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The benefits of growth
It should come as no surprise that increased revenues are the number one benefit of business growth! Growth creates new opportunities for companies, allows you to bring more customers through the door, and generates greater profits. It also permits organizations to capitalize on the economies of scale by bringing down costs per unit as you increase production output. For example, growth may enable a company to purchase in bulk and spread overhead costs across a greater output.
In episode 100 of Supermanagers, co-founder of Craft Ventures David Sacks said: “When you’re in a fast-growing company, it’s amazing. Like how quickly your org chart is changing. You’re constantly needing to create new teams, new organizations, to reorg things, or layer people.”
Hear that? Growth encourages innovation, problem-solving, and creativity, too!
How to grow a business
- Find what makes your company different
- Make connections with your customers
- Research your competition
- Form strategic partnerships
Your network is your net worth! To grow your business, you’ll need to develop a vast network of colleagues, business leaders, and mentors who will be able to connect you with the right people. Attend regular virtual and in-person networking events to meet other entrepreneurs and established professionals who can help you grow your business. You should also connect with a business coach who has helped others in your field. The more people you have rooting for you, the more successful you’ll be in the long run.
2Find what makes your company different
Find out what makes your company different from the rest and leverage this difference! If you’re considering growing your business, you have likely already had some success selling your main products and services. Try offering services to gain new customers and clients, or find different ways to offer your existing products. Conduct market research to see if there’s something unique you can offer. For example, if you’re currently selling smart watches, you can expand offerings to include accessories and additional technology to use with your product. You could also consider selling bundles of products or introducing a subscription sales model.
3Make connections with your customers
You have the product and network; now it’s time to prioritize your relationship with customers. Keeping your customer base loyal is the key to increasing business revenue. When your clients trust your company and services, they’ll come back for more. Build client-centred practices into all facets of your business. Connection starts from within! Encourage collaboration and open communication internally and watch these best practices bleed into your company’s external presence. From there, you, your employees, and your colleagues will be able to build rapport with your audience that will help sell your products and services.
4Research your competition
If you want to grow, you’ll need to understand competitors in your industry. Identify other companies that are selling similar services or products and analyze their presence. Review their websites and social media channels, and gather any other information you can. Act like one of their customers to uncover insider information. For example, sign up for their email newsletters to get an idea of how they’re communicating with their customer base. Track your findings in a spreadsheet and take note of what they’re doing over time. Look at their online reviews to help identify areas where you can improve your own business results. Lastly, use this competitive research to engage better with your own customers.
5Form strategic partnerships
Think Starbucks’ in-store coffee shops at Indigo or Barnes & Nobles bookstores. Some strategic partnerships just make sense! When you enter a partnership with another company, your business can reach a broader network of customers. When you decide on a partner, you can align your growth using strategic goals. For example, if you’re a smartphone retailer that partners with a phone case company, you could contribute to the long-term success of both organizations. Success is often best when shared!
What is scaling?
Scaling your business means implementing systems and protocols that will prepare the company for lasting, profitable development, while minimizing costs. When a company decides to scale up, they intend to grow their revenues and increase profit margins while finding ways to be efficient. A business is successfully scaling when the revenue is increasing without a substantial increase in resources.
It’s simple: when your revenue is growing at a quicker rate than your expenses, you’ll have the resources necessary to help fund and support the increased business. This will give you the opportunity to invest in the tools and talent you need to sustain success.
The benefits of scaling up
Scaling up allows organizations to add more customers and clients while delivering the same level of service, without incurring unneeded costs; it can also improve a company’s efficiency by forcing business leaders to plan for different circumstances and adapt to economic changes and pressures. What’s more, successfully scaling up indicates that your organization is a strong competitor in your field and is likely to survive into the future!
How to scale a business
If you want to scale up, you’ll have to find efficiencies in your business! One way to do so is by seeing if you can get discounts from suppliers, then using those savings to scale your business and earn higher profits on sales. You can also reduce the costs of producing your products and services. For example, you can search for cheaper sources of labour, rent a less expensive office space, and negotiate better shipping and equipment costs.
2Develop a business strategy
You may have a financial plan, a document for customer segmentation, and even an outlined mission, a vision, and set values for your business, but you need to develop a business strategy if you want to truly thrive. Your business strategy should define who your company is to its customers. Identify your competitive positioning, conduct a SWOT (strengths, weaknesses, opportunities, and threats) analysis, and create a prioritized list of action items that will help advance your company’s objectives. Use the strategy as a reference point to manage your business priorities.
3Create effective processes
Invest in processes and operations that will function seamlessly. Your business infrastructure needs to be strong to retain your customer base. Keep in mind that processes may have to change as you scale up. Be adaptable along the way and tweak processes as you go. Create a framework of what works so you have a solid core that allows your business to run smoothly in the early days—you can always go back and improve on this core as growth occurs, but having a good foundation will benefit you for years to come!
Scaling is hard work and you won’t be able to do it alone. Deleting tasks will give you the time to focus on higher-level projects that can lead to greater success. Once your business strategy is created and new processes and systems are implemented, delegate tasks to your team so you can keep operations running smoothly. Hire specialists to lighten your own load and improve efficiency if you can; encourage questions and provide regular feedback so individuals feel motivated to work hard and improve, and show your appreciation regularly. When an employee does a great job, make an effort to tell them!
5Adapt and innovate
Change is inevitable, and you won’t be able to scale if you don’t embrace it. Track your progress as you strive to reach milestones. Don’t be alarmed if you fail to reach one. Adapt your plan accordingly and regularly monitor your company’s progress towards goals. Develop innovative strategies to improve your processes over time. Ask your mentors, business partners, and employees for their advice and ideas along the way.
If you’re a business leader, it’s natural to want to grow or scale up your company. Now that you know the key differences between growth and scale, select the best path for you and your team and follow our steps to achieve your desired outcome. Ask yourself: is it important that I maximize efficiency and revenue without increasing costs, or do I have the resources needed to grow my business internally and externally? Above all else, remember that growing and scaling both require persistent courage and hard work.