Scalability

Scalability means a company can grow without being limited by the way its structure and available resources are set up. So, a scalable company or business can increase its revenue while keeping costs the same or adding only minimal extra costs (with the new revenue far outweighing the cost of generating it).

1. Types of scalability

The goal of scalability is always the same: to increase profits. But there are two different ways to build a scalable business. Scalability can be horizontal or vertical, and most often, it’s a combination of both.

Vertical scalability

This is the fastest method and delivers the clearest results. Vertical scalability boosts a single process or department by adding more resources. That is, investing in a very limited area or space. This makes it the option that provides short-term benefits.

Horizontal scalability

It allows for unlimited growth and requires allocating resources to generate profit more gradually (depending on the growth rate). More resources are added as needed, and it brings more benefits than vertical scalability, but it’s harder to implement and demands more effort. In the long run, it’s the better option of the two.

2. Keys to a scalable business

Almost any company can become scalable—though not all do—but you can only achieve it with a solid foundation of what’s needed to scale your business. Some of the aspects you need to consider when choosing to scale a business are:

– Plan and anticipate. You need to anticipate your growth needs and be ready to meet them.

– Proper sizing. It’s very common to overestimate or underestimate the size of the business, which weakens its scalability potential.

– Study the competition. The market and the competition need to be thoroughly analyzed to determine whether it’s profitable for the company to grow.

– Understand the MVP. You need to identify the minimum viable product your customer would accept so you don’t waste time and money on something no one wants to buy.

– Promote self-service. Whenever possible, design self-service processes that allow customers to help lower costs compared to the previous business model.

– Set the investment. After a thorough analysis. You need to have enough financial and human resources available to make scalability possible.