Is Your Online Business or Startup Scalable?

While you grow your online business or startup, it's important to take care of the fact that it is not at the cost of adding expenses, and not to the extent where you cannot manage it effectively. Always remember, growth brings in the need for additional workforce and operational support. Growth can push your finances to test; it will always put extra pressure on your systems, service levels and attach bureaucracy to organizational hierarchy.

People, process, and culture of organizations are forced to squeeze when businesses grow; unless you have ingrained scalability into the way your business works.

Scalability - Adaptable Growth

When your online business grows and adding more revenue does not significantly increase operational costs - it is judged as scalable. Scalability is a wider term which certifies that you have sufficient workforce, systems, and processes in place which can accommodate the growth without affecting the profitability of the business. That means, with growth you do not need to increase your operational expenses. Scalability can be attained by the following...

Keep Cost of New Acquisition Low

You can increase the scalability of your business reducing the cost of acquiring a new customer to almost zero. This can be done by optimizing the marketing expenses needed to obtain new customers and increasing the average revenue per customer. Innovative marketing strategies like digital marketing, and creative customer service initiative or loyalty programs will not only increase the customer lifetime values but also reduced the acquisition cost.

Build around a product-based business model

It is critical for a scalable business to grow a product-based business model rather than a service-based business model. The benefits of product-based business are:

  • Lowered risks and predictable sales.
  • Purchase decisions of customers are quick and immediate, unlike service-based models where sales process takes a long time.
  • Unlike service-based, product-based businesses are dependent on demand of the market and not how many you are capable to service.

Automate as much as possible

With business growth comes increased overheads. It is recommended that you put automated systems in place – as much as possible. This way you are keeping the overhead expenses and investment fixed but keeping the scope of growth wide open. Thus, increasing the profitability as well.

When large enough, negotiate special 3rd party vendor service

As your business grows, any 3rd party who's service you utilize will experience the growth also. Don't be afraid to lean on these vendors and negotiate lower rates. After all, you're doing the work of sourcing new business for them.

Both scalable and non-scalable businesses can make money. However, scalable businesses can sustain their profitability for longer and grow in a much more efficient and hand-off way. Take the time to look at your business in an objective way and ask yourself – "Is my business scalable?".