What does it mean to Scale Up Your Business? Is there a difference between Scaling up and Growing your business? Osborne Yuille Chairman John Osbourne has been mentoring business through growth and scaling for over 40 years. He shares his insights in this three part series on Scaling your business.
When experts talk about growth in your business, they are referring to increasing your revenue. This may have come about through increasing your sales, adding new clients or maybe a business acquisition. To meet the needs of this additional revenue, you may have to hire additional employees, increase the office space, additional computers, phones, inventory and other overheads. While you have experienced growth in your business it may have created temporary losses in profit initially.
Scaling your business means finding ways to grow your business more efficiently by adopting new technologies and streamlining your business. If you can add revenue while maintaining the same costs or better still lowering your costs you have now successfully “scaled” your business.
You may increase revenue but to meet this additional business you have had to increase your expenditure to meet the obligations of this growth. If this change causes a short-term loss or a break-even situation, then all you have done is increased the growth of your business, but you are not scaling.
If on the other hand you can take on the increase in revenue with no or little additional costs, then you have ‘scaled’ your business. It is important to understand the difference between growth and scaling in business. You need to continually see growth in your business, but successful businesses are able to scale their businesses to improve profit margins. If increasing the factory floor area is going to increase the output of the business increasing the efficiency and profitability of the business then you have successfully scaled the business.
When is the right time to Scale Your Business?
It is not recommended you scale your business if the business is still in the early stages of start up and growth. You need to be sure your business is well established before thinking of scaling your business. If you are going to introduce a new product or service, do your research and make certain the new product or service is unique from your opposition and is filling a client or customer need.
How easy will it be to scale?
Some businesses will find it easier to scale than others. If your business does not rely on heavy infrastructure to scale or has low operating costs it will be easier to scale as you will not need to build infrastructure and will not need to invest a lot more money. If you are for example, running an IT or Tech company you will probably be finding it easier to scale your business with little overhead or costs, whereas a manufacturing plant will have heavy plant to install and substantial cost that may generate growth in output but not necessarily scalability.
Lets Talk about you.
If you would like an obligation free 45-minute meeting with John and his team about scaling or managing your business for better results call 1300 727 082 or email us here.