For new business owners and startups, there is a lot of focus on growth and strategies for growing the business. Another term that gets thrown around a lot for startups and small businesses is scaling. At first glance, it often looks like people use the terms interchangeably.
In fact, some people probably do use them interchangeably, but they refer to substantially different things. If you’re looking for a clearer understanding of the difference, keep reading. We’ll dig into what growth and scaling mean for a business.
When people talk about business growth, they’re typically talking about a linear process. Last year, you served this many customers and made this much revenue. This year, you served double that number of customers and doubled your revenue.
That’s the basic model of business growth. The catch is that your growth typically comes with an equally linear growth in costs. Yes, you doubled customers and revenue, but you likely doubled your overall costs in new hires, expanded space, and additional equipment.
You can almost think of growth as an organic result of being in business and running the business well.
Business scaling is a much less organic and much less linear process. It still means more revenue, but without the same level of cost increases. Let’s say you run a real estate business. Your old marketing strategy was some local ads and a website.
If you want to scale your business, you might look for real estate marketing options that dramatically increase your reach without driving up costs. Instead of paying out for TV ads, you update your website with an eye toward SEO, invest in email marketing, and double down on social media.
All of these methods can bring way more clients to your door without forcing you to hire a lot of extra staff or up your marketing budget. You see a healthy uptick in annual revenue and get to keep more of it.
Growth and Scaling
Growth and scaling can feel like they’re somewhat at odds. Scaling often comes at the end of a deliberate plan, while growth can come simply from doing what you do well. In reality, though, these two processes are related.
As a general rule, you need a period of growth first to establish your business, brand, and reputation. Once you have these firmly in place and some working capital at your disposal, you can plan out a way to scale up without spending away that enhanced revenue.
Growth, Scaling, and You
For a new startup or new business owner, growth and scaling are both on the bucket list. Don’t rush the gun to scaling, though. Scaling depends, at least in part, on your business already possessing a solid reputation.
You can only develop that reputation and firm up your internal processes by going through that period of growth first. When you do move into scaling, always focus on changes that increase your reach and revenue without increasing labor needs and costs.
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