In the past, creating a business was considered an extremely costly and challenging job, with very high risks. Today, with the digital transformation provided by the advancement of technological innovations, this way of looking at the act of undertaking is left behind.
In recent years, it is increasingly common for companies to achieve great growth and expressive results in a short period of time. This is possible when the organization defines a clear objective, adapting its processes for this purpose and avoiding additional costs for the entrepreneur. Because this is precisely the proposal of a scalable business.
If you still don’t know what that is, don’t worry. In this article, we separate the main information on the subject, from what a scalable business is and its advantages to how to put it into practice. Follow!
What is a scalable business?
Companies that adopt the scalable business model are characterized by high growth — both in terms of expansion and profitability — without the need for a proportional increase in expenses to achieve results. That is, with this type of business it is possible to achieve expressive results with fewer resources.
A scalable business has high growth potential and can even be internationalized, all without the need for large investments. In practice, this means that the company must take actions to expand efficiently, in addition to constantly adapting to changes in the market and always evolving in quality and productivity.
Of course, from time to time, it is necessary for the company to make certain investments and hire new professionals. However, the idea is to use the existing infrastructure and team as efficiently as possible, optimizing processes and respecting the reduced and scalable model to achieve results.
The scalable business carries several characteristics that differentiate it from other models. Although each segment has specific demands and particularities, scalability has uniform elements in any type of company where it is adopted. Find out what they are below.
High demand not market
The main aspect that characterizes a scalable business is its ability to provide products or services on a large scale, based on the identification of opportunities and the needs of the target audience . In this way, the company has a high demand in the market, drawing the attention of customers and with great potential to conquer new markets.
Entrepreneurs who want to promote continuous growth in their organizations find scalable business the best option. After all, the model allows the company to grow exponentially, whether on a national or international scale, based on the implementation of initiatives in favor of continuous improvement and process optimization.
Another feature of the scalable business is standardization. That’s why organizations that adopt this model are so concerned about simplifying and standardizing their processes, because growing in a disorganized way is not being scalable. This allows cost reduction and work agility, contrary to what happens in a company that works with customization.
It is impossible to talk about a scalable business without mentioning process automation . This is because this is one of its main characteristics, adding, mainly, cost reduction and agility. And the reason is simple: the more automated a company is, the more agility there will be in production and delivery, in addition to less resources spent on labor and greater innovation.
Finally, it should be noted that a scalable business is capable of supporting high-scale production and a large volume of customers, and this without having to resort to additional costs. As expenses do not grow proportionally with the company’s growth, you can direct resources to other objectives.
What are the determining factors?
Despite being a model increasingly used by companies in the current market, scalability is only recommended for certain managements. Therefore, understanding whether a company can become scalable is essential. Among the determining factors for this are:
- Serving a large number of customers, prioritizing user experience and satisfaction;
- Promote continuous improvement in processes, implementing new technologies and managing the new resources that will arise from growth;
- Process a large amount of data;
- Implement processes that are specific and can be taught to others;
- Adopt an expandable, standardized business model that generates recurring revenue;
- Offer a unique and exclusive product, meeting a market need.
Faced with these determining factors of scalable business, it is worth noting that the model is more suitable for startups and industries focused on areas such as communication and technology, as they need to expand more frequently than other segments.
On the other hand, businesses that are not very scalable are those that rely on a complex structure for customer service — as is the case with restaurants, for example. Therefore, it is up to each business owner to carefully analyze the characteristics of the model to find out if it is applicable to their processes.
What are the advantages of this business model?
Now that you already know the main characteristics of the scalable business and how it is defined, it is time to understand what its main advantages are. The main ones are the creation of an intelligent service and a more productive operation, delivering more value to the customer and providing an improvement in results. Learn more about these benefits below.
Increase in market value
As we’ve already discussed, scalable businesses are synonymous with rapid growth and increased profits. Thanks to this, companies that use the model tend to register an increase in their market value, allowing contributions to have more quality and relevance.
This happens because this type of business is capable of transforming companies into franchise chains, in addition to favoring foreign investment and even international presence. Thus, your processes are replicated without loss of quality.
Another factor that adds even more value to an organization’s services or products is the fact that scalability conveys an image of high productivity and low cost. Compared to other businesses, this represents a huge competitive advantage.
This is an advantage that could not be left out of our list. After all, the opportunity to successfully grow the company is one of the primary benefits of scalable businesses.
This is possible thanks to the model’s ability to make companies adapt better and faster to changes in the market, since they have lower expenses and more optimized processes.
In this way, companies are able to establish themselves in their sector more easily, adjusting to the news and delivering new solutions to the target audience. Not to mention, of course, that this makes it possible to attract more customers to the company.
When a company becomes scalable, several changes need to be implemented for this purpose. And no area of the business is as affected as Information Technology (IT) — after all, technology is behind most scalable businesses.
This makes it necessary for IT to review all its processes, in order to seek solutions and tools to meet the planning of a scalable business. With this, outdated tools and equipment are set aside to make way for modern and innovative technologies that allow the process of business evolution.
A direct result of all this work is the organization’s technological innovation, which becomes fundamental in the development of the business. With this, a small startup, which under normal conditions would not be able to stand out in the market, can compete with brands with decades of experience by becoming scalable and relying on new technological solutions.
In the last topics of this guide, we discussed that one of the characteristics of a scalable business is the standardization and automation of processes. And one of the advantages provided by this aspect is the mitigation of failures and operational bottlenecks, which allows replicating the product or service marketed or provided more easily.
This also contributes to making the company’s operation more efficient and assertive, increasing customer satisfaction, optimizing time and resources and increasing productivity. Consequently, the company grows continuously.
Reduction in operating cost
The low investment is another important feature of the scalable business, which means that the company can be expanded without the owner having to bear large costs for this.
The low operating cost added to the scalability represents a great strategic gain, as it is not necessary to depend on decapitalizations or financing, allocate resources to areas that need it and quickly take advantage of market opportunities when they appear.
Agility in promoting changes
To finish our list of advantages of scalable business, it is necessary to highlight another great differential: the possibility of the model to make changes be promoted with greater agility. This is because, as the structure and cost of the business are leaner, it is much easier and more agile to put changes into practice, whether organizational or positioning.
As the market is increasingly competitive, agility to change and take advantage of opportunities is essential. In this way, it is possible to better understand the needs of customers and take advantage of opportunities envisioned in a short time, getting ahead of competitors and ensuring the conquest and loyalty of consumers.
What are the challenges to be overcome?
Even if your company has a good volume of customers and is recognized in the market, it can never be successful in adopting scalability if you are not prepared for it. For this reason, it is important to pay attention to the main challenges of the model, in order to scale the business and build a successful enterprise. Check out the challenges below!
Be a differentiated company
This is a common challenge for companies with different business models, but even more so when it comes to scalability. After all, no company will be able to scale without offering something different from competitors.
Therefore, it is essential to think big and not be afraid to innovate, adopting measures to stand out in the market. More than serving customers, it takes courage to do something new and offer exclusive and innovative solutions.
Grow in order
If you want to achieve consistent results, it is essential to standardize the company’s processes and always value the organization. To adopt these practices in favor of business scalability, it is necessary to train employees to perform specialized work and educate them about the company’s organizational culture.
Have agility and flexibility
If agility and flexibility are necessary characteristics for companies in any segment, this could not be different for those seeking to be scalable. This is because they need to be able to adapt quickly to changes in the market, both in terms of increased demand and expansion of the organization.
If the company is not quick and flexible to deal with changes, it will not be able to keep up with the natural changes that arise with its growth, in addition to losing opportunities.
Prepare for the changes
In a scalable business, change will be constant. To avoid the chances that you will be surprised by a problem, it is necessary to have a good strategy and prepare yourself in order to deal with the new challenges while minimizing the risks as much as possible.