Industry

Growing Vs Scaling Your Business: What Are the Differences?

Close
(Credit: marcelrmlsp from Pixabay) Image by marcelrmlsp from Pixabay
July 12
3:40 PM 2022

The journey from startup company to industry leader is a long one. Less than 1% of new companies make it to the top of their industries. The difference between those companies that make it to the top of the heap and those that stay in the middle of the road is simple: they cracked the code when it comes to scaling.

Every CEO wants their company to grow, but they can soon find themselves stretched to the limit. Growth means bigger, but it doesn't mean more efficient or more profitable. The problem they're running into is that they haven't made the deliberate decision to scale.

Growth vs. Scaling

The essential difference between growth and scaling is that growth is linear. Revenues increase, but so do costs. It's relatively simple: your company grows by gaining new business, but as the workload increases, you need to hire to handle all the work. The company earns more, but the effort and expenditure that goes into it is commensurate.

As much as companies say they want growth, it takes a lot of resources and investment, and any bumps along the way can prove costly. Often what they mean is that they want to scale.

Scaling is when revenues increase without costs rising as well. Sending an email is a great example of a scalable activity. You can send the same newsletter to five people or 500,000 people without significantly raising the effort level required.

When a company scales, it increases revenue exponentially, while costs only increase incrementally, if they have to increase at all.

Scaling is what differentiates a startup from an industry leader. Once a company decides and learns to scale, it can make a lasting impact on your industry.

How Can Your Company Scale?

The problem with scaling is that there is no single roadmap for all companies. It depends on your industry, the solutions you bring to the table, and the markets you're targeting.

Tech-oriented startups often have an opportunity to scale in a way other businesses can't. Take Nobul, for example. The company provides homebuyers and sellers with a digital marketplace where they can find a real estate agent. Agents compete for their business, and consumers use the platform because they get more transparency and information to make an informed decision about who they work with.

According to Founder and CEO Regan McGee, the main hurdle Nobul faces when they enter a new territory is getting the word out to consumers. In an interview with Yahoo Finance about expanding into the United States, he explains the process:

"In Florida, we have thousands of agents already on our platform, which is the supply side of our marketplace. The demand side is consumers, so buyers and sellers, so when we open up a new territory, we need to let consumers know that we're out there, we exist, and that they should come on our platform and get the best possible experience that they can have."

How your company scales and the challenges it will face along the way are unique to your company. Once you decide to scale, you have to chart your own road map to success.

© 2022 VCPOST, All rights reserved. Do not reproduce without permission.
Share

Comments

Join the Conversation

Subscribe to VCpost newsletter

Sign up for our Deals of the Day newsletter.
We will not spam you!

Real Time Analytics