What it actually means to scale your business

Tea with the Queen

Scaling a business is a buzzword we often hear in the entrepreneurial world. Yet, many of us don't fully understand what it means, how it differs from growing a business, or how to implement it effectively.

I recently worked with one of my clients who wanted to scale her membership service, and I realised just how much there is to consider. So today I want to share my insight on what it actually means to scale and whether it's the right move for you.

Let's start by breaking down the differences between scaling and growing. Even though these words are often used interchangeably, they don’t mean the same thing.

1. Resource Allocation: Growing involves a proportional increase in resources such as capital, workforce, or operational capacity. In scaling, the goal is to achieve more with less. This means a focus is on increasing revenue without significantly increasing resources.

2. Efficiency: Growth tends to be less efficient due to its linear expansion of resources and costs. Scaling emphasises efficiency and sustainability, aiming to increase revenue while minimising costs.

3. Strategy and Implementation: Growth strategies may include hiring more employees, opening new locations, or increasing production. Scaling requires strategic planning and innovation to handle increased demand without proportional cost increases.

To make things clearer, let’s look at some examples! A restaurant that opens new locations to serve more customers experiences growth. It doubles its revenue but also doubles its costs for rent, staff, and supplies. Meanwhile, a software company that automates customer support with AI can serve more customers without hiring additional staff. This is scaling because they’ve significantly increased revenue with minimal cost.

There are several benefits to scaling your business, like an increased market demand, greater revenue potential, and a competitive advantage. However, scaling is not just about the upside; there are risks involved. If your business isn’t ready you can overextend and expose it to unnecessary risks.

Remember, scaling isn’t for anyone. Like any decision in business, it’s important to be well-informed before diving in. Whether you decide to scale or grow, I hope the information I’ve shared will help you make the best decision for your business.

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For a copy of Emma's book, 'Go-getter: Raise your mojo, shift your mindset and thrive' – https://www.emmamcqueen.com.au/book/