January 22, 2015 Leave a comment
I am often asked, “What does ‘scale’ mean in business?” The term scale can have a different meaning depending on context. Common examples include: 1) Are we operating the business at scale? 2) Are we taking advantage of the scale of the business? 3) Can the solution scale-up or -down based on demand? 4) Does the business scale? 5) How fast can we scale the business? Below is an attempt to put context around the term “scale” to make sense of these five examples. For additional examples see Business Scale in Sales and How to Scale Yourself As A Leader.
1 – Are we operating the business at scale? Operating the business at scale means allocating resources to drive the greatest results and volume. Operating the business at scale is about optimization, not duplication, of efforts.
2 – Are we taking advantage of the scale of the business? Scale is another word for size. Companies can leverage their size by negotiating exclusive dealings, favorable terms and volume discounts with other organizations.
3 – Can the solution scale-up or -down based on demand? Most industries have periods with increased demand (retailers during the holiday season). Cloud companies like AWS let users increase or decrease capacity as needed.
4 – Does the business scale? Scalable businesses grow revenue with minimal to no new operating costs (software). If operating costs increase at the same rate as revenue growth, the business does not scale (professional services).
5 – How fast can we scale the business? Successful companies create a repeatable sales process. Once the process has been developed, companies can accelerate revenue by expanding (scaling) to additional geographies.
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