Not every business can scale. Can yours? You need to take an honest look at your company.To paraphrase Leo Tolstoy: All successful businesses are alike. All failed businesses are unsuccessful in their own way.Google and Facebook grew in different ways, but they were alike in one very important area:
They both had businesses that were scalable. Before jumping into the minutiae of scaling a business, it’s worth taking a moment and asking yourself how scalable your business model truly is. If your business isn’t inherently scalable, no amount of good hires or clever processes will allow it to scale.
“There are three kinds of businesses: Unscalable, scalable and hyper-scalable,” says Goldberg. “Something like Dropbox or Facebook is hyper-scalable. Here the marginal cost of selling an additional product is virtually zero because delivery is automated.“A scalable business is one that offers a blueprint for success that can be replicated.
A franchise restaurant is a good example. Every restaurant is a profitable unit that can be operated in the same way as the previous one.“An un-scalable business is one that doesn’t have a ‘saleable unit’ that can easily be rolled out multiple times.
Many service businesses find themselves in this kind of situation. If you offer a high-level service that requires very knowledgeable (and expensive) experts, it’s hard to scale. There are many businesses like this with low barriers to entry that struggle to scale beyond 30 people because most of the skilled leaders they need would rather start and run their own businesses.
Something like Uber is scalable because being an Uber driver does not require an expert skillset. However, there are exceptions. Advisory firms have managed to scale because regulation creates predictable demand, there is some regular supply of human talent and there are high barriers to entry for new players.”