Nobody starts a business to see it crashing after a couple of years. No one wants their business to stay small forever or to have to throw in the towel when a recession hits. Every business owner wants their business to generate sustainable revenue, one that funds the lifestyle that they want and creates a comfortable future for them. So how do you do this? And how do you know if your business is scalable?
What is a scalable business?
Firstly, to know whether your business is scalable, you need to understand exactly what that means.
To quote Investopedia, scalability is defined by “a company’s ability to grow without being hampered by its structure or available resources when faced with increased production.”
To put it simply, a scalable business is one that can handle and perform well under mounting workload or scope; it is one that can grow through new geographies and markets without falling apart.
How to check you have a scalable business model
With the current Covid-19 recession, if they haven’t already, businesses need to be checking that they have a scalable business model. If they haven’t, then they need to be implementing one.
Here are a few questions that you need to be asking yourself:
1. Is your bottom line growing faster than your top line?
2. If you went on holiday for a month, would your business still grow?
3. Can your current systems/processes/ways of working support your business being twice or 3 times as big?
4. Can your current ways of working produce predictable new client wins?
5. Can your business win work without you being involved?
6. Is there enough of a market place for your firm’s services to scale to the level you want?
If you answered yes to all of these questions, you have a scalable model in place. If you answered no to some or all of these questions then you have a bottleneck that is limiting the growth of your business and you need to address those areas.
Build a scalable business
The difference to surviving the recession and thriving in it is whether you have a scalable business model. There are plenty of fast-growing, cash-burning companies that are going to be vulnerable during this time, but if you have a flexible model in place, then you can not only adapt to the turning tide, but you can also grow comfortably when the economy is on the upturn again.
Here are a few tips on creating a business that can sustain the level of profitability as sales volume grows:
Refine the company’s growth trajectory
Communicate and enforce a growth culture
Define specialist jobs clearly & set and monitor goals
Set and monitor goals
Hire strategically and invest in technology
Streamline processes to boost efficiency
Build trusted partnerships
Give significant importance to marketing