When it comes to growth and scaling a business, many may think these both refer to the same thing – a company getting bigger, increasing revenue, and serving more clients. However, growth and scaling are two different aspects of businesses and should be treated as so.
What is business growth?
Essentially, business growth refers to increasing revenue just as fast as they are adding resources to fund that increase. It may also refer to tangible aspects of the organization that are growing, such as the number of employees, clients, and offices. However, what often happens is that as the revenue increases, so do the overall business costs.
For example, a company may gain $30,000 in revenue, but they might have to spend that same amount on hiring a new advertising agency. Therefore, these numbers even out, and although the company has grown in revenue, it hasn’t grown in value.
What is scaling in business?
The main difference between growth and scaling in business is that scaling is done by increasing revenue without increasing significant costs. Essentially, revenue is added faster than expenses are increased.
For instance, a company that is scaling might gain $30,000 in revenue, and only spend $3,000 on marketing automation tools. Therefore, the gains outpace the losses, allowing room for exponential growth.
Growth Vs Scaling
When we think of growth, we often think of it in linear terms: with new resources (people, technology, capital) comes new revenue. Scaling is when organizations can increase their revenue without necessarily needing to increase their resources substantially. A simple example is email marketing — the effort put into emailing 10 people or 100 people is essentially the same, however, it is a very efficient way to scale a business.
As you try to expand your business, you should consider scaling, and not just business growth. At BTA, we are always looking for ways to make you and your business even more successful. If you want more information about scaling your business, you should check out our latest blog post and contact us at email@example.com.
We are business owners and advisors that offer consulting services to entrepreneurs. Working hands-on, we help develop and implement effective strategies that increase business value, growth and profitability, to prepare for the future.