Business expansion via scaling and growth
Every entrepreneur wants a reasonable progress in the business for a successful survival and continuity. If this progress is not made as per plan then not only its profitability will be hampered but also the continuity will come under question. The required result could be achieved either through growth or through scaling.
Business growth is termed as expansion by increasing number of employees, number of outlets, business area, turnover or number of customers etc. In this case for every increase first of all one has to increase the capital so that the profits which business is earning are not fully re-invested and thus the working capital is not squeezed to an extent to halt routine business operations. Keeping working capital available for smooth operations steady increase in capital investment will be required. What if there are not enough resources to feed it?
To keep businesses running and smooth cash flow while increasing the size of business “scalability” is the solution. In scaling your profits are simultaneously increasing with the increase in the sales. So for increased operations you have got increasing funds accordingly. The key to scaling is “product-market fit”, a product or service that keeps you going while you increase the output/sales, such that you are not struck with the stocks or idle capacity services. Unless and until you don’t have such successful produce to play with, scaling wouldn’t work out. When you have got that highly in demand product or service only then you could think of scaling your business.
“Sustainability” is the next necessary factor while you are scaling. We can say that a growth which is sustainable is called scaling. To give an example from the current world you can look at sustainable scaling of Google as compared to Yahoo as a search engine. While Yahoo is quite old and have a much attractive interface but according to gs.statcounter.com Google has got 92% of search engine market share as compared to Yahoo which has only 1.8%. Means Google, while having a “product-market fit”, scaled the business and expanded with such a pace that it overtook Yahoo in a very short span of time.
For a steady growth to be retained continuously or to keep your business sustainability awareness about your business market size really matters. There could be a point in the course of action at which you don’t get increase in the number of customers which you were used to gain some times in the past, although you are offering the same level of quality in your services. This might mean that you have reached to the threshold of the customers who could be captured by your existing product or services. If you still try to keep on expanding on scale basis that wouldn’t work.
At this stage you have to search for new markets or products and have to create demand for your products in order to meet the pace of scaling. You could go to related markets and/or related products so that a margin for expansion could be gained. If you get a related product you can introduce it in your same existing market with almost the same marketing and distribution resources. Whether you are expanding in a new product in the same market or expanding in the new market with the same product, in both the cases accessing market size first is a must, to correctly analyze the quantum of resources to be allocated for expansion. Once the market size is quantified then you can decide the estimated share of market your want to capture by the existing business. Adding more products under the umbrella of same brand would also benefit you to get more sales from the existing customer base. Many companies got success with adding more product lines. Amazon is a very iconic example for that.
Continuous improvements in business process are necessary to decrease production or other overall business costs. As the manufacturing is continuously evolving since ever, therefore, sticking to traditional processes would keep you lagging back in the race of cost cutting.
We can summarize our topic as to grow business steady sustainable growth is the main thing. When you are at this stage you have specialized in your business line and there is a steady demand you can opt for scaling. When you are reaching to the threshold of your customer base you have to create demand for your product. Estimating market size before going for adding new product or market is the first step for your expansion. Business process improvements on continuous basis would keep you among the efficient companies in your niche.