May 22, 2024/in Planning & Biz Tips
This Biz Tips series is inspired by the modules in our Momentum Accelerator.
Biz Tip # 2: Define your goals: GROWTH or SCALE
Definition:
The Shark Tank folks talk a lot about “scaling ” a business, but how does that differ from “growing”?
GROWING means you have more sales, but each one costs you the same amount. So as your sales increase, so do your costs.
This is especially noticeable if you’re selling a product. Each widget costs you $5 to make. Your costs may go down slightly as your production goes up, since you may be able to take advantage of bulk discounts on materials.
But your personnel costs go up, since it takes more work hours to produce more widgets.
SCALING, on the other hand, means your costs remain pretty much the same, whether you sell 1 thing or 1,000.
A great example of this is if you have a tech product. You have to pay for, let’s say, 5 developers to manage the platform. If you double your users, you still only need those 5 developers.
Why you should care:
As you plan for your business’s growth, are there ways to scale some portions of it? For example, if you are a life coach and primarily do one-on-one client work, a way to scale would be to add an online course to your offerings. You create it once and you can serve as many clients as you can get with no (or very little) increase in your costs.
Give it some thought.
You can have several revenue streams, some that can scale and some that cannot. That makes for a robust, stable business, which is an excellent goal.
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Written by Jill Morenz, President & CEO at Aviatra Accelerators
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