Two of the most popular buzzwords around are scaling and growth in business. The words are tossed around a lot, yet the enthusiasm with which they are used often far outweighs the accuracy. Too many people use them to mean exactly the same thing: A business becoming bigger, gobbling up market share, and generating more income. The reality is that there is no such thing as a “business” that is growing – in the classic sense of the word. It makes no sense at all.
In order to understand what’s meant by scaling and growth in business, it’s important to understand what it is not. Simply put, there is no such thing as” scalable” or “growth-oriented” in the classic sense of the term. In fact, the two are very different concepts that often get conflated. Let me explain. Here’s how this works:
A business is scalable – it grows over time. The question of whether a business is growing or scaling is really a non-issue. After all, a business doesn’t “grow” in the traditional sense. So, when someone asks us whether a business is “scalable” or “growth-oriented”, what they really mean is whether the revenue stream is growing.
Scaling is an issue only when the business is growing. When the company isn’t growing, a business owner needs to worry about whether the investment they’re making is adequately covering expenses and bringing in enough revenue to support growth. In this respect, financial reporting plays a vital role. This is why most startup companies spend heavily on corporate finance, as well as hiring a CFO.
If a business owner wants to use the term “scale” when it comes to revenue growth, then it means the company has a fairly large number of customers who are buying its products and services. Therefore, it’s necessary to invest in infrastructure and other forms of internal growth in order to grow. But a small business can’t do this by itself – it has to hire people, provide training, and grow in a certain way. For instance, a health food retailing company can grow simply by offering more products to more customers. It’s all about scale, especially for the startup.
One reason why the CFO job is so attractive to startups in the current climate is because of something Guzman said at the World Wide Web Conference last fall. He said that companies should ignore the financial metrics in the past and focus instead on leadership. He likened this approach to scale an operation to the point where it’s no longer efficient – and then scaling it down again. And in this case, he was referring to the need for a CFO to ensure a company is doing everything it can to become more profitable as it grows.
As part of this strategy, here are six tips from Business Scaling Strategy that can be useful to a small business that’s trying to be successful in the current economy. These include things like understanding customer loyalty, having good relationships with vendors, investing in growth, and of course, marketing. When it comes to scaling up a small business, hiring a CFO makes sense. Here are the six tips from Business Scaling Strategy that can help you with your own operations:
As you can see, scaling a business involves more than simply hiring someone to manage day-to-day operations. It requires developing a comprehensive business growth plan that considers not just profit and loss but also how sales are growing, how customer satisfaction is affecting growth, and what types of activities to bring in new revenue. This strategy is often best implemented by someone who has already been involved in scaling operations – such as a former CFO. The person can explain what changes need to take place in order to successfully scale the business.
