What is scalability?
The term scalability defines the capacity that a company or system has to grow according to the demands without losing the qualities that add value. In practice, this means growing a business strongly and multiplying your income without increasing your costs proportionately.
Scalable companies manage to expand in a structured and sustainable way, and that is why this feature makes the eyes of many entrepreneurs shine.
To illustrate it better, I’ll give you an example.
Understanding scalability with Airbnb
If you are a born traveler, you probably know Airbnb, but I’ll explain if it is not your case.
Airbnb is an online marketplace that allows people to offer their homes for rent for guests who need temporary accommodation.
For the system to work, business idealizers only had to create a platform and make it available on the Internet. Through it, the owners and guests contact each other directly and close the deal.
How does Airbnb earn money? Simple: the company charges a commission (both from the host and the guest) for each booking made on the platform.
The business model of Airbnb allows you to increase revenues with only the disclosure of your service. That is, you do not have to spend with the hiring of professionals, logistics, or invest in the construction and maintenance of hotels or any other type of infrastructure.
This scalable method allowed Airbnb to grow rapidly and, currently, is present in about 190 countries, achieving more and more stratospheric results with practically the same expenses as always.
What are the benefits of scalability?
There are many advantages to creating a business with scalable solutions, and not only for companies. Customers can also benefit from this type of feature. Think for a moment what you would do without the applications you use daily, such as Uber and Instagram. Or without Netflix during your weekends (I would go into crisis).
Scalability allows a wide scope. In most cases, companies cross borders and internationalize their services, favoring millions of people worldwide.
And revenues increase according to that expansion in the market once the model is replicable and impacts little on production costs. Using once again the example of Netflix, the company can offer the same streaming service for one or one million users.
In addition, companies that develop scalable solutions almost always have a small but highly trained team, which improves the cohesion and strategic alignment of the business.
How to create a scalable company?
First of all, keep in mind that not all businesses are scalable. If a supermarket wanted to grow and serve more people, for example, it would depend on several factors, such as the increase in structure, hiring more professionals, and the variation of product prices to buy and resell them.
Therefore, the first step to creating a scalable company is to analyze if your business idea is compatible with scalability concepts.
For a business to be scalable, it must have three main characteristics:
Be easy to teach
If you can teach your production process and other internal activities to other collaborators, your business may become scalable without you needing to be there for everything to work. This type of flexibility allows the company to expand rapidly, according to market opportunities.
Be valuable
If you identified a unique opportunity and dedicated yourself to specialize in it, you are on the right track. Through specialization in a specific activity, you will distinguish yourself from the competitors, and you will add more value to the product or to the exclusive service that you offer to the market. That’s why great innovations are almost always related to scalability.
Be replicable
If you can reproduce your production process and generate recurring revenue, you have great scalability potential. This indicates that your production model works and, even more important, a market is available for your expansion.
Final tips
Besides, you must evaluate your business idea’s potential and the market conditions; Is there an audience interested in your solution? Are there technological resources so you can develop your idea? Do you have the resources to start your project?
If you have positive answers to these questions, you can consider implementing scalability. But I leave you one last piece of advice: never stop innovating in your business.
Continuous improvement is essential for the survival of scalable companies. The fact of being scalable does not make the business automatically successful. Many solutions can become obsolete or even unviable over time.
Stay attentive to the needs of the public and the actions of your competitors. Keep in mind that every transformation process in your business must be well structured, and its results must be accompanied daily.
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