Scalability: Not thinking about it today means you’ll pay tomorrow

Definition: scal-a-bil-ity \ˈskā-lə-bəl-i-teeˈ\

verb. The ability to increase the size of a business while either maintaining or increasing its profit margin.

A simple definition for something that, unless your business is built to do it, is rarely done well.

This guy wasn't thinking ahead

This guy wasn’t thinking ahead

Creating and managing a scaling enterprise requires a delicate balance of handling massively increased capacity without an equally massive increase in overhead.

This donkey understands this better than most.

Highly scalable companies are built from the ground up with a consistent strategy to maintain minimal impediments to growth.

Of course, some businesses are just born scalable. Grocery stores can handle radical increases in business with ease by simply adding more guys to keep the shelves stocked, and more staff to man the checkouts. ISP’s like NEWT’s parent company, Fibernetics, can dela with increases in demand easily as the network is designed to do exactly that. Facebook and Google are two other perfect examples.

Other business models are not however. Restaurants, in order to handle increased volume, also require increased seating areas and kitchen equipment to handle the rush. Once business slows down, that large capital investment is just sitting there and virtually impossible to scale back.

What about your business? Are you in a position to grow easily, or are impediments to expansion part of your business’ DNA?

There is a simple way to evaluate your current situation by looking at your fixed costs. Fixed, indirect or overhead costs are business expenses independent from the goods you produce or the services you provide. 

To improve scalability, many of those fixed costs can you convert to variable costs.

“All too often, small businesses get locked into large, fixed expenses unnecessarily,” writes Steve Strauss, USA Today small business columnist. “Business owners see these expenses as unavoidable or costs that can only be reduced in the long term.”

They’re wrong. There are numerous and painless changes any business can implement. Here are just a few:

HR requirements: hire freelancers, encourage telecommuting, standardize and simplify processes as much as possible to minimize training requirements for new people.

Product or service line: Do you really need to do it all? Figure out how much each product or service is contributing to the bottom line, weighed against the added complexity it brings to your business.

Focus on Self-Service: Ordering, account information, service or product notifications can all be taken online minimizing and streamlining each process and enabling unimpeded growth.

And of course you have to look at your basic business infrastructure, like, (here it comes), your phone system. As every business grows, there will be a need to add more extensions and phone lines to handle the increased call volume. If you are buying a phone system today that is incapable of supporting your business, two, five or ten years from now, you are making a scalability mistake, that, down the road will cost you.

The same applies for all our your long term business tools in fact, but let’s stick with the phones for this example.

If you’re an entrepreneur, or a small business with plans to grow, your phone system requirements are probably currently minimal. However, that doesn’t mean you should look for the cheapest, bare bones solution. Instead, think where you plan to be in a decade and purchase a system that is capable of starting small with you and that will keep pace with your projected growth. Phone systems that are designed to scale, liken the NEWT Managed PBX, are at their lowest price point when brand-new because of lower introductory prices to entice business owners to purchase. Because of this, it makes sense to take advantage of the initial lower price for the base system, and pay as you go when adding extensions, more features, more data connections and whatever new technology will be the “must-have” in 2024. There may be more money paid out in the beginning, but you only have to make a single purchase today, and one that will guarantee greater savings down the road.

Not every business is born to scale, but those that are built to scale have the best chance of getting there.

 

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About Gavin McDougald

Gavin McDougald has been working on and around the Internet since 1995. One of the original developers of The Sports Networks website, TSN.ca, he ended up as its Editor-in-Chief. An award winning writer, Gavin's work has been published on numerous sites like CBC.ca and NHL.com, as well as in papers such as the LA Times and Globe & Mail. Moving from online sports to Internet marketing in 2003, he's worked in a variety of industries including console gaming, online publishing, and now in telecommunications with Fibernetics. His focus is on the social media channels for both the Worldline and NEWT brands, blogging and corporate communications. Gavin has a BSc in Geology and a BA in Fine Arts from McMaster University.

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