2017-12-05 00:00:00 Growing a Business English Consider scalability when you're contemplating new business ideas to prepare for future growth and maximize long-term profits. https://quickbooks.intuit.com/ca/resources/ca_qrc/uploads/2017/12/Two-women-in-small-business-explore-scalable-business-ideas.jpg https://quickbooks.intuit.com/ca/resources/growing-business/small-business-scalable-ideas/ Developing Scalable Business Ideas

Developing Scalable Business Ideas

4 min read

When you’re developing new business ideas, the future growth of your business might not be the first thing on your mind. If you keep scalability in mind from the start, your business stands a better chance of succeeding in the long run. Scalable businesses are designed to handle increased demand seamlessly over time, so consider scalability when you’re choosing a business idea to ensure steady growth without any growing pains.

Why You Should Plan Early for Scalability

If you wait until your business is already up and running to consider scalability, you might miss out on an opportunity to streamline the growth process. Your capital structure and marketing plans may not be able to accommodate rapid growth, leaving you behind the curve just when your customers are demanding more from you. When customers are ready to buy, you should be ready to give them what they want. A solid yet flexible growth plan lets you anticipate changes in the market so you can respond quickly to increased demand.

Considering Scalable Business Ideas

The brainstorming process is a chance to contemplate many ideas before deciding on the right one to pursue. Scalability should be one consideration among many when you start to narrow down your ideas. Understanding the attributes of scalability lets you determine whether a particular idea is suited for massive long-term growth.

In general, scalable ideas don’t require a lot of extra cost to move from serving a few customers to serving millions. Digital downloads, apps, and businesses that are part of the sharing economy are scalable business ideas because they can grow without requiring a lot of extra investment or effort on your part. A boutique store, small manufacturing plant, or location-dependent service business isn’t scalable, because you can’t expand without purchasing more inventory, hiring more employees, or moving to a larger facility. Peer-to-peer platforms, such as the global lodging site AirBnB or the Toronto-based grocery delivery service InstaBuggy, scale up easily because they require relatively few employees inside the actual businesses and instead use on-demand workers who sign onto the service to take care of their customers.

For some types of businesses, the economy of scale helps make building your business more feasible. Growth should involve lower costs, because products get cheaper to produce or purchase from suppliers in bulk. Operating costs, including employee pay, maintenance, and equipment costs, should grow more slowly than your revenue does in a scalable business. Determining whether your business idea is scalable from the start helps you decide whether it’s something you actually want to pursue.

Streamline Your Processes

Once you narrow down your business ideas, consider ways to streamline business processes from the start and prepare your business to scale up once it has launched. Whether your business idea involves a manufactured product or a digital service, keeping documentation of every step from production to consumer fulfillment is essential. Automation is also important if you plan to scale up months or years down the road. Invest early in a powerful e-commerce system or customer relationship management software such as the Method:CRM QuickBooks app to automate the collection of sales and customer data so you don’t have to change systems once you expand your reach.

Management is another area that should be streamlined in a scalable business. A company concept that requires multiple layers of bureaucracy isn’t scalable because too many people need to sign off on decisions for anything to take place quickly. Automating payroll, setting up cloud storage solutions, and developing standardized training processes for employees and freelancers can all reduce the workload of managers, allowing you to reduce the number of decision makers in your company.

Resources also matter when you’re ready to scale your business. If your business idea isn’t self-sustainable at scale, you need outside funding to support rapid growth. Determine possible funding options for each stage of your company’s growth and put plans in place for a second or third round of funding before the point where you plan to scale up rapidly.

Think About Future Markets

A business is only scalable if there is a market for what you’re selling. Researching the potential market for your business idea gives you a clue as to whether or not scaling up is in your future. If your idea is truly scalable, it should be both easy and inexpensive to gain new customers once everything is up and running. This doesn’t mean things are effortless at the beginning. You may need to expend a lot of effort getting customers, clients, or business partners on board before your business takes off, but after a while, word of mouth and organic growth should replace or supplement your active marketing.

Ultimately, the scalability of your business is determined by the size of the overall market. Research your industry to determine how many potential customers there are in your local area, throughout Canada, and around the world. Identify any competitors who might already have captured market share in the industry, and study those competitors to determine whether they are prepared to scale up before you get there. By focusing on all of the aspects of scalability before you even choose which business idea to pursue, you set yourself up for long-term sustainability.

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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