What’s the difference between growth vs scaling? Many believe that these two terms are interchangeable synonyms, but that isn’t quite the case. While some businesses hope for growth, others hope to be able to scale their business to serve a larger client base. What are the defining differences between growth vs scaling?
Growth vs Scaling: GROWTH
First, we need to understand exactly what traditional business growth is. Contrary to popular belief, growth does not automatically mean an increase in revenue. Most business models center around growth – “adding resources to the business at the same rate that you’re adding revenue.”
Professional services, contractors, retail stores, etc. usually follow a growth-based business model. When these businesses want to bring in more revenue, they must add resources to the business – more employees to serve the increased number of clients, a call answering service to handle calls and appointments, a new location to capture a new segment of the audience. Essentially, with growth, you have to “spend more money to make more money.”
Growth vs Scaling: SCALING
Scaling, on the other hand, doesn’t require a significant increase in spending to trigger a significant increase in revenue. Companies like Google, Facebook, Amazon – they don’t grow, they scale.
“Scaling is about adding revenue at an exponential rate while only adding resources at an incremental rate.” – Fundable
Adding resources costs money that cuts into revenue. Scaling is achieving business “growth” by scaling the service or product in such a way that additional resources are not required to sustain the growth. Scaling increases margins at a rapid rate.
Growth vs Scaling: Which is Right for Your Business?
Not every business can effectively scale its services while acting under its existing model or strategy. Changes may need to be made to make a business scalable. While some companies are scalable in their very nature – like software companies who, after initial development, can freely sell the software to as many users as will download or purchase the software – others have to take a closer look at business processes in order to scale.
Take a look at your business model and find the facets that you could potentially scale to save time and resources. Examples of scalable processes might include outsourcing call answering, sales funnels, email and social marketing automation, and more.
For businesses who either cannot effectively scale their service or product (or those who just don’t want to), growth is still a beneficial option. Whether you’re focusing on growth vs scaling, you’ll be increasing your revenue and making your service or product available to more people. In our book, that’s a win.