A word you hear all the time in business–particularly in regard to the future, investment and growth–is scalability. This term has something of a dual application, but regardless of which one you look at, it’s essential to any small business.
Scalability is the ability of something to adapt over time to changes. The modifications usually involve growth, so a big connotation is that the adaptation will be some kind of expansion or upgrade. People use the term in reference to computer or other technological systems, but those in business also use the word to describe the adaptability of a company.
Scalability when referring to a company is very multifaceted. For instance, it can apply to your documentation, training aids, distribution channels and specialized equipment. Often, the scalability of one area will tie in to the scalability of another, so you must be aware of the interrelationships between your workers and resources and have a big picture of what’s happening operationally.
The Importance of Being Scalable
As a business grows, its main objective is to continue to meet market demands. The trouble is, market demands are never static. They shift as people’s interests and tastes change and as resources flow in and out of availability. If you want to stay competitive in these circumstances, you have to be able to change what you are doing to fill the needs and wants customers have in the moment.
Scalability also matters because growth in business means you are working with more customers, data and resources. If you do not have a way to handle these increases, you can lose efficiency, or the quality of your service or products can suffer. That can lead to poor customer relations and a lowered business reputation.
From the financial perspective, scalability is critical because it lowers what you end up paying out. For example, if you have 100,000 clients and buy a technology system that can support a million customers, you don’t have to replace that system (assuming it’s still functioning well mechanically) when you reach 200,000 customers, 300,000 customers and so forth. In the same way, if you purchase state-of-the-art equipment, it won’t become outdated as fast and you won’t need to put money into new hardware for a while. If you’re working in a scalable way, you end up getting more for your buck.
Scalability and Small Business
All businesses need to be scalable on one or more levels in order to hold onto and build market share. Even so, small businesses have the greatest need for scalability because they are the ones with the biggest potential for growth. They are the organizations that have to be more careful with the limited resources they have, the ones that go through metamorphoses as their leaders become more familiar with the business game. Many small businesses fold directly because they fail to foresee what they might need or where the market can take them, having too much of a here-and-now mindset.
It is natural for a small business to want to make as many areas scalable as possible, and business leaders should work toward this goal. Still, you should recognize that not everything might be scalable. A lack of scalability in one or more areas doesn’t necessarily stop you from moving forward, but it does influence how you approach your system design, equipment purchase and even hiring. For this reason, it’s just as important to recognize where you can’t change as to see where you can.
Scalability is associated both with computer systems and business change. In either case, it refers to the ability to adapt, particularly in regard to growth and increased demand. Scalability is essential in that it contributes to competitiveness, efficiency, reputation and quality. Small businesses must be particularly mindful of scalability because they have the biggest growth potential and need to maximize the return with resources. Although many areas in a company are scalable, some are not. You should consider these with the same serious thoroughness as you do your scalable points.
by: Wanda Marie Thibodeaux