Two of the favourite topics of entrepreneurs are business growth and scaling. The words are used around a lot, but the enthusiasm with which they are used often outweighs the precision. Many people use these words to mean the same thing: a company that is getting bigger, getting more market share, and making more money. But there’s a critical difference between growing and scaling in a business sense, and it’s an important difference in understanding what really happens when businesses grow and what kind of growth to look for.
Growth in Business
When companies grow, they are increasing their revenue equally as fast as they are adding resources to enable that increase.
Scaling in Business
When companies scale, on the other hand, they add revenue at a faster rate than they take on new costs.
How to Plan for Scaling in Business
As you launch your business, you should already be thinking about a strategy for scaling your startup — not for growing. If you simply continue trying to increase your revenue by adding more resources with a corresponding increase in costs, your growth is likely to stagnate. You’ll get to a point where you realize the effort to grow simply isn’t worth the financial gain.
What you need instead is a strategy for scaling in business that focuses on increasing revenue while also increasing efficiency. In the scaling scenario, it will be worth the effort to reach more customers since you’ll be expending a comparatively low amount and therefore making increasingly large amounts of profit. You’re increasing your company’s value by increasing the efficiency with which you can bring in new revenue.
Source: https://www.lightercapital.com/blog/what-is-scaling-in-business/
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