A strong product-brand combination is only half of a healthy company. Being prepared for future challenges is just as important. The key word? Scalability.
If, as an entrepreneur, you have developed a product or service that a particular part of the market is waiting for, then the first stone of your company has been laid. Congratulations! Now the real work begins.
"What do you mean 'the real work'? People want to buy what I offer. I'm onto a good thing?"
No, you've only just started. Now you need to find a sustainable company structure. The key word in this? Scalability.
What is scalability
Growth & contraction
Scalability can simply be defined as the ability of a company to adjust itself to growth and - in a poorer period - contraction. To put it differently, a scalable company can easily adjust its internal capacity and the volume of output/production to meet the external demand for its products or services.
Adjustment & taking a step back
Look at it this way: as the founder of a company you are, in the very beginning, the driving force of your company. You devise the product and bring it to the market. In addition, you are your own best salesman. You're not quite completely sure of exactly how you need to deal with matters, as long as the ball keeps rolling.
However, you can't keep doing everything yourself of course. That chapter ends as soon as your company really starts growing. Now you have to filter out the mistakes and the chance successes to form a procedure that’s successful in the long term.
At the same time, someone else has to be able to work with that procedure, with just as good results. In the long term, you have to be able to step back sufficiently. The business will have to continue to run even if you're not there.
Scalability goes hand in hand with two factors:
- Predictability: you want to be able to predict your future results as well as possible.
- Repeatability: what you are doing well today, someone else must be able to repeat tomorrow.
Why is scalability so important?
The market is constantly evolving
Not every business environment is stable. Depending on your sector, your business will quite predictably go better or worse, or your company suddenly economically shifts up 2 gears after a long period of stability.
What's more, your company grows in phases. In the first phase, the organic growth phase, you tap into a local market, you attract interested parties to your website, and via friends and family you quickly gain dozens of customers. Business is going well, you think…
And then suddenly it stops. Your turnover is flat. If you want to move forward, then it's up to you to get the growth going again.
Of course, that brings risks:
- A source of leads can quickly dry up, a nightmare for a marketer.
- You want to recruit new salespeople, but can't find the right people.
- Your support team is expanding and your procedure is not set out in any document.
Some risks you have to run, others you can avoid. So it's better to be well prepared.
Importance for the SME
Smaller margin of error
Setting up a robust, flexible, scalable organisation is a challenge for every company, certainly for SMEs that generally don't have much margin for making errors. Just ask yourself the question: What if the pressure on my company was to increase? Can I still meet the market demand without my turnover, customer satisfaction and product quality suffering?
Scalability is, in fact, much wider than sales. You have to strive to achieve it on every level of your organisation: sales, marketing, HR, IT, customer support, and more. Never forget that the interests of those levels are interlinked: marketing leads have to be followed up by salespeople, your customer service depends heavily on your IT department and so on.
Don't find yourself restricted as an entrepreneur simply to the here and now. A scalable model supports your current business but is also prepared for changes in the future (for better or for worse). Making strategic organisational choices right from the start is essential to do that.
How do you do all of that, and what do you need to pay attention to? You can read it here, next week!