Growth vs scale — what is the difference?
Are you looking to take your business to the next level? Are you trying to figure out whether you should be focused on growth or scale? Well, in business, the terms ‘growth’ and ‘scale’ are often used interchangeably. However, they are two very different concepts.
Growth is about increasing the size and revenues of your existing business, while scale is about enhancing efficiency and expanding your business to new markets. So, which is the right approach for you? It depends on your business goals. Let us explore the two in more detail.
Understanding business growth
Business growth can take many different forms. It could be the expansion of your customer base, the development of new products and services, the geographic reach and clientele of your business, or even the expansion of your role within your organization.
Whatever type of growth you are after, chances are it involves moving out of a neutral state into one that is more forward thinking and focused on doing good things. The process of growth can be incredibly rewarding — so much so, that many people in business have built their careers around it. But research also indicates that growth usually carries with it the seeds for a lot of other problems, including stress, burnout and even depression.
These are all normal psychological responses to the fast-paced nature of growth. As such, your ability to handle these challenges depends on your skills and knowledge level. If you are equipped with an advanced business degree, in a subject such as in business management, marketing or finance, you are more likely to cope with the associated challenges.
If you have a busy work schedule and need to be in a better position to handle any kind of business challenges, you could pursue an MBA online in the UK. This will help you understand the dynamics of your business and will help you grow it in the right direction. It equips you with a variety of subjects such as marketing, finance, operations management, and much more, which will help you build a strong foundation that can be used in your business.
What does business scaling mean?
Much like growth, scaling does also imply development, company expansion and an increase in profits. However, it simultaneously balances the rates and stabilises the costs. Business scaling is about growing the efficiency of your business. Simply put, it is about being able to produce more products or services with fewer resources.
A business could scale its operations either vertically (by adding more people), or horizontally (by using fewer people). A vertical scaling solution would aim to add new production capacity with the same number of raw materials, while a horizontal scaling solution would enhance efficiency by taking advantage of new technology.
Scaling is important because it allows your business to increase its output and reduce costs. However, the speed at which you scale and how it is done can have a big impact on your employees and your customers.
Scalability portrays a unique characteristic that allows businesses to deliver optimal results by functioning correctly under increased workloads. The most significant difference between growth and scaling comes down to the capability of maximising profits with maintained efforts.
A look at growth vs scale — is it right for you?
To obtain the right results, it is crucial to understand the difference between scale and growth. When your company is progressing, you are boosting market share, revenue, and having more in-house or outsourced staff. Consequently, costs will tend to grow at the same rate. Aside from the increased expenses, your firm is likely to encounter various impediments, risen stress levels and other struggles, which eventually results in an increased churn rate.
Scaling a business signifies growing revenue faster than expenses — it sets the tempo and beats the clock to suit your company, enhances employee satisfaction, drives an improved work-life balance, and promotes overall advancement.
Stages companies go through as they scale
In order to scale a business, it is important that you understand what stages your business will go through. Whether you are small or mid-sized, you are bound to be going through some of these steps:
- Start-up
When you first start your business, your focus is getting your idea off the ground. You must think about day-to-day operations, including everything from marketing and customer acquisition, to accounting and legal. This is an exciting phase with a lot of growth potential and very few overheads.
- Growth
As you grow your business, the day-to-day routines become easier because of the automation and systems set in place. When you staff up and hire extra people, this is when it becomes a lot more challenging. Your company still has that start-up feel to it, but now with a larger workforce in place. This can be hard on your business as well as your leadership skills. It is also the time when you most need help with business management or other professional services in order to get things moving along.
- Scale
As you scale your business, and sales continue to increase, you will need more structure and control over your business goals. This is when you start to focus on sales, marketing and operations — and it becomes a lot more difficult to manage. When this happens, it is a good idea to start looking at leadership training or outsourcing some of your processes. You will have to learn how to work with more people in your organisation, and if you have not already done so, it is a good idea to start looking at how you can practically start to scale your business.
- Dominating the Industry
As you scale and your business reaches dominance, there are still things to do. Your focus shifts from scalability to profits, longevity and corporate culture. Executing various services and internal management of the company is crucial in the final stage of scaling up a business. The main objectives here are to increase efficiency in all facets of the company’s operations, manage people effectively, develop systems that work for all levels of staff, and declare your business as a leader in its industry.
Bottom Line
Growth and scale are not necessarily opposed to each other, but rather, they are two different approaches to business. It is essential to have a clear idea of how you want your company to progress, and which end goal is most suited for your business. Scaling your business involves a faster cycle of growth and development. In short, it is all about creating a stable work environment for yourself and the people you lead.
