What’s the Difference Between Growth and Scaling

By VICKY BROWN

I bet you hear the term scale your business all the time – but have you ever stopped to think about what it actually means.  Isn’t it the same as growing your business?

Well, actually no.  Growth is more linear.  You add resources, in the form of money or team members, or technology – and as a result, your revenue increases.  So for a service business, you add media managers to your marketing team, and as a result you can take on more clients.  That’s growth.

But, in contrast, scaling is when your revenues increase without significant increases in your resources.  So, your marketing business develops and sells online classes explaining how businesses can manage their own media – well now, that’s scaling.

Now don’t get me wrong – growth is wonderful.  And it’s absolutely vital in the early stages of your service business.  After all, you’re growing from nothing to something – so growth is the ticket.  Yes, it means an investment of money, time, resources or all three – but I think it’s vital to establishing your business and getting your feet wet in the pool of becoming a CEO.

But at the end of the day, incremental growth takes a lot of resources – and sustaining consistent growth (year over year growth) takes a whole lot of resources.  And it gets more difficult as time goes by.  Adding 25% more clients is a lot easier when you’re talking about increasing from 8 clients to 10.  After all, you’re only talking about adding 2 clients.

But if you have 100 clients, a 25% increase means you have to win 25 more clients – and that will take a lot more resources – both to win them and to service them.

So, at some point, consistent growth becomes a bit of a slog; and the increases begin to have less and less impact.

So, sooner or later, you’ll find yourself facing the question of should you scale your business.

Now, there are lots of thoughts around this – and so many people say start out scaling the business, right from the outset.  I’m of a slightly different mind – I say let your business mature a bit in the early stages.  Get your people, process and market aligned.  Grow slowly, so you have a nice foundation under you.

But then, if you want to achieve world domination – you’re going to have to incorporate some scaling strategies.  Scaling speeds up your company’s growth, while preserving cash and other resources.  To put it in plain language – make more money, and keep more money.

So, yes – you want to grow fast, and hang on to resources.  But keep in mind that, according to Entrepreneur magazine – two thirds of the fastest growing companies fail.

In fact, growing too quickly can be just as much of a problem as growing too slowly.

Why – well because it’s easy to over reach, expand into new products or services without enough research into the market or the right strategy to reach that market.  Let’s go back to our marketing course example.  Suppose you get all excited at the prospect of scaling.

“I’m going to create and sell courses to business owners.  And, if building one course is good, then building 10 courses will be even better.”

“… let’s be honest – we need steady growth, but we love the hyperdrive of scaling.”

Now, sure – it may not cost you a lot of direct money to build the courses – but it will be a significant time investment, at least in the beginning.  And you’ll have to keep the courses updated.  And you’ll have to nurture an audience to buy the courses.  And if you do all that, before – or without – the right research into who your market is, where they are, and how you can most effectively communicate with them.  Well, you could easily end up with 10 beautiful courses, and no students.

And the time and effort you used to create the courses actually took you away from managing  the slower, steady growth of your company.  So, you put your company’s growth in jeopardy because you were pursuing scaling in a reckless way.

So, how can you be smart about scaling?  Well first – focus on steady growth.  Get your process, people and market in order.  Be sure you understand how to find, target and talk to your audience.  And make sure you have proof – proof that your company can grow successfully at a measured pace, and can sustain that steady growth.  Your systems and processes work.  Your people are capable of managing the load.  You have enough of the right resources to sustain that steady growth pace.  That’ll be the foundation of your company – master that, and you’ll be in good shape to start thinking about scaling.

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Then, once you feel good about how you can handle steady, consistent growth – then, and only then, explore ways to scale your company – because, let’s be honest – we need steady growth, but we love the hyperdrive of scaling.  We just have to do it smartly; and with a plan.

Take some time and map out various strategies to scale your service business.  Courses, physical products, subscription services – write down everything you can think of that might be a scale strategy.  Don’t leave anything out – nothing is too outrageous at this point in the process – you’ll cull the list down later.

Then list the pros and cons of each strategy.  How much will it cost, how long will it take, what additional revenue could it bring in.  Again, list everything you can think of.  Now we have to make the list smaller.  But don’t do that by crossing things off the list, just yet – assign them a timeline first.

This could be done in 6 months, or it would take at least a year to get the resources to do that, or that would take 5 years and so on.  You see, once you have an idea of WHEN something might be possible, then you can see more clearly WHAT might be possible.  If you start off by crossing things off the list right away, you might throw away ideas that are really innovative and game changing, just because you had some vague feeling that they were impossible.  Give them a few minutes to live and breathe.  You’d be surprised what becomes a viable option when you give it a chance.

Now you have a list, on a timeline, with pros and cons.  Now, you can start crossing things off the list.  You can zap them because they’re too complicated, or the payoff isn’t enough for the investment, or maybe you just simply don’t want to do it.  If it doesn’t meet your criteria, cross it off the list.

This should leave you with a good number of scale strategies that make sense and are doable.  Now – enlist the help of your team.  Gather your senior team members and talk through the options and get their feedback.  It’ll help provide valuable insight, and it makes them invested in the process.

And finally, once you’ve honed in on your scale strategy – make it so!  Create an execution plan, and get to the doing.  And remember, scaling should be fun!

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