The goal of the many startup firms is to become a scalable business. Unfortunately, there is some confusion about what it really means to scale up because scalability is often confused with rapid expansion. In this article we will discuss about How to Scale Up Your Business.

How to Scale Up Your Business

Overview

In a business, the expansion can happen either incrementally or exponentially.

Incremental expansion in business or incremental growth means ‘Addition to Business’. On the other hand, Exponential expansion means ‘Multiplication in Business’.

When business is expanding incrementally, the year-on-year growth is 10%.

When business is expanding exponentially, the year-on-year growth is 100%.

What is Scalability?

Scalability is that the ability of a startup to grow. Or, to put it more precisely, a scalable business can adapt to a larger workload without compromising performance of losing revenue.

Many businesses expand in a very linear fashion, wherever prices and revenues conjoin. notwithstanding what that potential is, it doesn't represent ascendible growth.

Potential growth should not solely be fast, it should entail increasing profitableness from the revenue generated.

Let us take the story of Lallulal Gulaab Jamun Wala as an example to understand the concept of scalability.

Lallulal used to make excellent Gulaab Jamun. Anyone who eats his Gulaab Jamun once comes back to him repeatedly.
In one time Lallulal became famous. His cost price is Rs. 5and the selling price is Rs. 50, so, his profit margin is Rs. 45 per price of Gulaab Jamun.

When Lallulal’s son joined the business, he added dry fruits in the Gulaab Jamun recipe and improved the packaging. He also established a board outside the shop, which read, “Lallulal Gulaab Jamun Wala, since 1975”. This improved their brand positioning.

Lallulal became more famous and he was called by celebrities like Mukesh Ambani, the Queen of England, Barak Obama, etc.

Despite all this, he was not able to scale up or expand his business because even today Lallulal is making Gulaab Jamuns himself, he has neither taught that skill to anyone nor he has made any SOPs. He has not even developed any method around it.

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How Can You Scale Your Business?

Scalability and profitability are two sides of the same coin. Creating profit is key for associate degree business because it offers sustenance and support for daily operational expenses whereas measurability comes into play once atiny low business needed to become an enterprise.

To scale up your business, perform the following activities:

1. Increase Your Speed of Transaction

 

Expansion while not managing your margin of profit is committing suicide.

If you are expanding without managing the gross margin or if your inflow of money and income recovery is delayed, after meeting the business expanses, it really hits on to your operational excellence and margin of profit leading to business loss and failure.

So, you ought to have an honest speed of the dealing.

2. Build a Competitive Advantage

Competitive advantage provides an edge over competitors and builds an ability to generate greater value for your business and customers.

In other words, competitive advantage is what causes you to higher than the competition in your customers’ minds.

A company should produce clear goals, methods and operations to sustain its competitive advantage.

3. Create a Differential Advantage

A differential advantage is created when a firm’s products or services differ from its competitors and are seen as superior to its competitive offering.

Differential advantages can be driven by more advanced technology, patent-protected products or processes, superior personnel, or strong brand identity.

These factors support wide margins and huge market shares.

4. Adopt Blue Ocean Strategy

In business, Red Ocean encompasses a outlined market, outlined competitors and a typical thanks to run a business in any specific business.

It is like an ocean in which sharks are fighting each other for the same prey.

On the other hand, Blue Ocean is like an ocean which is calm, smooth, with lots of food and little or no competition.

In business, Blue Ocean is a market is which the competition becomes irrelevant because your competitors cannot duplicate your ideas in a way that they prove to be a commercial success.

Remember, the entire plan of Blue Ocean Strategy is to have High Value at Low Cost.

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