A business is scalable if it maintains or improves its profit margins as the sales volume increases. Therefore, scalability describes the organisation’s capability to adapt to increased market demand.
Scalability has become an increasingly important business strategy aspect in recent years. This is because technology has made fast global expansion easier for many industries. Rapid growth is especially relevant in the tech sector that uses the Software as a Service (SaaS) model. However, other industries also benefit from digital tools that help speed up customer acquisition and optimize labour costs.
To scale up, a company needs to implement processes that lead to an efficient operation. For this, consistency in structure, workflow and brand messaging is essential. If the processes lag behind, the company’s different units can easily lose sight of the core business goals, resulting in decreased scalability.
For start-ups, demonstrating scalable business is also important to attract investments. Investors want to see a proven business model that is ready to be expanded. A common practice for validating a business model is launching a minimum viable product (MVP) first. MVP helps the company test the market fit and to get the first paying customers as little effort as possible. Having a successful MVP makes it easier for the founders to get funds for scaling up their business.