Growth and scale have been used interchangeably for a very long time when we talk about the progression of a business. But these two words are distinct in so many ways that are relevant to small business owners like yourself.
Growth which is most familiar to small business owners means that the business is expanding in one or more ways. It may be indicated by expanding sales, revenue, profits, number of employees or customers over time. A business can grow in so many ways but the best way to measure that growth is in relation to the goals of the business. But as a business grows, it also incurs a commensurate amount of costs too. Say your restaurant’s sales increases, that means that your business is receiving more orders and enjoying patronage from more customers, such an increase could mean that the capacity of the restaurant needs to be increased to accommodate the increased demand for your meals, right? So, you employ more hands and equipment to meet up with the new level of demand resulting in more costs for the business.
Now scale on the other hand is a term more associated with startups. To scale means that the business can expands exponentially without incurring commensurate increase in costs. That is a business expands its sales, revenue, etc. without employing needing to more people. It is about adding efficiencies to your business so it achieves more with less resources. By the same instance we used with growth, if you own a restaurant and you want to scale it, it means you are able to attend to more customers without opening new locations or adding more employees or incurring significant costs. Think of Paystack increasing its sales without opening up new locations or employing more people like it would have done if it was a small business pursuing growth.
Why Does the Difference Matter?
Here’s why the difference matters;
- Exponential Vs Linear – A business expands in a linear pattern when it grows, it takes a longer period of time for a business that wants to grow to reach become a top company than when a business experiences exponential growth. With scale however a small business today can become the leader in an industry in a decade or less. A typical example is a traditional transportation company versus an Uber or Lyft.
- Innovative – Startups by default leverage innovation than small businesses, in fact you hardly see small businesses discuss innovation to grow their business and add value to their customers. This is one of the components of scale that small business growth strategies misses out on.
- Leverage Technology – Technology provides so many opportunities for small businesses to scale and add efficiency to their processes that they are unfortunately not taking advantage of. Yes, small businesses can choose to grow their businesses but without leveraging technology, that growth may come with more work for the owners and less earnings.
I believe that while small businesses should pursue growth, because frankly they may not have access to the capital that a startup may have but they should be open to leveraging technology, to seeking a growth plan that is innovative to provide more value for their stakeholders.
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