Why It’s Important to Distinguish Growth and Scale In Business

In business, the terms growth and scale are often confused as being interchangeable. After all, if you think about it logically then it somewhat makes sense; growing a business should refer to hiring more employees, selling more products and ultimately making more profit, and scaling a business should refer to expanding what’s already been established.

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However, there are some very fine differences between the two and it’s essential that you learn the differences between them both. This is so that you can make more informed decisions in the future regarding growth versus scale and it will ultimately help you create a more defined path to success.

What is growth?

Growth typically refers to increasing revenue of a business. For instance, by offering more products or taking on more client orders, you’re effectively increasing your revenue by growing your business.

If you’re reaching out to more advertising channels, have more followers on your social media platforms and see more orders coming in each day, then you’re growing your business.

However, with growth comes more resources that are required in order to sustain that growth. For instance, more products mean spending more money obtaining stock, and more orders mean hiring more employees to keep up with demand.

This ultimately causes an imbalance which results in many income issues, over or understaffing concerns and it could even pose a risk to your business.

What is scaling?

Scaling refers to a more sustainable method of growth with a different set of concerns. For instance, scaling might tackle the issue of scaling sales beyond a founder, or even balancing the costs of keeping your business running while simultaneously being able to increase revenue.

Also Read: How to Increase Your Business Profit

You should think of scaling as a way to take the exact state of your business as it is now and amplify it. As an example, if your business is currently stable with a certain amount of staff being able to take on an average number of 500 orders per week, then you need to consider the factors which increase the volume of orders and balance it with the number of staff you’ve employed.

In other words, scaling is like a holistic approach to increasing your revenue. Instead of simply adding more products to your store or running more promotions, it takes everything into account and analyzes all the data to find the most efficient way of growing your business while keeping your operating costs as low as possible.

Final words

So to conclude, the main purpose of this post was to show you that growth and scaling are two very similar but ultimately different terms.

One refers to increasing your revenue despite the imbalances it could cause for your business, and the other refers to a holistic approach that takes every factor of your business into consideration and steadily grows each aspect of your workflow until it achieves the same results and provides you with more profit.

While the two terms can often be confused, it’s vital that you see them as two different paths to a successful business, each with its own pros and cons.