What’s the difference between Google or Facebook and a family-owned corner store?
Scalability.
You need these 5 things for your business to be scalable.
1. Your business has to create value for the customer
If there’s not enough value, your business won’t grow fast. Or won’t grow at all. Customers won’t return or recommend you.
You will have to pay lots and lots of money to bring in new people from paid channels. Your marketing won’t be efficient, acquisition cost will be high, you’ll lose money, and eventually go out of business.
You need to create value.
2. Your product or service should be repeatable.
If you’re doing the same thing over and over again for every new client or deal, you can optimize it.
You’ll optimize the product to create more value for customers. You’ll optimize processes to make them more cost-effective.
If your process for every new client is different, it’ll be much harder to scale. There are businesses that grow big by doing custom solutions, but their growth is limited.
3. Your sales should be profitable.
Every sale should bring you a profit. Every customer should bring you a profit. Every branch or point of sale, every unit by which you scale should be profitable. There are exceptions to this rule.
For example, sometimes you can take a loss on the first sale to bring in a customer that will make more purchases and eventually turn profitable. But this creates a cash gap that limits your scalability. Venture-backed businesses speed up growth by intentionally taking a loss on every customer or deal.
But to do that, you need to control your economics.
4. You need an acquisition channel (or channels) with large capacity.
A corner shop serves just a few buildings around it. Facebook serves billions.
When you’ve learned to do a repeatable thing that creates value and is profitable, you want to repeat it as many times as possible.
5. All of that said, don’t forget that to create a scalable product or business, you have to do things that do not scale.
Serve each customer manually until you’ve learned who your ideal customer is and how to create lots of value for them. Bring in new clients from your network or social, not from paid advertising, until you've learned what to say to them.
Sell face-to-face and not through a landing page or sales team until you've learned how it really works.
For your business to be scalable, you need to:
1. Create value. 2. Do repeatable things. 3. Control your economics. 4. Find acquisition channels with large capacity. 5. Start with things that don’t scale.