In business parlance, ‘growth’ and ‘scale’ are often used interchangeably. But though comparable, there are subtle differences between the two terms – not least regarding the technology and resources needed to achieve them.
To put this another way: the software requirements and technology you’ll need to realise growth and scale are different. So, in order to reach your desired goals, it’s important to leverage the appropriate technology and resources that will help get you there.
In this post, we’re taking a closer look at both growth and scale. We’ll define what they are and how they differ, before offering tips and advice on the technology required to attain each.
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Business growth is typically linked to increasing revenue. It happens when a business ‘grows’ in one or more areas – whether that’s an increasing number of employees or a move to a bigger premises.
While a growing business is a healthy business, it’s important to remember that sustainable long-term growth requires significant resources and, often, temporary financial loss.
For example, say a builders’ merchant wants to expand its operations or enter a new market area. A period of growth is required to achieve this, which may include a move to a larger premises, the opening of a new branch, or the employment of new staff.
In the short term, such a move will require a resource-intensive outlay. But when managed successfully, the business should see growth in the longer term – achieving its goals through targeted and strategic growth.
So, while business growth is a good thing, it can often only be achieved by making financial losses, too. That’s why businesses looking to grow need to adopt a careful strategy, performing the appropriate due diligence to guarantee business continuity while the new venture finds its feet, becomes profitable and drives growth forward.
To conclude our definition of growth, then; it’s achieved by increasing costs and resources. Typical outlays that can signify growth within a business include new hires, new premises, and new technologies. It’s all about financial growth in the long term, even if that means shouldering a temporary economic hit.
Business scale – or ‘scaling a business’ – is all about increasing revenue without the financial and resource outlays associated with business growth. It happens when a company finds a way to earn more revenue with only a minimal increase in operational costs – or none at all.
On paper, scaling a business sound almost implausible. How can any company expect to make more revenue without at least some additional investment? But the reality is many businesses have found a way to scale successfully, increasing their revenue and customer base with only a negligible increase in costs and resources.
If you’re virtually shouting at your screen in hopes that we’ll provide the secret to business scaling, we’re sorry to disappoint. There’s no silver-bullet solution to business scale, and no guaranteed path to scaling success, either.
But it’s by no means impossible. With the right approach, the right technology, and the right people, you can attain business scale and benefit from increased revenue with none of the high outlay associated with business growth.
By now, you may be seriously considering how your business can achieve scale, and benefit from added revenue without costly outlays or extra resources. But growth is important, too, so if you have the resources available, we’d encourage any enterprise to invest in its future. For instance, investing in modern ERP software is a prerequisite if you’re looking to scale your business down the track.
One of the key differentiators between growth and scale – particularly when deciding which is right for your business strategy – is timing. It’s critical that you time both growth and scale strategies correctly, otherwise you could fall at the first hurdle.
Typically, new businesses should focus on growth as a priority. Until you have the technology and resources in place, you can’t hope to achieve scale. There’s a minimal requirement for driving a business forward through scale alone, and this can only be achieved through growth-related investment in technology, people, and resources.
When your business has reached a certain size, however, this is when scaling can come into play. With the right people and resources in place, you can leverage technology and process improvements to target revenue growth, while working within the parameters of your existing operational infrastructure.
Say, for example, you run a builders’ merchants with a loyal customer base, committed staff, and a streamlined business management system. There are several ways to integrate scale into your strategy – from internal training to help junior members of staff broaden their skillset and take on more duties, to creating new scalable business processes that support your aspirations for financial growth.
To help you realise both growth and scale within your business, here are a few suggestions on how to leverage technology to achieve your goals and objectives:
Have you found this guide of interest? Read similar content on the Intact blog. Whatever stage your business is at in its growth journey, our future-ready business management solutions can help you take the next step with confidence. To learn more about our ERP software and business management applications, visit the homepage or contact our expert team today.