Breaking News, U.S., World, Weather, Entertainment & Video News - CNN.com. Scaling Your Business Model: 3 Necessary Adjustments. In a great blog post entitled “Scaling is Hard,” Jeff Bussgang of Flybridge Capital gave four challenges that companies face after they’ve achieved the elusive product-market fit and started to gain traction with paying customers.
As Jeff points out, scaling your company requires a very different skill set than does building one from scratch, and for some organizations can be even more difficult than the first million in revenues. In a way it’s like building a skyscraper: you can’t get to 100 stories just by stacking single story homes on top of one another. You need a better foundation and cohesive infrastructure to make it work. Similarly, building a $100 million dollar company is going to require a lot more ‘organizational architecture’ than building a $10 million dollar company, and many great startup management teams are, at least initially, unsure of how to implement this effectively in their growing firms. 1) Scaling the Organizational Hierarchy 2) Scaling the Sales Machine.
The Art of Scalability. Scalable Business Models. When a business model has the potential to generate growth in revenues significantly faster than its cost base, the business model is scalable. As growing revenues increases the operating margin, scalable business models have the potential for earning very high profits. The key to scalable business models is to have small Costs Of Goods Sold (COGS), and to get a demand driving revenues up.
Cost Of Goods SoldCOGS is the cost for each product or service, plus additional costs necessary to get the product into inventory and ready for sale, including shipping and handling, and is a variable cost associated with each unit sold. With low COGS, the contribution margin has the potential to increase dramatically relative to the fixed cost base, resulting in high profits. A product business with outsourced manufacturing can supply thousands of units with the same staff as it might supply hundreds of units. Selling SoftwareA common example of a scalable business model is selling software. Business Scalability - BizThoughts. I’m obsessed with scaling. Not in the technical, keep-the-Fail-Whale-away sense. In the business sense.
Every time I work on a particular business issue, I can’t help but think: “How can I scale this process?” What can I do to increase efficiency, to produce more with less effort? This is, of course, rooted in laziness. Have you thought about how you can be more lazy with your business? Thinking About Scalability in a Service Business To get you thinking about business scalability, here are some processes we’ve set into place for our web development agency, WebMocha.
Scaling Resources Revenue potential in a service business is tied directly to your resource capacity. However, resources are finite. By increasing their productivity. This is why service companies that have been around for years tend to be better than newer shops. Scaling Clients Another revenue driver of a service business is the number of client projects you can get. However, finding customers is difficult. What Can You Do? Browse by theme. Scaling up your business | Business Essentials | Strategy | DARE - Because Entrepreneurs Do | Taking your business to the next level requires judicious deployment of capital and human resources even as putting systems and processes in place is a must. Presuming that you are now ready to celebrate three years of your start-up and have a proven business model supported by regular cash-flows and stable revenue cycles, it could be time to take your business to the next level.
Often, during the first three years of your journey as an entrepreneur, you might have felt tempted to grow fast in terms of revenue, acquire more customers and hire more people. These are scaling up pangs when you think that you can do more than what you are already doing. Just like you worked on your idea to give it a shape before starting up, you have got to similarly sit down and plan as to how you would grow your business. This also involves putting in place systems and processes that would work despite your presence. As an entrepreneur, you must ponder on some quick questions: Is my business scalable? 3 Mistakes Made in Scaling up New Ventures - Charles Baden-Fuller and Ian MacMillan. By Charles Baden-Fuller and Ian MacMillan | 1:24 PM August 10, 2010 You’ve launched a successful new product or new company.
You have customers ordering what you’ve created. So, you’re on your way to building a thriving new venture, right? Not so fast. Most organizations feel that the job is done when they have successfully prototyped the first product or the initial service and are now selling to the first outlet or set of users.
They’ve defined success as developing something customers want. But reality is much different. Realize that customers are not the same as users Key to low cost airline Ryan Air’s growth was the recognition that airports, not passengers, were the real customer. Recognize that first users are not the same as scaling users In the computer games market, the first users are generally not the scaling users, namely the regular players that pay good money for the game.
Anticipate that first products are not the same as scaling products. How to Scale Up Your Service Business. It can be tough to grow a service business. Clients generally are buying your expertise, and if all you have to sell is time, the size of your business will always be limited by the number of hours in the day. One way to scale up your service business is to launch a training division to teach others what you know. That's what Nancy Duarte did when she found herself run ragged trying to grow Duarte, a Mountain View, California-based design studio. Nancy Duarte's specialty was creating high-impact presentations (her firm created the slides Al Gore used in the movie The Inconvenient Truth), but the work was tough to scale. Nancy Duarte found herself spinning several plates, hoping nothing would fall to the ground. Once she had taught her own staff, she turned her approach and philosophy into a book, which was published in 2008 under the title Slide:ology (her most recent book, Resonate, was published in 2010).