The Main Difference Between Growing and Scaling Your Businesses

It’s inevitable that within a business’s life-cycle, a decision will arise on whether to grow or scale ones business. It’s an important decision to consider, as it relates directly to your stance as a leader and setting up your company for future success. It’s even the difference between some companies growing larger in a short amount of time, to businesses who struggle to maintain a baseline profit margin. 

The two terms are often thought to mean the same thing, which can lead to the concept being overlooked by bosses and leaders. Whilst growth and scale do both mean ‘becoming larger’, in a business sense the two couldn’t be more different. Arming yourself with the knowledge of the difference between the two means you’ll be ready to make that decision when it arises in your company. 

Understanding business growth

Business growth means becoming larger or greater over a period of time. It sounds like just what we’re aiming for – more customers and more sales for our businesses.

There are five stages to small business growth that most companies will experience: 

  1. Existence Phase
  2. Survival Stage
  3. Success
  4. Take Off
  5. Maturity

By breaking it down into these steps, it should be possible to identify which stage your business is in. From coming into existence and finding its feet, to experiencing success which leads into your business taking off and becoming established in its space. Each phase comes with its own advantages and disadvantages, with growth experienced at the mid-range.

We must remember though, that as businesses take off, they often require more staff or better processes to manage the increased workload to keep up with the demand of business. If the demand is suddenly unexpected, you may face challenges in meeting the higher demand.

When your company supplies a product or service that is wanted in the market, that company will experience growth simply by being in business.

How and why to scale your business

The definition of scaling is to grow within the current capabilities and means of your business. If you picture a graph; growth would have a line going up and off the chart, whilst scaling would have the chart grow with it as its line gets bigger.

By determining solutions that scale your business, you can effectively keep costs down and enjoy the profits alongside your business’s growth, without having to pay much more for additional services. Some businesses will find benefit in hiring more staff, while others may focus on improving training and processes in order to scale.

Methods like these (as well as hiring internally and looking into new software for printers, phones and website function) are popular ways to effectively scale your business. It’s generally much easier to meet growing demand for your product or service in this fashion.

Signs that it may be time to scale up your business include repeat sales and even having to turn down business whilst you experience a growth stage. Providing an atmosphere of minimal risk, having reliable infrastructure and a proven concept, and surpassing your previous goals are all signs that your business is ready for the next step.

Should your business focus on growth or scaling?

So, what exactly is the difference between growth and scale in regards to your business? It is generally a comparison that arises when a company is no longer a startup, but not yet a large corporation. This is generally the turning point when a business decides to either continue with traditional growth, or choose to scale their business for future cash flow and profit.

Growth refers to increasing revenue as a result of being a traditionally ‘successful’ business. However, it also suggests a company requires multiple resources to keep feeding that growth. Scaling runs counter to conventional growth, with practices resulting in an increase in revenue without experiencing an increase in costs faced by the business, such as training employees.

In the case of growth, a business will focus on increasing the revenue from the number of products sold or services delivered, which may require expansion of its existing assets, such as more employees or greater product capabilities. While a business focused on scaling its resources will instead focus on finding untapped opportunities, such as discovering new markets.

Of course, there are no clear cut ways to growth or scaling financial success, and what may work for one business may not work for another. While a business is making a choice whether to focus on growth or scaling, it’s important that the business’ can remain flexible, while maintaining consistent cash-flow.

So – what is next for your business?

Companies that offer a service that requires growth to maintain their business assets will almost certainly have to choose to grow each quarter. On the other hand, companies that offer a product and are able to keep costs down may choose to attempt to effectively scale.

Whatever is needed for your company, it’s best to make sure you have spoken to the right people who can assist you on the next steps on your occupational journey. The team at OptiPay are fully equipped to assist your business in ensuring that you have the finances that your business might need.

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