Small Business Scalability isn’t Growth

Small Business Scalability is put to the test when it comes to delivering output and outcomes in the face of increased demand.

Scalability involves the ability of your system, network, processes, or small business model to throughput work due to this increased demand.

Your focus is scalability, not growth. What is your business chasing?

Last week I attended the 2014 CEO Summit, Business Leaders for Michigan®. A tremendous think tank of a meeting.

Attendees came from big companies, startups and small to medium sized, often family-owned, businesses.

Our lunch table discussions focused on knowing the difference – and the importance – between small business scalability and growth. Our conversations explored why “getting to the next level” may not always be the desired goal for a business.

Do you know the difference?

Many small businesses I coach are caught up in the “sell more,” “make more,” and get to the next level of business objective. Yet when all of the orders come in-house, these businesses don’t have the manpower, machinery, scheduling processes, or capacity to honor those requests.

Unbridled growth, as a means of getting to the next level of small business, can bring your current business to its knees.

I offer two examples of small business scalability, based on my conversations. Chew on these and let me know what you think.

1. Would you know whether your business is already “there?” Your B2C and B2B small business has the right people, the right equipment, the right processes, and operates slightly under capacity. You have set up checks and balances to measure whether demand is balanced by capacity, employee buy-in and morale. You all enjoy what you are doing. You can control everything. You have left your business some wiggle room too. Your small business scalability can honor X increased demand without stressing out employees and making the workplace a tense hot mess. You love what you do, your customers love your company (and your food products!) and your employees carry your brand into the marketplace daily – with a smile.
2. Your B2B manufacturing small business scalability depends too much on growth via outsourcing. Your business focuses on increased sales to drive revenue. You want to focus on complex projects to increase profits. You outsource most of the manufacturing work; you don’t feel you need to worry about capacity. Assembly work is accomplished in-house. You figure when sales increase, you will send more work to your current suppliers. You achieve your goal. You win complex orders, except your current suppliers are not geared to produce the high quality work demanded by your new customers. You figured Quality and engineering oversight was their responsibility. Guess who your first new hires are going to be?

Small business scalability is the key to sustainability. Have you focused on unrestricted growth without considering its impact on your business and financial models?

Babette N. Ten Haken, President of Sales Aerobics for Engineers®, LLC, is a management consultant and business coach. She helps startups and small-to-medium manufacturing and service companies who have difficulty with unpredictable revenue streams. Download her Grade Your Customer Worksheet to help you plan for scalability and sustainability.