tech
Scalability
The ability of the business to grow output without a proportional increase in cost.
Definition
Scalability is the property of being able to grow revenue significantly without proportionally growing costs. A scalable business adds the next $1M of revenue at much lower marginal cost than the first $1M - because product, infrastructure, brand have already been built. A non-scalable business adds the next $1M at the same cost as the first $1M - typical of pure-services businesses where every dollar of revenue requires another hour of person-time. Productizing services, adding software leverage, building IP - these are the levers that move a service business from non-scalable to scalable.
In your business
- →Identify your scalability constraint - usually founder time, then specific delivery roles
- →Productize services into fixed-scope packages - reduces customization cost
- →Build IP (frameworks, templates, software) that gets reused across customers