What does scalable mean? What does it mean to have a scalable business? How can you make your business scale?
The Definition of Scalability: Santa’s Workshop
Scalability means the systems you have in place for your business are conducive to growth.
Here’s a metaphor we use to explain scalability. Imagine that Santa Claus ran his toy workshop as a real business. Here’s the current workflow of his business model.
- Create running list of the behavior of every child in the world.
- Check list at some point before Christmas Eve.
- Check again.
- Make a series of mall visits and ask each child what they want for Christmas. Supplement this process with a write-in campaign.
- Make all toys with a team of elves, presumably paid standard holiday and overtime bonuses.
- Hand-deliver all toys within a single 10-hour overnight period.
This process is not scalable. Santa has the advantage of magic reindeer, sleighs, and elves to help him to pull the whole thing together, but what if he didn’t? What if Santa lost his magic and came to you and asked, “What does scalable mean? How can I make Christmas scalable?”
Let’s use this example to check out some fundamental concepts of scalability, how they apply to our businesses, and see if we can save Christmas in the process.
A Scalable Business Considers All Verticals
One of the great cautionary tales in the business world is that of Kodak. The company built its fortune on photographic film, but later lost a huge share of the market to digital cameras and declared bankruptcy in 2012. What some people don’t know is that Kodak actually invented digital cameras way back in 1975. The company saw the advantages of the new technology over photographic film and thought it would be the death knell for its business, so they stopped production. This surrendered the digital market to Kodak’s competitors. The decision is considered one of the greatest business blunders of all time.
Kodak didn’t consider their verticals. You have to remember as a business owner you’re not selling products. You’re selling solutions to problems. Kodak was worried that digital cameras were a better solution to the problem of amateur and casual photography than photographic film. They were right, but if they’d been focused on selling solutions instead of products, they’d have known to take advantage of the vertical of digital cameras. This would’ve allowed their business to continue to grow despite the digital boom that eventually overwhelmed them.
Advice for Santa: What happens when Amazon’s drones and 30-minute delivery expand nation-wide? Is there still room in the market for Santa? Consider what it is you truly sell. Nostalgia? A sense of wonderment? Bringing joy to underprivileged areas? Look for new ways to deliver your solutions.
A Scalable Business Delegates Duties
When your business was just your side hustle, you probably took pride in being entirely hands on with everything you did. Your business selling t-shirts or skateboard stickers or meat snacks was a labor of love or a passion project that you could easily handle on your own. But becoming married to the DIY approach limits your growth potential. Amazon, Apple, and Mattel may have each started in a garage, but none of them stayed there.
Delegating duties, whether it’s to new hires or to new software, takes the pressure off of you as a business owner and allows you to grow past what is your own potential. Hiring someone is an expensive and nerve-racking process, so make sure you consider the pros and cons of hires vs. software. Here’s a list of just a few of the tasks ecommerce businesses can (and should) automate with software.
- Sales order routing to warehouses and suppliers
- Email marketing
- Inventory management and multichannel syncing
- Helpdesk consolidation
- Shipping management
Advice for Santa: You’re already hiring actors to play you in malls across the country, so that’s a good start on delegation. Next step: retire the sleigh and use a sales order routing system to send your orders directly to Fulfillment by Amazon to let them handle shipping. Use inventory management software to keep an accurate count of quantities no matter how massive your catalog becomes.
A Scalable Business Expand Before It Needs To
Pokémon Go was undoubtedly a massive hit. Even as some of the hype has died down, many people (including yours truly) continue to play on a daily basis. But what also can’t be denied is that the game’s developer Niantic was woefully unprepared for the bum rush of downloads. If your business is not ready to handle record-breaking sales, you are anchoring yourself to mediocrity. Waiting to expand until you’re already swamped beyond your capacity is not a profitable way to run your business. To truly be scalable, you have to expand before you need to.
This takes a level of business savvy. You can’t be a passive business owner. If you simply ride the tides of your industry, when a tidal wave of sales comes in you’re sure to be capsized. Read up on as many periodicals as you can find related to your industry. Subscribe to relevant Google Alerts so you can receive breaking news as soon as possible. Doing this will keep you ahead of the trends so you know what’s coming.
Advice for Santa: Ecommerce sales will make up 12.8 % of all retail sales worldwide by 2019. It’s probably time you set up some new workshops across the globe to save on shipping. Manage the expansion with inventory management software that works with multi-warehouse sellers.
So, what does scalable mean? It simply means that you’ve given yourself room to grow. That doesn’t just mean physical expansion, but also the expansion of sales, business, workflows, and employees. Consider your vertical, delegate duties to hires and software, and expand before you need to.
One of the major selling points of our software system here at ecomdash is that it makes your business scalable. Ecomdash takes all the tools you use for your ecommerce business and consolidates them into a single tool. We then sync stock quantities, route sales orders, and facilitate hands-off communication between merchants, suppliers, and customers. It’s easy to understand why that helps your business today, but to understand the concepts of scalability and creating a scalable business, you need to think about the future of your business. Ecomdash grows with you as a lifelong partner to your business.