Scalable Businesses | Examples of Scalable Businesses
What is Scalable Business?
A scalable business can be simply defined as a business that is able to easily grow as a company while still managing to maintain the same level of quality. There are many benefits to creating a scalable business, but certain steps should be taken to ensure the continued success of the business.
A scalable business is one that has the ability to grow and expand easily. It is a business that typically has a product that can be scaled as it becomes more popular.
Scalable businesses are those that are designed to grow to unlimited levels. These businesses are often propelled by the sustainable growth of the market.
What is Scalability?
In software engineering, scalable refers to software that can be used in tandem with other services without significant performance problems on either side. It is sometimes called “scalability” and often is confused with “scalable,” which refers to anything that increases in size without limits.
A scalable database system is one that increases in volume without a sharp limit on the number of connections.
Steps to make a business scalable:
- Run lean: A lean business is a business that has minimized all the unneeded overhead expenses in order to free up resources that can be utilized in other areas such as product development and marketing.
- Set up some value metrics: Value metrics are used to gauge how well a product or service is performing in the market. These metrics can be anything from customer acquisition cost to customer retention rate or the total number of views your website has received.
A benchmark is a set of pre-determined measurements that can be compared to the progress made by either team members or external agencies. Metrics use numerical values in order to describe how well certain things are going, such as how many sales numbers have been made on the website.
- Test success metrics: Success metrics are the metrics that will show whether the project was a success or not. An example of a success metric would be the percentage increase in the number of users on the website.
Successful Scalable businesses
Many of the biggest and most successful businesses, such as Amazon, Apple, Google, and Facebook, are scalable. Scalable businesses are able to achieve a sustainable level of growth and typically maintain a competitive edge.
A scalable business can typically be described as a company that grows by reinvesting profits into its own growth. An example of a scalable business would be Starbucks.
Starbucks focuses on a menu of high-quality drinks that is also available in convenient locations. The company offers a menu with a variety of options such as coffee drinks, frappuccinos, and espresso that are available to be served in a variety of formats such as hot or cold and to-go or for-here.
The company also focuses on delivering a consistent experience by hiring friendly employees that are trained to provide excellent customer service. Starbucks has been able to achieve growth and success in the market by reinvesting its profits into the business.
For example, Starbucks has built new stores in locations that have a high population density and high traffic flow. The company is able to reinvest its profits in the business by building new stores in areas where it is easy to make investments because of the high level of traffic and population density.
The high-traffic flow allows the company to achieve quick, efficient growth while also providing a great experience for their customers.
Scalability Business Model
The scalability business model has been used for decades by major corporations such as PepsiCo and McDonald’s. The original founders of these companies have often reinvested 100% of their profits into the business.
For example, McDonald’s has often reinvested over half of its company’s profits into the business. This has allowed McDonald’s to achieve phenomenal growth. The model of scaling your business by reinvesting profits creates a sustainable competitive advantage.
Some companies choose to build a scalable business with the goal of an IPO (Initial public offering). Some examples include Google and Facebook.
Google was initially built on the idea of providing individuals with a comprehensive search engine that could be used to find nearly any piece of information on the web. This provided Google with a competitive advantage over its competitors because it was able to search more niche topics than other major search engines.
As Google grew, it needed to expand its product offerings and innovate new products in order to maintain its competitive edge. Therefore, Google has had a history of reinvesting profits into continued growth and innovation.
Different Types & Examples of Scalable Businesses
## Digital Products and Downloads
Since digital downloads have almost no per-customer distribution expense, developing a product that can be sold and then downloaded digitally is a very scalable business concept.
Businesses can also produce e-books, music, games, images, and models for presentations or documents that can be accessed after a customer purchases them online, in addition to software.
Businesses that build premium websites for which consumers must pay for access have scalable models as well, though they may face bandwidth problems as their goods become more popular.
## SaaS & Software Business
SaaS is a software delivery model in which a cloud provider hosts applications and makes them accessible to end-users through the internet. An independent software vendor (ISV) can contract with a third-party cloud provider to host the application in this model. In the case of larger corporations, such as Microsoft, the cloud provider might also be the software vendor.
For businesses that operate as SAAS (Software as a Service), the more customers you have, the more revenue their subscriptions will bring.
In addition, SAAS provides businesses with scalable costs. As the number of customers grows, they only need to pay for additional hardware or servers to handle the increased number of requests.
Software: While the fixed costs of software development are substantial, the cost of actually producing the software is very low. Indeed, Briefing observes that Microsoft is an excellent model for a flexible company since the only thing Microsoft offers is the software program; vendors handle the hardware requirements, such as CD-ROMs.
As a result, while Microsoft can gain a million customers overnight, the cost of selling goods to these customers will not rise.
## Subscriptions Based Businesses
Most Subscription-based businesses are scalable since the per-customer cost of operations is low and the number of customers is high.
The cost of servicing a customer is high, especially when dealing with support email, telephone calls, and/or returns.
Additionally, sales cycles can be long in Subscription businesses.
## Online courses
Another scalable business is Online courses. Online courses are remarkably flexible, and if the course is free, they can attract just about anyone willing to pay for access.
If the course is for a fee, businesses can expand to additional students as they obtain more income.
Indeed, just about any course is scalable since the fixed costs are so great to start up, and there are few costs with each additional customer.
Businesses can also develop subscription or fee-based courses based on earning credentials needed in a specific industry.
A relatively new business opportunity is the development of MOOCs (Massive Open Online Courses). MOOCs are platform-based online learning courses that can be accessed from anywhere in the world.
They provide a wealth of free and low-cost learning opportunities. This is ideal for people who may not have money to spend on higher education or who are unable to travel frequently.
## Online Dating Websites
Online dating services are very scalable and have a long list of clients that has no end in sight. The cost of Online dating websites is minimal compared to the amount of revenue they generate, and at most, they will need more servers to accommodate more clients.
##Blogs, Podcasts, and YouTube
Blogs, Podcasts, and YouTube are all scalable businesses because there is virtually no overhead cost to sustain such a business, the only expense being your time and effort.
The more clients you can attract to your business, the more revenue comes with it. YouTube earnings, for example, can be very high if you have a large number of subscribers.
##Digital or Web Media and Entertainment
Digital or Web media and entertainment is very scalable since it requires little to no physical infrastructure to produce, distribute and sell the product. The only expenses for such businesses are the costs of marketing their goods in online spaces.
However, media and entertainment businesses cannot only be concerned with their current business operations. Still, they should also look at developing a more scalable model by branching out into related products and services to gain more market share in the future.
Some examples of digital media and entertainment products are podcasts, movies, computer games, online radio stations, live-streaming webcams, and blogs.
## Web-Based Product Development
Web-based product development is also a very scalable business. To start a company that produces downloadable software or web tools, one needs only establish a website and launch it.
E-commerce would be the most popular type of scalable business due to the relatively small start-up costs for setting up an e-commerce site and the relatively low cost of running such a site thereafter (compared to other forms of e-businesses).
If you are an e-commerce business owner and want to expand your business, all you have to do is acquire more e-commerce businesses to grow your company.
## Online forums
Online forums can be scaled across numerous clients for free or for a fee, depending on the number of resources required. The demand for services is always high since there are countless places on the Internet to go to without having to pay any fees at all.
## Affiliate marketing
Affiliate Marketing is a very scalable business. It requires almost no fixed costs other than the time and effort you put into it to promote your affiliate links and the money you will make when customers make a purchase using your affiliate links.
Affiliate marketing can be scaled across millions of customers by using internet marketers through your affiliate network to market their goods.
Affiliate marketing is a scalable business since it requires almost no fixed costs other than the time and effort you put into it to promote your affiliate links and the money you will make when customers make a purchase using your affiliate links.
## Video Games
Most video games are scalable businesses since their market is so huge and the cost of production is very small compared to sales revenue.
Currently, it is difficult to take video games out of their niche market as there are no easy ways to reach mass consumers. This technological problem hinders the scalability of video games.
## Music and Radio Streaming
Music or Radio streaming services are scalable since they can grow easily, and the cost of goods sold is very low.
There are some minor limitations to this kind of business as they are services that require a lot of time to create, perform or record.
## Blogging and Podcasting
Blogging and podcasting both rely on an individual’s online presence, requiring only the time and effort it takes to develop a following.
In addition, blogging and podcasting are free ways to reach potential customers and grow your business by giving advice, sharing your experience, or teaching new skills.
## Data Mining
If you are a data mining expert, then you are in the business of data mining.
Scalable data mining is possible because the company needs to invest very little money to get started. All they need is a computer with data mining software programs already installed.
## Music Composition and Recording
Recording music is a scalable business because the costs of recording and producing music are minimal, and the profit margin is very high.
What Makes business Scalable?
## Low Cost of Goods with High-Profit Margins
Many businesses use a scalable model because they can sell goods with high-profit margins.
By picking a market where their product can have a dominant market share, these companies can ensure that they will be able to operate without incurring much risk if their business model is scalable.
## Maintaining an Active and Stable Customer Base
Businesses also have to make sure that their customer base is stable enough in order to support a scalable business model.
A stable and active customer base is one in which customers are still making purchases and are using the product enough to keep them “in the know” on new updates and features.
In order to maintain a stable customer base, businesses have to constantly post regular updates to their products.
Businesses that provide news and entertainment will also be able to attract more customers as they make the news or entertainment accessible over the internet.
Making the news or entertainment accessible over the internet also gives businesses more customers as there are more people who would like to see what’s going on in the world.
Businesses that make a software product that allows users to customize it will also have a stable customer base because customers won’t want to change the program since it is perfect for them.
## Businesses with a High-Cost Competitiveness Ratio
Many businesses can and do follow a scalable business model because they have products or services that are very cost-competitive.
For example, if a corporation can sell its products for half the price of another company’s, it can pay half as much to its employees.
This means that they could potentially scale this business up much more easily than other companies since they would be saving money on every employee.
These types of companies will usually focus on outsourcing to foreign countries.
## Low-Cost of Credit
A business that has a high level of liquidity and little debt can also maintain a scalable business model.
By having this type of business, company owners would have a lot of money to invest in advertising their product; this will increase the company’s return on investment because it will make the product more recognizable.
As a result, there will be more customers, which increases the likelihood that someone will buy something from them.
Every country has an average interest rate, so a business that charges less interest than the average interest rate can make more money if it receives the same amount of debt.
If this business also doesn’t have any debt, then it will not have to worry about paying back its loans if it decided to sell them.
## A Low-Cost Marketing Strategy
The key factor in having a scalable business is the ability to use marketing tactics that are more cost-effective than others and whose effectiveness can be scaled up over time.
For example, if you have a scalable business model, the profit margins from each customer are higher than the profit margin of other businesses.
This means that your marketing expenses will be lower than those of other companies.
Since your marketing expenses will be lower, you can spend more on advertising your product. This means that there will be more customers and thus more money to reinvest in your product for future updates; this also adds to the profitability of your business.
## Businesses that Have a High Coverage Area
Businesses that operate a scalable business model will usually have a product that can be sold in multiple geographic areas.
By having this type of business, you will have more customers, greater coverage, and thus more money to reinvest in your product for future updates.
For example, if your business is producing tea, you would want to sell it in different country areas to attract the most customers.
If you sold your tea in different country areas, you would be able to sell more to more customers. This would mean that you would earn more money from each customer.
However, if a company is highly competitive in its market, its product may not have much value since it can be easily imitated and made for a lower cost. If this is the case, then the company’s business model may not be scalable after all.
## A Company with Limited Employees
One of the factors that also play a role in determining whether a business can scale up or not is the number of employees.
A company with few employees will have lower operating costs than other companies that have more employees. As a result, this will reduce the net cost of the company and increase profits exponentially.
This also means that a company will be able to afford to advertise its product more often, which will make it more recognizable.
## Businesses that Have Low Costs
Executives should look for business models with low costs because, with lower operating costs, the company can afford to advertise its product more often to attract a larger customer base.
An example of a business with low operating costs is the book industry. The book industry has a very small number of employees compared to other industries.
This means that the cost to operate the business is very low, which allows the company to have a low advertising budget. This also means that there will be less competition in the book industry.
## Businesses with High Profitability
Companies and executives should also look for companies with high profitability because they are easily scalable.
A business with high profitability is defined as a company with higher profits per employee. This means that the company is able to operate with fewer employees and have greater profits than most other companies.
Depending on the industry, businesses that sell luxury goods are usually very profitable as well because they require a high amount of capital to start.
If you are looking for a successful, scalable business model, it is important to look at these factors in order to determine whether or not the business is scalable.