A person going up an escalator, representing a scalable business.
What Is a Scalable Business? (And How You Can Build One)
A person going up an escalator, representing a scalable business.

What Is a Scalable Business? (And How You Can Build One)

Published in Leadership on , last updated .

Maybe you’ve just had the big business idea that’ll change your life. Or maybe you’re five years down the road and already noticing a few hiccups in your process. You might be dealing with miscommunications between teams, software tools that aren’t pulling their weight, or workflows that crumble when you see new growth. Whether at square one or a little further along, you’re looking to build a scalable business that can grow for years. But how is it done? And what are some of the pitfalls you should watch out for?

What is scalability?

Put simply, scalability is the ability to adapt to increased demand. The term can be applied to a number of fields, and it’s usually a reflection of how flexible a system is when handling massive growth. It’s often used to describe how well a computer system can deal with a sudden increase in demand, since these systems often rely on a limited amount of resources.

Ever had a “the server took too long to respond” error when visiting a website? Often, that’s due to a sudden influx of website traffic — increased demand — showing that the website’s servers aren’t very scalable.

What is a scalable business?

If you follow the definition of the word scalability, then a scalable business is one that can handle growth. Not just a sudden spike in growth, but sustained growth over time, too. In sectors that are dominated by rapidly-growing startups — like tech — scalability is a huge differentiator. A business that initially outpaces its competitors but isn’t scalable might completely collapse given a long enough window. Or it’ll go through rounds of layoffs.

A business can only be made scalable purposefully. Sure, scalability might not be the first thing on your mind when you’re working on a new business idea in your garage, but eventually it’ll become a problem you need to deal with. When you go from a team of one to a team of 10, you’ll run into situations that’ll challenge your business’ scalability. And it’ll happen again when you grow from 10 to 50, and so on. If you make your business scalable early, it’ll be able to handle these speedbumps.

So how do you do it?

5 characteristics of a scalable business

An idea that works

Call it product-market-fit, the “Uber-of-whatever,” or your life’s work, but your core product or service is the foundation on which you’ll build everything else. You can have the best operators in the game, tons of cash, and a massive addressable market, but if your core business idea doesn’t make sense, you’ll struggle to scale. Many founders create a business that solves a problem they’ve encountered personally, but your offering has to find its audience and solve their problem too if you’re going to scale.

A strong core team

One-man operations are the hardest to scale, and they won’t get any easier just because you add a few employees. Whether you’re a founder working on your vision or part of a small team, you’ll need to learn how to delegate if your business is going to scale. Even working every waking hour can only get you so far. You have to build a strong team and learn how to deploy their skills effectively.

Efficiency

If your teams are constantly bogged down with red tape, every project will feel like an uphill battle. As a business scales, every team will have to take on new types of work. Processes will multiply and there’s always going to be some new thing to think about. If you’re not proactive about making all of these aspects of the business as efficient as possible, you’ll struggle to scale your operations.

Documented processes

Contrary to what some might think, documenting processes doesn’t make them less efficient. In fact, it makes it that much easier to get someone up to speed on a new process, and it helps prevent expensive mistakes when you need to do them repeatedly. You should only go into as much detail as you need to communicate how a specific process works and store these documents somewhere that’s easily accessible.

Cash flow

Not every business can scale massively off of debt, angel investing, and a solid idea — there can only be so many Ubers. For everyone else, generating cash flow is absolutely essential for scalability. If your revenue isn’t strong enough to scale, start finding ways to turn that around.

4 risks scalable businesses need to overcome

Before you learn how to build the scalable business of your dreams, you should know about the problems it’s going to face. While growth is the goal, sudden spikes in demand can test your business and reveal just how scalable it is — or isn’t. Here are just a few examples of these risks:

  • Collaboration risks: Nothing feels better than working with a tight-knit team. You know how everyone works, and you can quickly crush projects that would take other teams months to even start. But is it scalable? Whether you get a sudden influx of demand and can’t keep up or your team suddenly doubles in size, scalable businesses need processes that can manage these changes.
  • Technological risks: How scalable is your tool stack? Does everybody just sort of use whatever tool they think is best for their work? Or do you have a specific stack? If you’re not careful, you’ll end up discovering workflows that rely on copying and pasting data from one tool to another as you grow. These are the workflows that won’t scale with you.
  • Resource risks: If you’re selling a software service, how reliable are your servers? Can they handle a sudden influx of traffic or will your homepage go down? If you’re running a business that offers a physical service — say a garbage-collection company — do you have a big enough fleet of trucks? How reliable are they? How will they handle routes that get longer and longer? You don’t have to massively overestimate your resource needs to be scalable, but you have to put some kind of fail-safe in place.
  • Security risks: These risks will vary greatly depending on the kind of business you run. Tech companies need systems in place to handle their customer’s data — systems that abide by a number of international laws. Physical businesses need insurance, strong physical security, and more. As your business grows and gets more attention, your commitment to security will be tested.

These broad categories cover some of the most common risks that’ll test whether your business is scalable or not. And if you’re worried that your business might not pass these tests, don’t panic! Scalability is something you build into your business over time.

Let’s go over how you can do that.

5 tips for building a scalable business

A scalable business is built brick by brick — or bit of code by bit of code. It’s in the processes you put in place, the tools you choose, and the way you work. When it comes to scalability, every little bit helps. Here are some of those little things you can do.

Automate aggressively

How much manual work are your teams doing right now? Sure some things absolutely need the input of an expert, but hitting CTRL+C and CTRL+V for hours each week isn’t it. While finding the steps you can automate in your workflows needs some upfront work, the payoff is worth the effort. Plus, the tools you’re already using often already have some way to automate that routine work. Do this, and your teams won’t get overwhelmed when they get a sudden influx of requests to handle manually.

Spend as little as you can

Spending money and recruiting aggressively was the name of the game for most tech startups in the past few years. But if the latest rounds of layoffs are anything to go by, it seems like this wasn’t the right approach. Now building a scalable business doesn’t mean you have to be profitable right away, but you do need to keep a careful eye on your cash flow (and burn). That way, you’ll have a bigger war chest when your business suddenly needs to scale rapidly. If you can’t cut costs, you can look for ways to spend more efficiently on things like SaaS tool licenses.

Cut corners

When you’re starting small with big dreams, you quickly have to learn which corners you need to keep and which ones you can cut. In software development, that’s how technical debt happens; teams focus on fixing a problem now rather than finding the best way to fix it. Then, when they have more time, they go back and pay that debt down. All teams can learn from this approach. Focusing on the boxes you absolutely need to check off rather than obsessively checking them all means you’re managing resources in a more scalable way.

Research the risks

If you’re here, you’ve already started this work! Trying to build a scalable business is just like any other challenge; you need to know what you’re up against. By researching the risks, you’ll know where your business is prepared to scale and where it’s not. That way, you can put resources where they’re needed. You can also create regular risk reports to track how prepared your business is for these risks over time.

Get (and keep) the best people

People will be some of your most adaptable resources as your business scale. The people who join your business early have the opportunity to grow alongside it, meaning their own abilities can be just as scalable as the business itself. And after they’ve been with you for a while, they have keen insights into how your business works and how it can grow. When you have skilled, trusted teams you can rely on, your business will be able to handle whatever the market throws at it.

How to keep your business scalable with Unito

One of the biggest challenges when scaling a business is building a tech stack that scales with you. When every team is using their own tools, the manual work you need to account for the gaps between them doesn’t really scale. At best, it can slow down your workflows. At worst, it can bring a whole project down.

With a solution like Unito, you can pave those gaps between tools and keep your workflows moving. Unito automatically syncs data between tools like Trello, Asana, GitHub, Jira, and more. That means everyone can use the tools they need without worrying about the manual work that comes with that.

Here’s how Unito customers are building scalable businesses:

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