Have you ever wondered what a scalable business is? Or what it takes for a company to develop a scalable business?
Contrary to popular belief, a scalable business isn’t just a business model for the tech industry—it can drive growth for companies in almost any industry.
In this blog post, Mika Fisk, a business coach who mentors growth companies developing their businesses at Yritystehdas’s Hautomo, explains what a scalable business model means and what it takes for a company to build one.
What does a scalable business mean?
“At Yritystehdas, we view scalability as a company’s ability to grow its operations without having to increase its resource usage in the same proportion,” Mika Fisk explains, adding that many people have a distorted view of scalable business.
“The biggest misconception about scalability is the idea that a company has to be like Facebook or Google. However, a scalable business isn’t something only international tech giants do. Scalability can be built into a service or product regardless of the industry or the size of the industry.”
Various software applications and digital services are good examples of scalability that can be developed for any industry.
“For example, a consulting firm that sells training courses, where an employee travels to train clients, is not a scalable business. However, if that consulting firm were to develop, say, an online training program, the business would then be scalable,” explains Mika Fisk.
The key to a scalable business idea is identifying how the company’s product or service can be made available to an ever-increasing number of people without requiring a proportional increase in resources or additional investment.
Scaling a business requires determination and planning
For a company’s business to scale, there must be a vision for the future on the part of the company’s leadership.
“At the core of a scalable business must be the desire to transition from a more traditional business model to a scalable one. This inherently involves systematic planning. The company must outline the steps needed to advance scalability and how to implement the plan in day-to-day operations.”
Achieving scalability can be challenging, and getting started also requires financial investment. According to Mika Fisk, companies can pursue scalability by securing funding from public-sector financiers or private venture capitalists.
However, in his view, the most affordable and hassle-free source of funding is revenue generated from customers. You can read more about the requirements for different financing options on our eligibility blog.
Scalable Business as Part of a Company’s Operations
One of the main criteria for admission to Yritystehdas ’s Incubator is that the product or service offered by the company must be scalable. According to Mika Fisk, there is another major misconception among entrepreneurs regarding this:
“It’s a misconception that a company applying to Yritystehdas should engage exclusively in scalable business. We also have companies where perhaps about a third of their revenue comes from scalable operations and the rest from more traditional billable work.”
So it’s enough that part of a company’s business—as it participates in Yritystehdas’s coaching program—is scalable. What matters is that the company’s goal is scalability and that it focuses on it.
“A company applying to the incubator must have a clear vision and plan for how it intends to promote scalability during its time in the incubator. For example, what are the next target markets, or what kind of pricing model will be used?” explains Mika Fisk.
For example, a company that manufactures and sells products can achieve scalability by licensing a production-related manufacturing method.
“Another way to scale an innovation is to partner with a larger player, which allows production to be ramped up quickly. In this case, we can speak of a partially scalable business,” Mika Fisk continues.
If you have a scalable business idea but haven’t generated revenue yet, it’s still worth reaching out to our coaches: you may be able to get coaching before the actual Hautomoraati program begins.
A scalable business affects all aspects of a company
Yritystehdas’s Hautomo services are strongly geared toward pursuing international growth. At Yritystehdas’s Hautomo, companies aiming for international markets have been successfully mentored in developing their scalability. Companies that have received coaching at Hautomo have found that the support they’ve received has accelerated the implementation and strengthening of their scalability. Read more about how coaching is carried out at Yritystehdas’s Hautomo.
“One company gained a better understanding of the importance of setting KPIs and using them to reflect on the development of its operations. Another company, on the other hand, realized how systematically sales and marketing efforts must be carried out. Even a good product needs regular visibility; otherwise, customers won’t be able to choose it,” says Mika Fisk.
Developing a scalable business impacts every aspect of the business, so the coaching must also take the big picture into account.
“The most concrete way we support scaling in the Hautomo coaching program is through regular business reviews, where the entire business of the company being coached is evaluated across different business areas,” says Mika Fisk.
Scalability can be supported by refining the pricing model or revenue model, identifying new target groups, streamlining sales processes, or, for example, fine-tuning key messaging.
“With the help of coaching, companies are able to identify more quickly and effectively the areas they need to focus on to accelerate growth and make it more efficient,” says Mika Fisk.
