What is the difference between growing your business and scaling a business?
This is one very common question asked by most entrepreneurs and most of them genuinely do not know the exact difference yet. Consider a metaphor, growing your business is like addition but scaling your business is like multiplication. So when you grow or expand your business at 10/20 or may be even 75 percent, it qualifies as actually growing your business and not scaling your business. But if you expand your business by 100/300 or 1000 percent that would qualify as scaling your business.
So the fundamental difference between growing and scaling your business is this – growing your business is incremental but scaling your business is exponential.
Let’s illustrate this difference with a better example – a restaurateur, who is running a successful restaurant in Roermond, Netherlands with almost 200 footfalls every evening, wanted some tips to scale his business. On an average, his yearly profit was more or less 150k USD which was pretty much handsome amount to live with. Now, when asked whether he wants to grow your business or scale your business, he could not really understand what is the difference. To make it little easier for him, then asked suppose your revenues will go up to 250k USD, will you be happy. He was delighted with the proposal and agreed to that saying yes that’s what I am aiming for now.
Now, here is what you need to learn from the above example. The restaurateur is actually looking to grow his business, but not scale his business. The approach towards growing a business and scaling a business are always different. You can always refer to McDonald’s story of growth and then scaling it globally under the supervision of Ray Kroc.
Approach towards growing your business
There are lot of ways of how you can help to grow your business starting with:
- Promoting your recipes, specialties or offers on your items
- Giving easy ordering process or delivery process
- Easy take away or smooth dine out experiences
- Digital touchpoints to talk to your customers in a structure manner
Approach towards scaling your business
There are three major things you need to do to scale your business and these three things are inevitable.
- Stop being a restaurateur and start becoming a businessman
- Make your business model replicable and scalable, so that you can open more than one restaurant (we are using restaurant as an example here only)
- Work on your business rather in your business
Some of the tips for our restaurateur friend were:
- Start working out to open five restaurants around the most traffic shopping centers across Roermond
- Hire people and train them about recipes and customers
- Start home delivery services to nearby locations
- Develop systems to make your process faster and replicate the same across all restaurants
- Start understanding the insights of all your restaurants, to know what’s working and what’s not
- Find an investor who will be willing to invest on your restaurants to speed up the process
- Start promoting your restaurants like a brand
Now, if you imagine that he was making 150k USD from one restaurants in an year and with 3 new restaurants this revenue becomes 750k USD. Assume he is making 40k USD as profit every year, and with the five new restaurants this will be come 200k USD profit every year or high, if he plans to open more restaurants.
So, there you go is what explains the basic difference between growing a business and scaling a business.