Business Scalability | Capital Funding | Emerge 180
The Big Box Stores do it. FedEx, UPS and even the stodgiest, lumpiest institution of all, the U.S. Post Office all do it. It’s 21st century agility, it comes in all flavors, shapes and sizes and it goes by the common name of “scalability.” Is your business scalable? What does scalability even mean?
The key to understanding scalability lies in its purpose and applicability to your enterprise. Seasonality is a major driver of the concept and the savvy retailers — from the big box chains to the small box movers — understand the crucial need to augment staffing to meet the surge demands of the Christmas selling season. Even the Christmas tree business owner ramps up for this limited selling season, only to go dormant for the remaining 11 months of the year. Economic conditions, current events and even emerging trends also have a say in the how and why of scalability.
One might argue that farmers invented scalability in response to harvest time. In its purest form, scalability represents the instantaneous capability to increase or decrease capacity, volume or throughput to meet prevailing market conditions, while optimizing overhead expense. Scalability takes on many shapes, sizes and forms because it’s difficult, if not financially impossible, for a capital-intensive industry such as an automaker to add additional production lines and idle them as car sales fluctuate. Yet that same automaker can staff three shifts or scale their lines down to one shift to meet demand.
As a small or medium size business owner, it’s likely you understand and already implement scalable to your business model. Inventory, staffing, locations, business hours, virtually every attribute of your business is scalable in one way or another.
The question you should ask is whether or not you are fully considering all the opportunities to apply scalability and leverage economies of scale. While staffing, hours and inventory remain the most visible candidates for scalability, others aren’t so obvious.
For instance, do two part time employees give you enhanced scalability over one full time equivalent? The full time employee perhaps depends upon full time employment to make ends meet. Reducing that employee’s hours during slow periods may create undo hardship. Two part time employees may give you the flexibility to save on payroll by discharging staff early during slack periods. Conversely, part time employees may accept additional hours during peaks, sparing you the expense of an additional full time equivalent. Part time employees also aren’t typically entitled to a full time employee’s benefits package.
Whether your business is retail, service, business-to-business, manufacturing or industrial, opportunities for scalability exist. Have you found them all?
Originally published at https://emerge180.com on June 10, 2015.
