Growing a business vs Scaling a business: What is the difference?

Have you heard a lot about growing your business vs scaling your business online, but aren’t really sure what the terms actually mean and what the difference is. As the CEO of your business you need to be clear on whether you are currently in a growing phase or a scaling phase in order to make the right decisions about what your priorities are and what actions you need to take. Keep on reading to find out what the difference between growing a business and scaling a business is.

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GROWING A BUSINESS VS SCALING A BUSINESS: WHAT IS THE DIFFERENCE?

It is common for the words growth and scale to be used interchangeably, but the words aren’t the same. If you are scaling your business you are growing your business, but you can be growing your business without scaling your business.

When you are focused on growth as a business owner your main priority is increasing your revenue. The growth you describe in your business is based on the increase in revenue. For example, if in 2020 you generated £30,000 and then in 2021 you generated £60,000 you would be able to describe your business as having grown by 100% year-on-year. However, if the only information you have is revenue you can’t assess whether that growth in the business was a result of scaling or not.

When you are focused on scaling a business your main priority is to increase your revenue at a faster rate than your expenditure increases. This means that the business is able to increase its profit margin as the business grows. An easy example is to think about a company that sells an app. An app-based business is a scalable business. There are costs associated with creating and updating an app, but whether it is downloaded by 10 people, 10,000 or 10,000,000 the costs won’t change drastically. This means that as more apps are sold the business is able to make more profit.

Growing vs scaling an online, service-based, business

If you run an online service-based business, like a coaching, consulting or training business, you might have just read my description of scaling and not be able to see how it is relevant to you. You might not associate there being direct costs in delivering your service, which is probably due to the way you pay (or don’t pay) yourself.

Traditionally, service-based businesses have only been able to grow but not scale. If you had a business where you were delivering a service on a 1-to-1 basis you were limited by the number of hours you could work. If you wanted to increase your business’ revenue you had three options: work more hours, raise your prices or outsource. Some business owners don’t want to work more hours, raise their prices or outsource. In this situation, the business owner would find themselves in a situation where their revenue was capped and the company could no longer grow. And it is this dilemma that resulted in their becoming a focus on creating a scalable, service-based, business.

In order to create a scalable, service-based, business the tie between time and money needs to be broken. This means looking at ways to have a service that can be delivered to multiple people simultaneously, or looking at ways to package your services into digital products, which have no limit on the amount of people it can be sold to.

WANT HELP TO GROW OR SCALE YOUR BUSINESS?

Are you a coach, consultant or online service provider that is ready to take your business to the next level (whether that be following a growing or scaling approach). I work 1-to-1 to help experts package, price and promote their services. Whether you are looking for a one-day consultancy session or on-going training, support and accountability I can help. Click here to check out all of my current services.

Which is better? Growing your business or scaling your business?

Now that you know the difference between growing and scaling a business you might be thinking “Which one is better – growing or scaling?”. Neither is better and as a CEO of your business you’ll need to make a decision about what makes sense for your business. If you are running a lifestyle business then you’ll need to think about your goals for both your life and your business in order to make the right decision between growing or scaling.

For example, if you are a fan of Tim Ferris and dream of working a 4-hour work week then scaling your business would probably be the best fit for your business. Whereas, if you love working with people 1-to-1 and aren’t fully booked yet then you are more likely to want to focus on growing your business.

Understanding your growth limits

Another way to work out whether you should be focusing on growing or scaling is to understand what the growth limits of your current business model are and make a decision about whether you are happy or not with that. For example, imagine you are a financial coach charging £2,000 for a 12-week programme. At any point in time you can work with 10 clients simultaneously. This means across the year, if you were fully booked continuously you could generate £80,000 in revenue. Once you understand the growth limits of your current business model you can then make a decision whether, right now, you are happy to be limited by that income ceiling and focus on growing, or decide those growth limits are unacceptable and start looking for ways to scale.

You can change your focus in the future

Some businesses focus on scaling from the very beginning, whereas some businesses will focus on growing and then once they hit a certain level they’ll then switch their focus to scaling. So if you decide that right now you want to focus on growing your business don’t feel as if that means you can never scale again in the future. There is always the option to scale in the future, but it may involve having to adjust your services or create new services and / or products.

Why it is important to know if you are going to focus on growing your business or scaling your business?

Whether you decide to focus on growing your business or scaling your business doesn’t make a difference to me, but it is important that you make a decision. Knowing whether your focus is on growth or scaling will impact the decisions you need to make in your business. It impacts your offerings, your pricing, your delivery mechanisms and possibly the technology, system and processes that your business needs. As I mentioned earlier you do have the option to change your mind in the future, but it is important right now to make a decision about your focus so you can take actions in alignment with that focus.

That’s it! You now know the difference between growing a business and scaling a business.

Hopefully by now you are clear about the difference between growing and scaling a business and next time someone brings up the topic of growing a business vs scaling a business you can confidently share what your current focus is.

In the comments I would love to know if right now your focus is on growing your business or scaling your business

WANT HELP TO GROW OR SCALE YOUR BUSINESS?

Deciding to grow or scale your business and achieving that growth are two very different things. I work with coaches, consultants and online service-providers to turn their growth goals into a reality.

I help solopreneurs and small business owners to think and act strategically with their offerings, pricing and marketing to maximise the revenue they generate in their business.

You can find out how I can help you here or send me a message here to discuss other options.