Guide to scalable business models

You’ve started a business and gotten it up to speed. What comes next? Growth. But it is not just growth for its own sake—the trick is to create sustainable growth by scaling your company to increase profits without overloading your resources. 

If you’re seeing more demand for your products or services, it could be the right time to scale your business. While many businesses can scale operations, some business models are more scalable than others. As your business grows, there are a few tips and strategies to help you keep up with demand—and some mistakes you’ll want to avoid. 

Learn more about scalable business models and how and when to decide if scaling your operations is a good next step for your company.

What you’ll learn:

• A scalable business model can efficiently grow and increase revenue—without spreading company resources too thin.

• Business models that don’t require a significant up-front investment to support growth tend to be more scalable.

• When determining whether to scale your business, consider if there’s steady demand for your products or services to avoid expanding too quickly.

A scalable business model is one that increases profitability without a proportional increase in company resources. Scalable companies stay flexible, adapting to market demand while maximizing their current business resources and infrastructure. 

And while many use “growing” and “scaling” interchangeably, when it comes to business models, they’re actually different. Growing your business involves increasing revenue while adding more resources—like employees or technology. Scaling, on the other hand, still increases revenue but focuses on achieving sustainable growth without significantly increasing the cost of resources and production.

Any business that can take on more demand and bring in more revenue without adding considerable resources can be scalable. But while many businesses can be scalable, there are some types of companies and industries that have a higher scalability potential. 

Here are a few examples of different scalable business types: 

• Online marketing or content creation: In general, an online marketing business, such as email marketing or social media marketing, or a content creation business, such as content writing or graphic design, could be scalable because it typically doesn’t require a significant investment up front. And these types of businesses can be scaled up as demand increases—without dramatically adding resources. 

• E-commerce: Direct-to-consumer e-commerce businesses, in particular, have lower operating costs than traditional brick-and-mortar retail locations. As online traffic and demand increase, e-commerce businesses can be scaled up with a minimal up-front investment. 

• Tech companies: Tech companies selling a service instead of a physical product can scale at a fast pace because they don’t have to worry about inventory or warehouse space. This keeps operating and production costs lower.

• Subscription services: Subscription service companies can expand rapidly while keeping up with demand—without the need for a physical storefront. Plus, some subscriptions sell digital media, so production costs tend to be lower because there’s no inventory to manage.

As you consider ways to scale your business, here are some tips to help you grow sustainably:

To promote rapid growth, look into automating processes with technological tools. Certain areas of your organization that could benefit from automation include:

• Hiring and onboarding: You can use tools to make your hiring and onboarding faster. For example, you could use automation to find the right employees with prescreening application questions or use it to expedite the completion of onboarding paperwork and documents.

• Project management: If your company has different departments, project management software can help you stay organized, prioritize tasks and keep everyone on the same page. Implementing project management processes can help you better understand your resources and how you can allocate them to improve productivity.

• Customer communication: It’s important to stay connected with your customers to make sure you’re meeting their needs as you expand. Tools like chatbots can answer customer questions and help provide support without your needing to hire full-time employees.

• Internal communication: If you need to hire to scale your business, it’s important to have clear communication channels in place to keep everyone aligned during rapid growth. There are plenty of communication platforms that can help you keep the conversation flowing between you and your employees.

Depending on your business’s goals and structure, you might need to bring on some extra help to support your growth. If you’re not ready to hire more full-time employees, you could look into working with subcontractors or freelancers to help with certain tasks. This way, you can avoid spreading your company resources too thin and bypass expenses such as benefits, which can eat into your profits. 

But there may be instances where it makes sense to hire full-time employees who can help take your business’s products or services to the next level. As you work toward building a successful team, look for employees who are aligned with your company’s overall mission and can help guide and train additional staff as you expand.

When it comes to scaling a company, the key is finding that sweet spot—where you grow revenue faster than your costs go up. And while it might be tempting to keep processes and resources in-house, there can be benefits to outsourcing certain areas of your company. 

For example, consider using an outside company to manage your social media profiles and handle customer outreach while you focus on running your business. Or you could bring in outside help for hiring and onboarding so you can pay closer attention to your existing staff and how to lead a team effectively.

Having clear, standardized processes set in place positions your company to grow sustainably, increasing your profits without stretching your resources too thin.

1. Start by identifying your current processes and mapping them out to analyze where there are areas of improvement needed.

2. Then decide which processes can be automated. You can do that by determining how well they’ll be able to handle more volume. 

3. Adjust these processes to fit your growth plans. Create documentation to maintain consistency as your company grows. 

Having the right systems in place helps you build a solid foundation as your operations get more complex over time.

Depending on your business and industry, franchising could be a great way to scale without needing a significant up-front investment. If your company can be run successfully by another business owner, you can set up a franchise model that allows you to earn profits based on the franchisee’s efforts. Just remember, as a franchisor, you’ll need to give your franchisee the tools and resources they need to succeed.

Successfully scaling your company requires critical thinking, adaptability and efficiency—but even the most sustainable plans can have unforeseen pitfalls. Here are some mistakes to avoid when creating a scalable model for your business:

• Having an unclear vision: As you scale up your business, it’s important to make sure that everyone—especially business leaders—is on the same page. This helps define your company’s structure and keeps things aligned as operations grow.

• Not retaining the right people: Even though it might be tempting to hire quickly and at a lower cost, it’s usually not the best long-term solution. Look to bring in motivated, top-tier staff who align with your business’s mission. This can drive growth and set the stage for attracting great talent as you continue to expand.

• Misalignment between teams: Collaboration between teams is key when scaling, and it starts with having a solid organizational structure. Having clear core values and a defined company culture creates a strong foundation for how your teams will work together in the future.

• Attempting to grow too rapidly: While growing your company can be exciting, it’s important to set realistic expectations for how quickly you can scale. Even though it might be tempting to shoot for the moon, overambitious metrics can hamper your profitability and overall success. 

• Losing focus as you expand: Determining the scope of your expansion efforts is a key part of achieving sustainable growth. For example, should you expand your startup into new markets when promoting your business? Or would it make more sense to scale by creating new products or services? Find the areas of opportunity where your business can be most impactful and stay focused on that as your North Star as you grow and scale. 

• Not having a proper financing strategy: As you explore different ways to finance your growth, look for options that can fuel expansion without adding too much risk. While accessing capital can help with scaling, be cautious about taking on unnecessary debt at the wrong stage of your business. Finding the right balance between your fixed and variable costs is crucial—it helps you stay flexible and adapt to market changes as they happen.

There can be a fine line between scaling efficiently and growing too quickly. You don’t want to move so slowly that you miss out on opportunities, especially when you have a steady demand for your products or services. But expanding too fast without the right infrastructure can lead to growing pains or, worse, a failed endeavor.

There are a few signs to look for when determining if scaling is the right move as part of your overall business plan, such as:

• You’re seeing steady growth in demand from your customers.

• Your business’s sales are thriving.

• You can stay ahead of your competition.

• Your employees are looking to grow within your company.

• Your capacity to manage core operations is being stretched thin by handling too many tasks.

Not every business model is a perfect candidate for scaling. Scalable businesses can manage growing sales and demand while quickly adapting as needs change. If you’re ready to take the leap and scale your operations, you’ll need resources and tools to help you move your business forward. If opening a business credit card plays a role in your scaling efforts, compare Capital One business cards to find an option that works for your business. You can get pre-approved for a business credit card today—with no impact on your credit.