Scalability as a skill : The Bedrock of Profitable Business Models.
What is scalability?
'Scalability is the ability of a business to exist in different levels of capacity at different times based on the structures and policy set in place and still produce the same result".
As a business owner, it is a good thing to dream and think big. Thinking in sizes of heavy valuations and heavy revenues.
As a young business man starting up in the early 2000's, I had very big dreams, my ideas where never ending, and one good skill I learnt very early was the habit of documenting all ideas that comes to my head.
When I mean documenting, not in writing on a piece of paper, Not at all, But in writing a business plan for that idea from start to finish before deciding what to do with it.
My first ever business plan was to start a poultry farm at my backyard then in the University, since I lived alone and had a compound to myself.
I had drafted out a business plan for a 40 broiler poultry farm, from production to sales.
And everything from budget to sales forecasting, was fully on ground.
I later did not embark on the plan, because of school work then, but I after school I finally did start and when I sold off , I just wasn't interested in that level again, because I wanted more.
But, here is the catch, I never paid attention to the issues that ensued with the small farm, I thought
"it's just a small farm" when I grow big, it will not be there.
Issues I encountered spanned from;
1. Sales and Marketing problems - which was done very late.
2. Not understanding the psychology of the Market (Buyers) and how it affect your pricing.
3. Not paying attention to how best a way to manage poultry diseases and some other best practices.
Guess, what, when I started our first farm of 1500 capacity, we had all these issues repeating itself but now in a much larger platform.
THE LOSSES WERE HUGE!!!!
WHY SCALE?
We had to down-scale so as to be able to get the right template for success in the various sectors of our business.
I just used a word, "Down-scaling"
TYPES OF SCALES
There are two types of scales commonly used;
Upscaling - This is to increase capacity using same template with little or now adjustment to the process. This can be found in a Poultry business that wants to increase production from 100 to 1000 birds per cycle.
Down-Scaling: This is the inverse of upscaling and it is mostly implemented in a scenario when a model has failed and the business owner decides to decrease capacity to learn more about the business model.
What I did differently?
Immediately, we had started with opening a research department in the farm, were we test anything new - be it a new feed, a new breed of bird, whatever is not a standard yet, must be tested on a small scale before it is implemented in the farm.
Scaling is very important especially in a business when a business owner is trying a new model that has not been tested before by him or any of the team members.
The benefits of Scalability are encompassed as
It gives you the opportunity to test your models
It gives you the opportunity to make adjustments to the model.
It helps you see all possible failure points and provide solutions to these points quickly.
In Summary Scalability will save your business from massive failures.