Growing and scaling are NOT the same

Growing and scaling are NOT the same.

Non-scalable growth is “easy”. Just add more resources, to increase revenue (whilst also increasing cost). Mathematically, both revenue and cost increase at a linear rate. But the problem here is that this growth is non-scalable, growth becomes expensive due to the unsustainable cost of growth. This wipes away profits, staggers growth, and ultimately leads to stagnation.

However, scalable growth is a challenge, and this is where many startups fail. Even though they are able to build a product that customers want, they face challenges when they go into the scaling phase. Scaling is about exponentially increasing revenue whilst only marginally increasing costs. Economies of scale. This significantly increases profits and enables sustainable growth, leading to further success.

What are the challenges faced when scaling tech companies? What happens when they don’t scale? Is there a solution to the scalability problems faced by tech companies?

Stay tuned. To be continued in our upcoming post.

The follow-up post is “Scale or fail. Tips for tech startups that want to scale effectively.”