Ready to grow your products without spending a small fortune each month?
It's every business owner's dream. Build something that scales. More customers, more revenue, and without hiring a small army of employees or doubling your overhead every few months.
But most business models don't scale.
They grow, sure. But scalability is an entirely different game. If you want to grow your product without pouring more money and more of your time into it each month, you need a scalable business model.
There are several ingredients that every scalable business model needs. But the problem is, it's a lot easier to build non-scalable business models than it is to build scalable ones.
In this guide, we'll be showing you how to create the right business model for the products you want to grow. We'll be giving you the tools you need to build a business model that scales, from top to bottom.
Let's jump in.
Table of Contents
What Is A Scalable Business Model?
Building The Right Foundation
The Secret Sauce to Scale Product Growth
Common Scaling Mistakes to Avoid
Wrapping Things Up
What Is A Scalable Business Model?
A scalable business model is one where you can continue to grow your revenues without an equal increase in costs.
Period.
The classic example is if you have $10,000 in monthly sales and it costs you $9,000 to deliver on those sales, there's no way to scale that.
BUT…
If you have $100,000 in sales and it only costs you $15,000 to deliver on those sales, you can scale that business by adding more sales (customers).
The problem with non-scalable business models is that there's always someone who can offer to deliver your service or product at a cheaper rate than you. A factory in China, an overseas call center, lower-cost software tools, you name it.
According to research by Gartner, companies that adopt scalable business models tend to grow their revenue by an average of 20% each year, whereas companies that don't have scalable business models struggle to grow at 2% per year.
Building The Right Foundation
Before you can scale a business, you need the right foundation in place.
I'm not talking about a fancy tech stack or a seven-figure marketing budget. I'm talking about the basics that most people overlook when they first set up their business.
Your Business Operations Need To Be Solid
In order to scale a business, you need to have your business operations under control. You can't scale chaos. So if your business operations are a mess, all you're doing is adding more customers to a sinking ship.
Set up an office address for business that looks professional and gives your company some credibility but without the overhead and costs of a physical office space. This is exactly the kind of smart operational decision that scalable businesses make.
Get Your Operations Tight Before You Scale Them
Document everything. Create systems. Tighten up everything that you can before you try to scale your product.
Focus on High-Margin Products
It's all very well to think that you can scale any product. But the reality is that some products are a lot easier to scale than others.
Think about it. A piece of software as a service (SaaS) product is a great example. You build it once and can then sell it to thousands of customers. But the cost of serving one more customer? Nada.
Digital products work the same way. E-books, online courses, templates, you name it. Build them once and then sell them over and over.
Automate Everything You Can
If you want to know what the difference is between scalable businesses and everyone else.
Automation.
According to recent research, over 70% of employees believe that automation tools help speed up their work. And smart businesses are cottoning on to it fast.
Automate repetitive tasks, and you free up the resources you need to focus on growth. Everything from email sequences to customer onboarding to billing and reporting. It can all be automated.
The less manual work that goes into serving each customer, the more customers you can take on.
Automate Everything You Can
So start with one process. It can be anything from sending out follow-up emails to creating invoices to onboarding new customers.
Automate that one process and then move on to the next.
Subscription Model Formula
Subscription models are booming right now. And it's not hard to see why.
A subscription model provides you with predictable recurring revenue. You know exactly how much money is coming into your business next month. And when you know your revenue numbers, it makes everything so much easier.
The thing is, most people don't get it right.
A subscription model only works if you provide enough value that it justifies a monthly payment from your customers.
Build A Sticky Subscription
The most successful subscription businesses are the ones that have low churn. That means that their customers stay with them month after month.
How do you create a sticky subscription? Simple.
Make your product such an essential part of their operations that if they canceled it, it would create issues in their own business.
Think about software like Slack or Salesforce. Most businesses can't just cancel them without massively disrupting their own operations.
Use Other People's Audiences
Building an audience from scratch takes a long time.
So if you want to shortcut that process, use other people's audiences.
Affiliate programs, partnerships, marketplace platforms. These are all great ways to get in front of customers without building an audience from scratch.
Airbnb is a great example of this. They don't actually own any of the properties that they rent. They just connect property owners with travelers. Leverage at its finest.
Affiliate marketing is another excellent example. You get other people to promote your products for you and only pay them when they make a sale. No upfront costs and it scales very nicely.
Common Mistakes That Kill Scalability
Businesses make the same mistakes over and over again when they try and scale. Here are the big ones…
Scaling Too Fast
How can you scale too quickly?
Well, if you try to scale before your systems and team are ready for it, it will lead to cracks. Your systems will start to break, your team will burn out, and your product quality will drop.
Ignore Unit Economics
You need to know your numbers. You need to know how much it costs to acquire a customer and how much profit each customer makes for you over their lifetime.
If these unit economics don't work, scaling will only make things worse. You need to fix your unit economics first, then you can scale.
Doing Everything Manually
Business owners who think that they can scale a business without investing in systems and automation.
Don't fall into this trap. You will hit a ceiling where you simply don't have enough hours in the day to do everything manually. Systems and automation are how you remove this ceiling.
Should I Invest in Expensive Software?
Start with affordable, scalable tools that can grow with your business.
Investing in enterprise software when you're only doing $50K in revenue makes no sense. But you also don't want to outgrow your tools in six months either.
When choosing a tool, look for something that:
Offers tiered pricing based on usage
Integrates with other tools that you use
Has room to grow as you scale
Doesn't lock you into a long-term contract
Wrapping Things Up
Scalable business models are achievable. It's not magic. It's just making smart decisions when it comes to your operations, products, and systems.
Start with the right foundation. Get your business operations clean and tidy. Choose high-margin products. Automate everything you can.
Focus on building recurring revenue models that give you predictable cash flow. And find ways to leverage other people's audiences instead of building everything from scratch.
Scale smart and avoid the mistakes we've talked about above.
The businesses that win in the long term are the ones that design their business with scalability in mind from day one.
You can do the same. Start with one improvement, then another. Before you know it, you'll have a business that grows without you having to spend all your time and resources on it.
Start with one of the points above today.
