What is scalability

Entrepreneur's Lexicon

Definition: scalability

The term scalability or scaling means, in a business sense, the Ability to increase saleswithout having to make major investments (e.g. for production and infrastructure) at the same time. In general, scaling describes a change in size and represents a significant one Property of business models or business ideasrepresent.

When is a business model scalable?

For business start-ups, this question must already be addressed by the Development of the business model put. Because with a high level of scalability, the profit margin also increases with growing sales.

Especially business models that no physical capacity limits how production plants have are highly scalable. Are a good example Internet business models, for example an online shop that deals solely with the trade of goods: Once the website is up and the logistics are organized, it often doesn't matter how much is implemented - hardly any new investments are made.

Further features for high scalability

1. High level of automation

In companies with high scalability, there is a simultaneous rule high degree of automation. This enables efficient and fast work.

2. Low fixed costs

Almost every company incurs fixed costs. Scalable business models are, however, characterized by the fact that they have a relatively low proportion of fixed costs despite increased production.

3. "Asset Light" strategy

Business models that have relatively low fixed assets tend to be more scalable. These companies are more able to increase their sales with low investments than companies with high initial investments, such as production facilities.

4. Expandability

A successful business model must be able to expand into other markets. A scalable business idea can easily establish itself outside of Germany and thus internationally.

Other areas of application

The term “scaling” is also used outside of business. Here are some more definitions of terms:

  • Art / Photography: Images are resized
  • IT: Objects or font sizes are enlarged or reduced
  • Computer graphics: describes the change in size of a digital image
  • Video technology: Material is digitally enlarged

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