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Scalable

BLSH

New Contributor
Ive noticed this word thrown around here on the forum & was wondering if someone can give me the definition & example of the term as its used here.

Thanks
"Scalability is a desirable property of a system, a network, or a process, which indicates its ability to either handle growing amounts of work in a graceful manner, or to be readily enlarged."

Picked from the link below....

http://en.wikipedia.org/wiki/Scalability

I look at it kinda like this -- when a system is scalable it is supposed to be future-proof. If your company grows, you can add more hardware/modules/etc. to increase capacity to adapt (scale) your old system to your now bigger/different requirements.
Does that make sense?
 

australianinvestor

Bronze Contributor
I especially like scalability when it doesn't require extra effort. For example, if your company handles 100 sales a week now, but could handle 1000 with the same amount of effort and no changes to infrastructure.
 

Jonleehacker

Gold Contributor
Read Millionaire Fastlane
Speedway Pass
A real life example of the danger of not being able to "scale" your business:

About 15 years ago I owned a photo frame business. I was an innovator and my designs were ahead of the curve (ie. Ikea hadn't knocked them off yet).

I was making good money, but doing almost everything myself, and working at full capacity.

At a retail trade show, a buyer for a large chain of framing stories walked into my booth and wanted to place an order to supply 50 stores (to start!).

That single order represented a year's sales at what was my production level at the time. I had to refuse it, since my business was not scalable (I was just too inexperienced to understand the concept at the time).

A couple years later "my" frame styles were in every shop in North America for 1/10th of the price I was selling them for.

Lesson learned, your business must be able to grow large. When getting a "jackpot" order is bad news, you don't have a real business.
 

White8

Contributor
Lesson learned, your business must be able to grow large. When getting a "jackpot" order is bad news, you don't have a real business.
You also have to be prudent with large growth scalability especially dealing with one very large buyer. Today we live in a global market with suppliers with minimal labor costs in parts of the world and non existent government safety requirements.

What if Jonleehacker had taken the order, leased a 20,000 sq ft building on a ten year lease, bought $100k with of equipment and tooling, and hired 20 people then had the buyer use him as a suppler for only two years before a competitor in China arose that was willing to produce the same product for 1/3 the price? Would he have made enough in those two years to cover his set up costs and still make a profit?
 
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