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Vocabulary for Entrepreneurs: Scale

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Businesses that scale are businesses with operating leverage. Your business is not scaling if you add operating cost at the same rate as revenue. You must add profit faster than you are adding operating cost in order for your business to scale.

Just because your business is not scaling that does not mean your business is not succeeding. There are some types of businesses that have to add operating cost at the same rate they add revenue because they offer one on one services. Then there are other business that will scale very quickly because once they invest in all the things they need for start-up they immediately start growing revenue faster than operating expenses.

Source: http://finance.fortune.cnn.com/2011/06/01/but-does-it-scale/

This post is from a contributing writer to CEO Blog Nation. 

Image courtesy of Arvind Balaraman / FreeDigitalPhotos.net

About Gresham Harkless Jr.

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