Should You Pre-Scale or Scale by Need?

That’s a question I often ask myself.  Is it better for a business to pre-scale processes or to scale only when they absolutely need to?  The answer I’ve come up with for us is a mix of the two.  Let me explain.

As I mentioned when we launched Faceup, we took a step back as a company this year to take two steps forward next year.  If we had continued taking on clients at the rate we were in the first quarter we would have made a lot more money, but we would have been a mess.  Instead we re-developed SportsLizard and Detailed Image and automated everything we could, and we built Faceup so that we could immediately handle several new clients each day.

In a way, these decisions reflect my personality and the skills that were hammered into me as an engineer.  When you’re talking about an assembly line at an auto manufacturer, every single process needs to be built with extreme scalability in mind or you’ll fail.  I kind of took those skills to the web.  Even iPrioritize, which has succeeded in registering a lot of users but failed to make money was very, very scalable.  SportsLizard’s Price Guide has grown to over 20,000 members in about six months and I spend the same amount of time each day on it as I did when we had 15 members.

But there’s a huge downside to doing this.  If you guess wrong and the customers want something different than your cookie cutter process, you fail.  If that happens you spend a lot of time re-building a system that you could have just waited to make until you completely understood your customer.  We built Faceup only after we noticed patterns with the clients we were attracting and we *think* we can become a leader in that market due to our efficiencies that are going to allow us to do high quality work fast.  However, there’s still a risk that it won’t work and customers won’t act the way we suspect they will, and in that case we’d be out about a month of work.

In a perfect world, every site/company would be built with the minimum processes in place until you gather ample data from your client base to build the system so that it encompasses the majority of situations.  Detailed Image’s site was extremely difficult to build because they had almost three years of customer experiences to draw upon, and we built the site to address as many of those needs as possible.  However, it was probably better that they used a crappy version of osCommerce for  a few years before building the custom site.  Had they built the custom site in 2004 they wouldn’t have known what they needed.

That’s my take when it comes to websites.  When it comes to office space, employees, and most other expenses, I absolutely think you should scale by need instead of pre-scaling.  A company just starting off needs to keep overhead low and I say work from your basement as long as you can before taking on the expenses of an office (particularly the upfront expenses of furniture, additional technology, and insurance, which I think blindside people).  The *only* time I’d break that rule is if you encountered the perfect employee and you don’t want to let them slip away.  Then it might be worth snagging them up while they’re available.

Note – this doesn’t apply to getting a good lawyer, accountant, and payroll service.  Get those in place ASAP so you can cultivate that relationship for years as you grow.

In the end, I think that the scalable systems we’re putting in place are one of the highest indicators of our probable long-term success.  Whether or not you agree with my sentiments about scaling, you absolutely need to be thinking about it constantly.  Don’t just work on your day-to-day business tasks, force yourself to take the time to put the systems in place so you’ll be able to handle your business when volume doubles, quadruples, increases one-hundred-fold, etc 🙂

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