what the scaleability mean I’m gonna answer that question in today’s episode
answer that question in today’s episode
answer that question in today’s episode of ask Evan so recent guy asks a
of ask Evan so recent guy asks a
of ask Evan so recent guy asks a question for one of my Twitter followers
question for one of my Twitter followers
question for one of my Twitter followers love you guys ex girl Candace wrote in
love you guys ex girl Candace wrote in
love you guys ex girl Candace wrote in to say I think our mango can you make a
to say I think our mango can you make a
to say I think our mango can you make a vid on scalability what it means and
vid on scalability what it means and
vid on scalability what it means and examples I’m in the food industry and I
examples I’m in the food industry and I
examples I’m in the food industry and I sell slow-cooked barbecue meats so let
sell slow-cooked barbecue meats so let
sell slow-cooked barbecue meats so let me answer this question in as non a
me answer this question in as non a
me answer this question in as non a boring way as possible we get into some
boring way as possible we get into some
boring way as possible we get into some accounting terms scalability relates to
accounting terms scalability relates to
accounting terms scalability relates to how fast a business can grow and how
how fast a business can grow and how
how fast a business can grow and how much earning potential it has and so if
much earning potential it has and so if
much earning potential it has and so if you look at how a typical business will
you look at how a typical business will
you look at how a typical business will grow your revenues will go up and your
grow your revenues will go up and your
grow your revenues will go up and your costs will go up right this is revenue
costs will go up right this is revenue
costs will go up right this is revenue these are your costs a business that
these are your costs a business that
these are your costs a business that scales well that has high scalability
scales well that has high scalability
scales well that has high scalability well how the revenues that go up and the
well how the revenues that go up and the
well how the revenues that go up and the cost don’t go up too much and so this
cost don’t go up too much and so this
cost don’t go up too much and so this extra room that’s profit where if your
extra room that’s profit where if your
extra room that’s profit where if your revenues are going up and your costs go
revenues are going up and your costs go
revenues are going up and your costs go up too then your profit isn’t as big and
up too then your profit isn’t as big and
up too then your profit isn’t as big and therefore you’re not as scalable what
therefore you’re not as scalable what
therefore you’re not as scalable what this really comes down to is the
this really comes down to is the
this really comes down to is the difference between fixed cost and
difference between fixed cost and
difference between fixed cost and variable cost fixed costs are one-time
variable cost fixed costs are one-time
variable cost fixed costs are one-time costs that you have for your business
costs that you have for your business
costs that you have for your business we’re variable costs are ongoing cost
we’re variable costs are ongoing cost
we’re variable costs are ongoing cost with every product or service that you
with every product or service that you
with every product or service that you sell so let me give you an example if I
sell so let me give you an example if I
sell so let me give you an example if I come over here I have this statue right
come over here I have this statue right
come over here I have this statue right this statue the fixed cost would be the
this statue the fixed cost would be the
this statue the fixed cost would be the the factory that it was made in the
the factory that it was made in the
the factory that it was made in the machines that were used to create it
machines that were used to create it
machines that were used to create it where the variable cost would be the
where the variable cost would be the
where the variable cost would be the bronze a naturally creativeness and so
bronze a naturally creativeness and so
bronze a naturally creativeness and so this is not a highly scalable business
this is not a highly scalable business
this is not a highly scalable business because every time that I need to ship
because every time that I need to ship
because every time that I need to ship out one of these products I have to buy
out one of these products I have to buy
out one of these products I have to buy the bronze right so my costs go up as my
the bronze right so my costs go up as my
the bronze right so my costs go up as my revenue goes up as well and I’ll give
revenue goes up as well and I’ll give
revenue goes up as well and I’ll give you two examples from my own background
you two examples from my own background
you two examples from my own background of businesses that are highly scalable
of businesses that are highly scalable
of businesses that are highly scalable my first company was a software business
my first company was a software business
my first company was a software business with software there’s a lot of
with software there’s a lot of
with software there’s a lot of investment at the start in development
investment at the start in development
investment at the start in development right you have to hire programmers or
right you have to hire programmers or
right you have to hire programmers or you have to spend your time being the
you have to spend your time being the
you have to spend your time being the program and putting it in but once you
program and putting it in but once you
program and putting it in but once you create a product all of those hours all
create a product all of those hours all
create a product all of those hours all of that time and the money invested into
of that time and the money invested into
of that time and the money invested into creating the software whether you sell
creating the software whether you sell
creating the software whether you sell one copy of it
one copy of it
one copy of it our million copies of it it doesn’t
our million copies of it it doesn’t
our million copies of it it doesn’t matter it’s the same software it doesn’t
matter it’s the same software it doesn’t
matter it’s the same software it doesn’t cost me more to sell a million than it
cost me more to sell a million than it
cost me more to sell a million than it does one for every piece of software
does one for every piece of software
does one for every piece of software that gets sold or downloaded I don’t
that gets sold or downloaded I don’t
that gets sold or downloaded I don’t have any extra expenses so that’s a
have any extra expenses so that’s a
have any extra expenses so that’s a highly highly scalable business and
highly highly scalable business and
highly highly scalable business and that’s why so much investment dollars
that’s why so much investment dollars
that’s why so much investment dollars venture capitalists angels pour money
venture capitalists angels pour money
venture capitalists angels pour money into software because it’s highly
into software because it’s highly
into software because it’s highly scalable you can make a lot of money
scalable you can make a lot of money
scalable you can make a lot of money with it the other business is dancing
with it the other business is dancing
with it the other business is dancing school that I’m involved in and our
school that I’m involved in and our
school that I’m involved in and our fixed costs are our studio we have a
fixed costs are our studio we have a
fixed costs are our studio we have a main studio here in Toronto in city and
main studio here in Toronto in city and
main studio here in Toronto in city and that studio is in a mall and it costs
that studio is in a mall and it costs
that studio is in a mall and it costs over $100,000 a year in rent so every
over $100,000 a year in rent so every
over $100,000 a year in rent so every year over a hundred thousand dollars has
year over a hundred thousand dollars has
year over a hundred thousand dollars has to be given out and rent to the
to be given out and rent to the
to be given out and rent to the management company and whether we have
management company and whether we have
management company and whether we have one student who comes out the class or
one student who comes out the class or
one student who comes out the class or ten thousand students that come out to
ten thousand students that come out to
ten thousand students that come out to the class that’s the capacity of the
the class that’s the capacity of the
the class that’s the capacity of the studio doesn’t matter we’re still paying
studio doesn’t matter we’re still paying
studio doesn’t matter we’re still paying a hundred thousand dollars so that’s the
a hundred thousand dollars so that’s the
a hundred thousand dollars so that’s the biggest fixed cost there’s very little
biggest fixed cost there’s very little
biggest fixed cost there’s very little variable costs as we grow this sound in
variable costs as we grow this sound in
variable costs as we grow this sound in terms of having instructors but the
terms of having instructors but the
terms of having instructors but the biggest cost is that studio space and so
biggest cost is that studio space and so
biggest cost is that studio space and so that becomes a highly scalable business
that becomes a highly scalable business
that becomes a highly scalable business as well so if your costs go up
as well so if your costs go up
as well so if your costs go up dramatically as your revenues go up then
dramatically as your revenues go up then
dramatically as your revenues go up then it’s not so scalable and it’s harder to
it’s not so scalable and it’s harder to
it’s not so scalable and it’s harder to attract investment so if you look at
attract investment so if you look at
attract investment so if you look at your business barbeque meats which I’m a
your business barbeque meats which I’m a
your business barbeque meats which I’m a fan of and want to try some and maybe
fan of and want to try some and maybe
fan of and want to try some and maybe make a video review on some barbeque
make a video review on some barbeque
make a video review on some barbeque meats execute Candace that’s what’s up
meats execute Candace that’s what’s up
meats execute Candace that’s what’s up it’s not a highly scalable business
it’s not a highly scalable business
it’s not a highly scalable business because every time you sell your meats
because every time you sell your meats
because every time you sell your meats you have to pay for that meat right
you have to pay for that meat right
you have to pay for that meat right whether you have a physical product it’s
whether you have a physical product it’s
whether you have a physical product it’s a lot harder to scale it up because
a lot harder to scale it up because
a lot harder to scale it up because there’s cost every time you sell a
there’s cost every time you sell a
there’s cost every time you sell a product now there may be ways to do it
product now there may be ways to do it
product now there may be ways to do it may be value ID services that you can
may be value ID services that you can
may be value ID services that you can add on top of it there may be other ways
add on top of it there may be other ways
add on top of it there may be other ways that you can market it and it’s not
that you can market it and it’s not
that you can market it and it’s not necessarily a bad thing right you could
necessarily a bad thing right you could
necessarily a bad thing right you could still grow a highly successful business
still grow a highly successful business
still grow a highly successful business that makes you a lot of money that isn’t
that makes you a lot of money that isn’t
that makes you a lot of money that isn’t necessarily super scalable but you can
necessarily super scalable but you can
necessarily super scalable but you can still have a ton of success with
still have a ton of success with
still have a ton of success with hopefully that helps answer the question
hopefully that helps answer the question
hopefully that helps answer the question about what scalability means if you need
about what scalability means if you need
about what scalability means if you need me to elaborate further or give more
me to elaborate further or give more
me to elaborate further or give more examples leave in the comments below and
examples leave in the comments below and
examples leave in the comments below and I’ll see what I can do thank you guys so
I’ll see what I can do thank you guys so
I’ll see what I can do thank you guys so much for watching my question the day
much for watching my question the day
much for watching my question the day for you is is your business scalable
for you is is your business scalable
for you is is your business scalable I’m curious let me know
I’m curious let me know
I’m curious let me know see you guys soon believe thank you for
see you guys soon believe thank you for
see you guys soon believe thank you for watching getting hungry actually I want
watching getting hungry actually I want
watching getting hungry actually I want some slow cook barbecue means
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