Sunday, October 31, 2010

More ideas

Reason number 46 that starting a business in a rural area is more difficult is scalability.

Scalability is a word made popular by venture capitalists in the late 1990s as a critical criterion for investing. It essentially refers to the ability to easily replicate transactions. Pouring concrete foundations can only be done one at a time. To scale up and double the transaction, you need to double your workforce, almost double the amount of equipment. You save a little on administration costs, such as bookkeeping. and advertising. That is not an easily scalable business.

A scalable business is eBay. Once they pay for a software writer and server space, they can handle 10,000 customers for not much more than the effort of covering one customer.

In small towns, you have fewer potential customers. So scalability is a challenge.

So what?  Do you need to become huge?

If you have reached critical mass, if you are profitable enough to earn the living you need, then you are big enough. Any more growth is icing on the cake.

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