Scalability

Wikipedia, the free, on-line encyclopedia, says:

In telecommunications and software engineering, 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. For example, it can refer to the capability of a system to increase total throughput under an increased load when resources (typically hardware) are added. An analogous meaning is implied when the word is used in a commercial context, where scalability of a company implies that the underlying business model offers the potential for economic growth within the company.

Scalability, as a property of systems, is generally difficult to define and in any particular case it is necessary to define the specific requirements for scalability on those dimensions which are deemed important. It is a highly significant issue in electronics systems, database, routers, and networking. A system whose performance improves after adding hardware, proportionally to the capacity added, is said to be a scalable system. An algorithm, design, networking protocol, program, or other system is said to scale if it is suitably efficient and practical when applied to large situations (e.g. a large input data set or large number of participating nodes in the case of a distributed system). If the design fails when the quantity increases then it does not scale.

Wikipedia goes on to identify some applications: Scalability can be measured in various dimensions, such as:

1) Load scalability: The ability for a distributed system to easily expand and contract its resource pool to accommodate heavier or lighter loads. Alternatively, the ease with which a system or component can be modified, added, or removed, to accommodate changing load.

2) Geographic scalability: The ability to maintain performance, usefulness, or usability regardless of expansion from concentration in a local area to a more distributed geographic pattern.

3) Administrative scalability: The ability for an increasing number of organizations to easily share a single distributed system.

On a personal level, scalability means that your income is not tied too how much you work. Winning the lottery, for example, is highly scalable because you can win millions of $ for basically shelling out $1 for a ticket.

Go read the Wikipedia article and follow the links.

Entrepreneurs should be concerned with scalability on at least three levels.

1) Income scalability: if your income is non-scalable, to earn more money you have to work more hours, unless you get a raise. If it's scalable it means that you can earn more revenue without having to work longer hours. Residential real estate is mostly scalable because their income is based on how much house they sell. Agents work the same number of hours to settle a house no matter what it costs. Actually, it's negatively scalable because cheaper houses usually require more work. Because of this scalability, the only way you can make more money is to sell more expensive houses.

2) Business scalability: your business has to be scalable, that is it must be able to grow seamlessly with the increase in business. Otherwise you'll lose out from lack of fulfillment.

3) Growth scalability: your business has to grow without you putting in more hours. There are only so many hours in a day, so if your business is not scalable, there's a definite limit to growth. And since you often have employees who must be paid, it means you take less and less money from the business.

What do you think about this? Is your income scalable? And what does that mean to you? Post a comment.

Entrepreneurship 2.0 is my entrepreneurship course. The ideas in it supply the life's blood of my professional activities: teaching, writing, and real estate. For entrepreneurial real estate go to www.yourstopforrealestate.com/blog and for entrepreneurial writing to www.kearneymusicschoolmurders.blogspot/com.