Scaling means trading your margins for dollars.
You can’t scale with low margins.
When you’re starting out, high margins are critical.
Why? Because high margins give you the room to make mistakes and learn.
Higher gross margins allow you to spend more on growth and product development.
They also translate into higher cash flow.
It’s easier to raise capital for high-margin businesses than for low-margin businesses.
Overall it’s less headache. It’s a much easier business to start and run.
So, when you scale, you trade some of those margins to achieve higher volumes.
To make more dollars in profits even with low margins.
You can’t scale with low margins from day one.
The biggest brands in the world—whether in tech, retail, or consumer goods—operate on low margins today, but they didn’t start that way.
They began with high-margin, low-volume models, which allowed them to grow, improve efficiencies, and eventually trade margin percentages for massive volume.
So the key? Scale smart.
Know when to protect your margins and when to exchange them for higher revenue.
But never sacrifice profitability for volume alone.
That’s the balancing act that makes or breaks scaling businesses.