By Dr Farah Sleiman

When investors assess a business to decide whether they want to invest in it or not , they look for specific characteristics that when gathered in one venture promise to make this venture a viable and sustainable business. One of these key characteristics is “scalability”. But what does scalability mean from an investor perspective and why it is crucial to understand it if you are an entrepreneur looking to raise funds to start or grow your business . From an investor perspective, scalability is assessed on two dimensions: The founders profile and the business model. Now you are going to ask me, how can a founder profile be “scalable” and what does scalability meansin this context. Well it is simple, a founder is deemed to have a scalable profile if he has what it takes to take the business through the different stages of the growth cycle including the growth pains, the setbacks , the fluctuations of the market and the shifts in consumers preferences.

Founders with scalable profiles have in common a high degree of emotional intelligence, resilience and passion for the business. Emotional intelligence is important for business scalability because self control and self management are essential skills for good leadership and keeping the morale of the team.Emotional intelligence is also a key attribute investors look for in founders seeking funding because it ensures smooth working dynamics between the investors and the founders which result in higher quality business outputs and better bottom line results. Emotional intelligence is also an investor requirement in founders because it results in flexibility and openness to input and feedback and makes the founder predictable (thus easier to trust!) and easier to work with. In fact, when investors assess in their mind a founder they are constantly asking themselves these same questions: ”Can I work with this guy on the long term? Will he integrate and value my input or he is I know-it-all kind of guy ? Can I trust him?”.

The second characteristic investors look for when assessing a founder profile is whether he has the grit to keep going when the road gets tough or will he give up in the middle of the journey. Resilient entrepreneurs not only bounce back quicker from setbacks but they also see every obstacle as an opportunity to ignite more creativity and innovation in the business. Passion is the final attribute investors look for when assessing founders profile and sometimes when too much passion for the business is there it can blind the investor to the fact that the founder is an impulsive dude with high narcissistic traits that cant keep a team together let along guide him through stormy weathers. Now let’s say you’ re an entrepreneur looking to raise funds and so far in the investor mind you have ticked all these boxes , does this mean that you got the funding automatically and you are all set? Nop, unfortunately not. You still need to demonstrate that your business model is scalable. And to do this you need to have the proper strategic and operational planning in place. But what does that mean in concrete tangible steps? Your business model is deemed scalable if it is based on sustainable business practices that builds on efficient processes that ensures that as your customers’ base expands and you start selling higher volumes of your products or services , the marginal cost of developing and producing these products and services goes down instead of expanding exponentially with your sales figures. In one word , a scalable business model means that as you grow you benefit from economies of scale and become more and more profitable. So having said that, are you scalable?