The scaling up stage can be a decisive moment for your startup. Premature scaling can even lead to the collapse of your business, while scaling your company too late can result in missing key opportunities during your startup’s development.
In the following lines, I will talk in detail about the scaling stage of a business, starting with the differences between the growth process of a company and the scaling process.
Growth vs Scaleup – how do you separate the two?
There is a big difference between growing and scaling a company. “Growing” simply means getting bigger, while “scaling” means growing proportionally according to a well-established barometer.
More customers, more employees and an increasing number of bigger & spacious offices are all signs of a booming business. But what real, quantifiable benefits do these things bring if you fail to meet your main goals?
Many SMEs face a similar problem – they end up hiring more people, increasing their day-to-day costs, but they make the same profit or even less than when they started.
When you have a scaling business, even if you grow your customer base and revenue exponentially, the costs should also increase the same way. Therefore, the scaleup does not face constant, linear growth in all directions.
The first steps towards scaling – establishing, testing, and implementing the business model
A company is still in the startup stage until its business model is proven, works and can be applied successfully. From that moment on, the company enters the scaleup phase. While the startup is still exploring its potential and discovering how to present its product or service best, the scaleup already has the answers to the above questions.
Moreover, the product-market matching was perfected through scaleups. And when it comes to financing, scaleups can usually offer more validation than an MVP to potential investors.
This means that you can have a startup with a seemingly scalable business model but never have a scaleup due to a lack of customer growth. At the same time, you can have a startup with a revenue increase of over 20% year-over-year, but if you still do not have the infrastructure set up or a product or service with enough traction, then the business cannot ascend to the next level.
The next step – creating a sense of purpose, urgency, and leadership
To grow your business and move to the next phase of evolution, you must first establish the best methods to achieve your goals. Make sure you have a clear sense of direction and that the whole team is centred around common goals. The focus and alignment with specific standards and goals are vital for a successful scaleup. You can’t have a sense of purpose without a certain amount of pressure and a sense of urgency. To get there, set clear deadlines for everything you do right from the beginning. One of the biggest mistakes companies make is not paying enough attention to the time factor. Keep in mind that you are in a marathon, but even a marathon can include several sprints.
After you manage to give a sense of purpose to your employees, you can work on perfecting the day-to-day operations through measurable and systematic processes that you can constantly replicate. You need to fully understand the things that contribute most to your impact as a leader on employees and keep doing them better and better. Having enough self-confidence will always bring out the best of you, helping you achieve more and more while being a role model for your team members at the same time.
The importance of organizational culture in the scaling stage
Your company’s culture and organizational values must embrace the spirit of personal development and transparency. Align the individual successes of the team members with the business objectives, and things will progress in the desired direction.
Success cannot be achieved without patience, resistance to stress, emotional intelligence and healthy habits reinforced daily throughout the organization. For a new employee to understand the company’s mission, vision, cultural values, and processes to move to the next level of performance, he often needs to get access to intensive and well-developed courses and training.
Your startup must have a strong marketing team, separate from the sales department. This way, the business can remain focused on attracting the right customers (and the most profitable ones). Marketing is also necessary to generate enough interest and traction.
To remain competitive, scaleups must promote goods and services that can improve quality-wise, not just financially. You need to be smart in how you handle your business and create an environment where people enjoy working, implementing the latest technologies that can give you a competitive edge.
Outsourcing and automation – about their essential roles in the scaling phase of your business
Standardized and repeatable processes save time and resources, which are crucial for such an important process as scaling the business. Look for the best solutions to implement them by the book! Initially, it may require additional investment in systems (IT) and training, but these costs will be amortized in the long term. You will soon be able to hire faster, sell more and streamline operations for a truly scalable business model.
If every aspect of your startup requires an ever-increasing workforce, it will be difficult for you to complete an efficient scaleup. You must find ways to get the most from every process or from as many processes as possible. This includes automating the wage payments, creating training programs to get employees ready fast, finding ways to automate the marketing process of your business and so on so forth.
Where you can’t automate, you can always outsource. Most of your resources should be allocated so that your core products and services can be scaled as efficiently as possible, and the business can move as smoothly as possible to the next stage of growth. Only the essential positions in the company should remain outsourced. Where possible, everything from design and copywriting to the legal part can be delegated to external contractors.
The challenges of the scaling process – what to avoid
Startups tend to make several common mistakes during their scaling process. These mistakes can lead to unnecessary obstacles, stagnant growth, chaos and maybe even the failure of the whole business.
Fortunately, many can be avoided with proper preparation, planning, mentoring, and strategic thinking. Here are 3 of the main challenges companies need to overcome:
Improper planning or lack of planning altogether
Scaling requires strategic planning, but the experience, know-how and resources needed to make it possible are often missing. Planning is frequently done ad-hoc and is limited to far too general goals, which is probably why your company fails to achieve their targets. Without systematic training and efficient and well-thought-out prioritization, scaling will be chaotic.
Imitation of other companies/businesses
If, for some companies, a particular model proves to be successful, this does not mean that it can be applied everywhere and to every business. The better you know your primary product and/or service and your customers and marketing channels, the clearer it will be in which direction to go.
The art of taking a step back at the right time
While many startup founders could grow their businesses and get them where they want to be, not everyone can handle the numerous challenges in the process. Knowing how to recognize your strengths and weaknesses and how to ask for help, coaching, and timely support shows strength of character. Although giving up is never easy, it can still open the door to the next fantastic opportunity and keep your business afloat, even if it means taking a small step back for a short time.
Closing Words – what you need to remember
To make your business scalable, you need to put all pieces together. Here are some things to keep in mind before moving forward from startup to scaleup.
• Automate and outsource as much as possible, especially if it is not directly related to your core qualifications.
• Be thoughtful. Don’t spend money on new people or jobs until you’re absolutely ready to do it.
• Make sure your business is really scalable. There is nothing wrong or shameful about keeping a company to a certain size as long as it is profitable.