Roughly 50 million startups are born each year with the intention of eventually becoming profitable businesses. Many entrepreneurs dream of beginning their startup with next to nothing in the bank and growing their business to a million dollar company. But the truth is, you may not be ready to scale your startup in this way.
Startup Genome surveyed over 3200 startups and found that 74 percent of them fail due to premature scaling. If you don’t start out with the right business model or with the right systems in place, then it is almost impossible to effectively scale.
So how can you effectively scale your startup? How does a startup continue to grow and take on more work without compromising the quality of their products or services? This article will explain what it means to scale and will outline five steps for how you can scale your startup.
What Does it Mean to Scale Your Startup?
You’ve probably heard the term “scale” being thrown around a lot – be it by other entrepreneurs, VCs, or, well, anyone involved in the startup ecosystem.
Everyone wants a startup that can scale. Traditional businesses with minor payouts are not in fashion anymore.
So, what exactly does it mean to scale your startup? Once you have a product out, “scaling” is the process of growing exponentially: being able to go from handling 5 clients to 500. If your product isn’t scalable, you’re going to get stuck somewhere along the way, being unable to handle all that load.
Clients are good, but it’s a common misconception that the more clients you have, the better. Let’s say you’re VP sales. You work like hell, and in 2 months, you exceed the company goals by a huge margin.
If your startup is scalable, the engineering team will figure out how to handle the extra load. If not, well, you’re going to be hearing a lot of emergencies in the office soon.
That is what it means to be able to scale your business; you have the capacity to serve a rapidly growing number of customers efficiently.
5 Steps to Effectively Scale Your Startup
A lot of planning and thought goes into scaling your startup. You need to make sure you have built a business that is strong enough to support the massive growth of your company. To do this, you will need to have the fundamentals, systems, technology, and people in place to make this possible.
Listed below are five steps to effectively scaling your startup:
Get the Fundamentals Down
We live in a society that likes to celebrate seemingly “overnight” success stories. Slow and steady growth may not seem as exciting, but by trying to scale too quickly, you risk failing altogether.
Make sure you understand who your ideal customer is and what problem you are solving for them. Make sure that you are confident about the quality of your core product or service.
You should also be confident that you have the resources available when it is time to scale.
Outsource Wherever Possible
As a startup, your funds will be very limited in the beginning. So you have to think long and hard about how you will spend the revenue you do have coming in.
Obviously, you will need people for your business to grow but do you need to hire a graphic designer, lawyer, AND a CPA? You should think carefully about what type of employees you will need in your startup.
To scale your startup, you will need to make tough choices and allocate your resources wisely – and one of the easiest ways to do this is by using freelancers or remote employees. If you can find the right individuals, they might come by 2 or 3 times cheaper than hiring locally.
For more on hiring and working with freelancers/remotes, check out our guide to onboarding remote employees.
Use the Right Software
As a startup, you’re going to have very limited time. So, you might want to automate as many business processes as possible. While it might seem very technical or hard at the beginning, it can be crucial for long-term growth.
Thankfully, though, there are countless business process automation tools ready for you to use. Zapier, for example, can “zap” together all of your office tools, and automate all sorts of minor processes that chip away at your time minute by minute. Or, you can use Tallyfy to give structure to your growth efforts. The tool allows you to map out your processes, and automate them using forms or approvals.
Employ the Right People
When you are beginning a startup, resources will most likely be limited. So it is important to employ the right people with the necessary skill sets to help the business grow.
The best way to do that is by employing generalists. Take marketing, for example. You might need someone who can do PPC, SEO, and Content at the same time. Instead of hiring three different people with expertise in each field, you can hire a jack-of-all-trades instead.
While this may seem like a loss in quality, it’s going to help you long-term. A generalist can set up the framework for company operations, and lead the rest of the team when you end up hiring or individual roles.
Or, if you’re looking for co-founders rather than employees, you might want to pick one of these three archetypes.
Don’t be a One-Man Army
Ideally, your business should operate like a vending machine. You invest a certain amount into the business and you continue to reap the profits even when you aren’t physically present.
It is impossible to scale a startup that is entirely dependent on you. That is one of the many reasons why it is important to employ the right people.
When you have the fundamentals, systems, and people in place, then your business can function just fine without you. At that point, you may truly be ready to scale your startup.
Conclusion
As a business owner, it is important to be always evaluating your company and looking for new ways to improve. Companies like Blockbuster and Sears prove that an inability to adapt to new trends and demands in the marketplace could be fatal.
It is important to create an environment that embraces continuous improvement and constantly looks for ways to grow. Poorly run and inefficient processes are one of the biggest things that hold most startups back from scaling.
Related Questions
What does scale mean in startup?
When people talk about scale in startups, they mean growing bigger without breaking things. It’s like stretching a rubber band – you want it to expand smoothly without snapping. Scaling means handling more customers, making more money, and growing your reach while keeping your startup running smoothly. Think of it like upgrading from a bicycle to a car to a plane – each step lets you go further and faster.
What is a scalable startup?
A scalable startup is built to grow big from day one. It’s like planting a tree that’s meant to become a forest. These startups have business models that work better as they get bigger – when you add more customers, you don’t need to add the same amount of resources. Netflix is a perfect example – they can add millions of new viewers without building new studios or hiring armies of people.
How to scale a startup team?
Scaling a startup team is like building with Lego blocks – you need the right pieces in the right places. Start by hiring people who can wear multiple hats, then gradually bring in specialists. Create clear processes that everyone understands, like a good recipe that anyone can follow. Most importantly, maintain your company culture like a garden – nurture it as it grows, or it might wilt under pressure.
What does it mean to scale your business?
Scaling your business means growing smarter, not just bigger. It’s about finding ways to serve more customers without multiplying your costs at the same rate. Imagine a chef who figures out how to cook for 100 people almost as easily as cooking for 10 – that’s scaling. You’re looking for ways to multiply your impact while keeping your operations lean and efficient.
When is the right time to scale a startup?
The perfect time to scale is when you’ve found your “secret sauce” – a repeatable way to make customers happy and make money. You should have steady customer demand, a proven business model, and enough cash in the bank. It’s like waiting for the right weather before sailing – you need favorable conditions before you set out on your scaling journey.
How do you scale without losing quality?
Scaling while maintaining quality is like copying a masterpiece painting – you need systems and standards to ensure each copy is just as good as the original. Create detailed processes, use automation wisely, and build quality checks into everything you do. Think of companies like Apple – they manage to make millions of devices while keeping their quality consistently high.
What are the biggest challenges in scaling a startup?
The main hurdles in scaling include keeping your culture alive, managing cash flow, and maintaining product quality. It’s like trying to steer a boat that’s getting bigger while you’re building it. You’ll face challenges in hiring the right people, building efficient systems, and making sure your technology can handle growth. Many startups struggle with growing too fast and losing what made them special in the first place.
How do you know if your startup is ready to scale?
Your startup is ready to scale when you have consistent customer demand, predictable revenue, and processes that can be repeated reliably. Look for signs like having to turn away customers, hitting resource limits, or seeing strong market pull. It’s like a plant that’s outgrown its pot – if you see roots coming out the bottom, it’s time to move to a bigger container.
What role does technology play in scaling a startup?
Technology is like a multiplier for your scaling efforts. It helps you automate repetitive tasks, reach more customers, and manage operations efficiently. Good technology choices let you handle growth without adding tons of people or complexity. Think of it as building a machine that can do the work of many people – the right tech stack makes scaling possible and profitable.
How do you scale customer support as you grow?
Scaling customer support means finding ways to help more customers without losing the personal touch. Use a mix of self-service tools, automated responses for common questions, and well-trained support teams. It’s like creating a library where people can find their own answers, but also having helpful librarians when needed. Focus on preventing problems before they happen and making it easy for customers to help themselves.
Do you have experience with scaling a startup? Have anything to add to our suggested steps? Personal Experiences? Let us know in the comments!
