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?
By scale, when people discuss it around startups, they mean bigger, don’t break things. You want to pull it out, like a rubber-band, and not discontinue or snap. Scaling is all about serving more customers, generating more revenue, and expanding your reach as the fire of your business continues to burn hot. If you consider this like upgrading your transport — first a bicycle, then a car and finally a plane — you are able to go longer distances and at higher speeds.
What is a scalable startup?
A scalable startup are created to grow big from day one. It’s planting a tree that’s intended to grow into a forest.” These are companies that have business models that scale better the more they grow, which means you add more customers without having to add corresponding amounts of resources. Netflix is prototypical — they can keep adding millions of new viewers without having to build new studios or hire armies of people.
How to scale a startup team?
When it comes to scaling a startup team, there are various Lego-type pieces to fit into place. Hire generalists first, then specialists, and keep specialists to a minimum. Instead, establish clear procedures for everyone to follow — similar to a good recipe that anyone can execute. Above all, treat your company culture like a garden; swing by and tend to it as it matures, or risk it wilting in strain.
What does it mean to scale your business?
To scale your business is to grow better and not necessarily bandarq wider. It’s about figuring out how to serve more customers without increasing your expense in direct proportion. Visualize, a cook who learns how to feed 100 as easily as they would learn to feed 10 — That is scaling. You are searching for means to scale your impact, but to do so efficiently and effectively.
When is the right time to scale a startup?
The right time to scale is when you’ve discovered your “secret sauce” — a repeatable process for delighting customers and making money. You should have consistent customer demand, a validated business model, and at least some cash in the bank. Just like when you’re sailing, you must wait for the right weather to set sail; you must wait for the right conditions before you start your scaling journey.
How do you scale without losing quality?
Making copies of a masterpiece is an art in its own right, requiring systems and standards to ensure the same work can be replicated thousands of times without losing quality. Write procedures, use automation effectively, and add quality checks into everything you do. Consider organizations such as Apple – they can create a vast number of devices with uniform quality.
What are the biggest challenges in scaling a startup?
There are three challenges that arise when scaling: preserving your culture, managing cash flow, and maintaining product quality. It’s like trying to steer a boat that is growing in size while you are constructing it.” You’ll struggle to hire the right people, to put systems in place and to make sure your tech is up to scale. Most startups die simply, often growing too rapidly and losing what made them desirable in the first place.
How do you know if your startup is ready to scale?
You are ready to scale when there is consistent demand from customers, predictable revenue, and processes can be repeated with confidence. Signs include having to tell customers to go away, hitting limits on resources or seeing strong market pull. If you notice roots coming out of the bottom, it’s time to repot — like a sprawling plant outgrowing its pot that’s long overdue for a transition to a container with more room to thrive.
What role does technology play in scaling a startup?
Now, technology is a multiplier for that scalability. It enables you to automate repetitive tasks, tap into larger customer base and operate in the most efficient manner. Better technology decisions make it such that you can manage growth without layering on heaps of more people or complexity. Imagine building a machine that can do the work of multiple people and for that to be scalable and at the same time profitable, you need the right tech stack.
How do you scale customer support as you grow?
So how do you scale customer support? The answer is figuring out how to serve far more customers while still maintaining that personal feel. You can use self-service tools, auto-responses for common questions, and a well-trained support team. It’s kind of like building a library where people are able to discover their own answers, only you also have librarians who can pop in and help if you ask for assistance. Get ahead of the issues before there are issues and encourage self service to make it easier for customers.
Do you have experience with scaling a startup? Have anything to add to our suggested steps? Personal Experiences? Let us know in the comments!
