One of the most common problems that founders face is expanding their startups. Scaling a business isn't something that happens organically, on the contrary, it demands that multiple factors are perfectly aligned.
Undeniably, this is one of the most challenging tasks that any business owner, founder, or CEO needs to address while leading a startup. And naturally, most small businesses will experience growing pains because their evolution also means that these companies will outgrow their old self at some point. Consequently, this evolution is complex and demands the investment of high level managers and leaders to ensure the success of the scaling phase.
Although the expansion of a business is challenging, achieving sustainable growth is possible, the thing is that it needs a carefully planned strategy, rigorous supervision of the operations, and a clear vision of the company’s future.
Many business owners believe that growing a business is only about cost reduction, but scaling goes beyond profit generation, it implies achieving long term growth.
Related: Camel Startups And Their Advantages In Times Of Crisis
Growing vs Scaling
Once a startup is launched successfully and has gained enough traction, many founders start evaluating expansion alternatives, and here is when growing or scaling becomes a dilemma.
Growing a business suggests that the company’s revenue and expenses rise simultaneously; it’s a linear and controlled process.
Scaling is different. Unlike growing, scaling a business means increasing revenue, user acquisition, or any other measurable factor of an organization, at a faster speed without spending and acquiring new costs. At last, scaling is a form of expansion that boosts profit margins while also ensuring cost reduction.
When it comes to determining whether to grow or scale, founders need to consider that both options are possible, but choosing one alternative over the other will depend on what is best for the company, team, and consumers.
If scaling a business becomes the final decision, founders and CEOs need to acknowledge that this expansion will carry out challenges that need to be addressed.
The main challenges of scaling a startup
Regardless of the strategy, scaling up always comes with some growing pains, because distress is a natural part of growing. Developing a good scaling strategy is crucial, so much so that the most successful companies may be wrecked while scaling.
The good thing is that with appropriate planning and preparation, the most common challenges may be faced or avoided entirely.
But what obstacles can slow down or complicate the expansion process?
- Obtaining long-term objectives
- Managing ever-increasing data flows
- Not altering organizational structure as the company grows
- Getting bogged down in micromanagement
- Scaling before achieving product-market fit
- Focusing on sales and marketing rather than creating long-term demand
- Not creating a business culture that efficiently integrates new team members or independent talents
Related: How To Minimize Risks If You Want To Set Up A Start-Up
Identify the Best Time to Scale Up
It is hard to acknowledge when is the best time to scale up since this process demands that several factors are perfectly aligned. Market timing, the balance between income and outcomes, board opinions, and the business operating effectively, are some elements that need to be valued when deciding if it’s time to scale.
Also, many businesses overlook the talent component of the scaling equation. If the company lacks a team to manage the additional effort that expanding would need, then definitely, it’s not the right time to scale.
Once the potential roadblocks are identified, the next step should be to focus on the strategy that the business should follow to expand successfully.
Related: New Business Needs, Talent On Demand
Define your startup scaling strategy
- Hire the right team
Hiring the right talent for the business is mandatory because the company could fail if it does not have the right team on board. Also, founders should be certain that every team member has the same values of the business and is ready to grow as the company grows.
At this point, it’s necessary to consider if outsourcing some tasks is an option that fits the business’s needs. Hiring independent talent might also be a great alternative when deciding how to handle operative duties.
- Invest in technology and automatization
Another frequent scaling technique is investing in developing an agile, automated, and technological structure. By investing in digitization processes, the business can better serve its current customers and automate its operations, freeing up time for team members to focus on broader company goals and strategic priorities.
- Enhance the marketing efforts
Even with a great product and effective system, if the startup doesn’t have a strong positioning in the market, then approaching the desired customers will be highly difficult. Thus, creating a new, bold, and compelling marketing strategy must accompany the expansion of the business.
Though marketing is a challenge for many businesses, it is the only way to exhibit what the company can offer the market and to reach the target audience.
- Outsource when required
Big corporations can attract employees for nearly any position they may need, but this might not be the case for a startup that cannot sustain investing time and resources in ongoing recruitment. In these situations, outsourcing is an efficient strategy to maintain effectiveness during the scaling phase.
Delegating tasks to external teams saves time and money while allowing the internal team to focus on strategic activities rather than ordinary tasks.
Related: Myths Of Independent Talent
- Raise capital
Some startups face a big obstacle in their scaling path: not having enough cash flow to invest in their business. At this point, raising funds is a fast solution that will help the startup attract the top talent it needs, expand the features of its products, enhance marketing and sales, and expand its operations.
When funding is needed, businesses have multiple options to help them rise the capital they need to expand:
- Acquiring seed funding from friends and family members
- Reaching out to a venture capital
- Seeking angel investors
- Taking out bank or credit card loans
- Developing a crowdfunding campaign
How To Run and Scale a Successful Startup
Founders who want to thrive must be adaptable and flexible as they cross the road from the earliest sparks of an idea, guided by a forward-thinking business strategy and deciding how to scale.
In the end, scalability is a vision that accentuates the value of having the right systems and people to ensure an expansion. And, while there are no assurances of success in an industry where failure might seem inevitable, becoming “the one business” that develops into a sustainable scale certainly needs leaders with willingness to learn, an open mind, adaptability, and the audacity to seek the best top independent talent for advice.