The Challenge: Scaling Up Startups

Startups companies are constantly pushing the limits to grow and scale as quickly as possible – all without running out of funding or exceeding their bandwidth. At all startups, this process will include growing pains and struggles as leadership tries to find the business’ identity, core messaging and target market.

Unfortunately, the failure rate for most startups is incredibly high. So how do you make sure that your company beats the odds and succeeds?

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Early Growth

In the early stages of business growth, almost every startup begins with an idea for a product that addresses an underserved market, a detailed business plan and a whole lot of optimism. The business then goes through a series of growth phases, starting with:

  • Brainstorming
  • Development
  • Growth
  • Setback
  • Renewal
  • Pivot
  • Growth

These phases can repeat over and over again as the business scales, and each phase of growth will present new and varied challenges. The key to start-up success is surviving and overcoming each of the setbacks, and finding the right solution to each business problem that crops up. This includes trying a number of solutions that may fail, and fail again, but your team must come back with yet another idea and pivot quickly. If you allow every setback to drain too much of your company’s valuable time, money and energy, the growth rate of your business will slow down and possibly grind to a halt.

Barriers to Growth

There are a number of factors that can sink your startup. The most common challenges include:

  • Fatigue: With every member of your team working long hours and pouring effort into the company day in and day out, burnout can be a serious concern. You have to make sure to use your resources effectively, and not put too much pressure on any one individual or team.
  • A Reactive – not Proactive – Mindset: Your company needs to have a proactive plan for the business, and not just react to problems that come up. Scrambling to put out fires every day is guaranteed to exhaust your team, and waste your energy.
  • Unrealistic Goals: Many startups begin with endless optimism and enthusiasm and initially, this can be an asset. However, you cannot allow your belief in the company to blind you to problems or the realities of the market. Great leadership is able to diagnose problems and find realistic solutions for them.
  • Bad Budgeting: Don’t blow cash left and right on things you don’t need or expenditures that don’t offer a high enough ROI. If leadership is running out of money before the end of the month, this is a serious concern. Successful startups have a long-term budget and stick to it.
  • Missed Opportunities: Startups can’t let even a single business opportunity slip through their fingers. If your sales team identifies a new market for your product or marketing wants to try out a new channel, leadership needs to support experimentation and try new things – discarding what doesn’t work and doubling down on what does.
  • Pricing Problems: You can’t sell your product for too little, and also can’t sell for too much. Your product pricing has to be a delicate balance between offering a great price to customers, and keeping a large enough profit margin to keep the lights on.
  • Poor Hiring: A big part of scaling is growing your team with high-quality talent. If you’re not hiring the right people, you can waste resources training someone who isn’t a good fit for your company. Create a strong startup culture, and then try to find candidates with the right skills and the right qualities for your team.
  • Undefined Roles: Many startups begin with a small group of people who do a little of everything, but scaling requires specialization and more defined roles within the company. As you hire, create strong leadership positions to help guide your team through the growing pains.

Scaling Up and Out

Truly scaling a startup business model can be like juggling 100 balls in the air all at once, and not dropping a single one. There are dangers to both scaling too quickly without a well-thought out plan, and scaling too slowly to generate revenue. But if you are able to successfully avoid or address the barriers impeding growth, you are on your way to being one of the startup companies that survives.

As you start to grow, you need to shift focus away from raising capital from investors and focus on creating repeatable and scalable processes to grow your business. This can include shifting management roles, bringing in new people, or making some big changes to the overall strategy. At this point, startups that can be flexible and agile are the ones that will succeed.

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