Running a startup is no easy feat: once you’ve gotten your business up and running, your next course of action is to scale it efficiently—a buzzword in today’s entrepreneurial scene. But what does scaling mean, exactly? Simply put, scaling is the ability to grow your startup without compromising your revenue or the quality of your product. For many startups, this is easier said than done. A survey conducted by StartupGenom found that 72% of startup failures are associated with premature scaling. Without the right processes and decision-making startup founders can quickly find themselves in over their heads as they rush to deliver.
With that in mind, here’s what you need to know about scaling your startup:
Get the Product Right First
Many startup founders falsely associate scaling with bigger-budget marketing. Throwing more dollars at your marketing budget isn’t scaling; if your product isn’t foolproof, no amount of marketing will handle your sales. Instead, focus on testing your scaling potential with smaller budgets and sample sizes. Use data and user feedback to continuously make upgrades and iterations to your product offerings, and be sure that market research is a huge part of your process early on (consider hiring a market research firm for in-depth data).
Think about all the processes and tasks you’re involved in, day in and day out. Automation plays a major role in scaling. A truly scalable model is all about streamlining your operations, and to achieve this, you’ve got to invest in time and technology. There are many areas of the business that can benefit from automation: for instance, jFrog helps manage Helm charts for developers; QuickBooks helps automate payroll for human resources departments; and tools like Hootsuite automate social media management. Also, you can fully automate your accounts payable and receivable operations.
These processes might take some time to set up and learn on the front-end, but they will save you plenty of manual hours in the long run.
Outsourcing plays a major role in a startup’s ability to scale efficiently. Unlike corporations, startups don’t have the budget to hire in-house talent for every little need. And while you’re scaling, some of those positions don’t require a person in place full-time. With limited finances, you should refrain from hiring another in-house employee unless you truly have an in-house need.
Otherwise, outsourcing is key. You can hire freelancers to spearhead one-off projects, virtual assistants to help with calendar management and research, and SEO agencies to make sure that you’ve got everything covered. The options are endless here, and you can outsource pretty much anything. Don’t be afraid about relinquishing control or “giving away” business ideas; loss of control is an outsourcing myth, and ideas are rarely stolen from on-again off-again contractors.
Choose a Mindset and Method That Works
No matter how many articles you read on scaling your business, it’s clear that every startup is different. What works for one company might not work for you. Before you start executing a scaling plan, it’s crucial that the entire team has the right mindset for the path ahead. Every scaling method is personal to the company’s experience.
For example, while outsourcing is a great way to get tasks completed on a lean budget, another company’s version of scaling might include taking the time to hire the right in-house developer. Other companies might value speed. For instance, over at Facebook, new engineers to change code and employ a “move fast and break things” mindset. By doing so, Facebook is able to encourage everyone to make impactful changes quickly.
Don’t Rush to Take Money
Raising funds is stressful for entrepreneurs, but the prospect of new money is often worth the struggle for them. However, it’s crucial that you look at other funding sources before you start accepting checks from investors. Ask yourself, “does my company absolutely need money to survive this current stage?” The longer you can go while building a lean operation, the better.
Startups armed with new money are also faced with new challenges, and those challenges can be crippling. In fact, too much money without a solid plan for allocation and ROI can make the business model even more difficult to scale. And furthermore, you’ll have to answer to investors who want input in your decision-making; this level of pressure can be a price that’s too high to pay for many investors.