Much attention is given to the beginning phases of a startup. After all, the very term “startup” emphasizes the importance of effectively establishing a new business. Entrepreneurs understand that a lot goes into starting a company, from coming up with a novel, salable concept and finding seed money to perfecting products or services and creating marketing strategies that help them stand out from the competition. The initial few months and years are critical to the survival of a startup and can mean the difference between flaring and then fizzling out or becoming a sustainable brand that becomes firmly established in the market.
Once a startup is established, however, it is just as important to scale the business properly in order to ensure that it can build on its success and hype, and thereby remain competitive and continue to grow. After the initial development process, scaling is arguably the most important phase a startup company will go through—and when it is done correctly, scaling becomes a continuous, ongoing process that reacts to market changes and informs both short- and long-term strategy development.
The various industries are full of stories about startups that began with a bang, but then eventually faded away. Meanwhile, only a handful of companies and brands become stable businesses with long-term profitability. Professionals understand that the one thing that the majority of successful long-term brands have in common is the ability to scale effectively and efficiently in a way that maximizes income growth while minimizing costs. Here are a few strategies for successfully scaling startups.
Timing
The first and most important step in scaling a startup is doing it at the right time. Attempting to scale before a company is ready will result in increased overhead costs, but without the income necessary to support growth. On the other hand, scaling too late means missing out on sales and growth opportunities, which can result in the loss of potential income, a weak, unrecognizable brand, a failure to keep up with essential innovation, and a general tendency to be outpaced by competitors.
In order to understand when the right time is to scale a business, it is important to maintain an objective, ongoing evaluation of the company’s status. Key performance indicators (KPIs) should be established and monitored on a weekly, monthly, and yearly basis. A strengths-weaknesses-opportunities-threats (SWOT) analysis should also be undertaken, and continuously referred to and updated as the company and market grow and evolve. Most importantly, the company should have a strong financial foundation built on fundamentals such as consistent cash flow, manageable debt, and measurable profitability (or realistic confidence that profitability will soon be achieved). Unless all of these factors are present, it is likely too early to start scaling.
Proactive Preparation
While a company shouldn’t begin scaling before it is equipped to do so, it’s never too early to start developing strategies for doing so when the time finally comes. This means working to anticipate what the scaling process will look like (bearing in mind that it is unique for every company). It also means hiring employees who have the skills and potential to not only help build the company in the present, but also help it to grow in the future. If the employees that a company needs in order to scale are already working there and contributing to the success of the company before the scaling process begins, then it becomes less complicated and less financially risky to undertake the scaling process when the time to do so arrives. By developing a strong, welcoming, innovative corporate culture from the outset, startups will naturally attract employees who have the talent and drive to support them in the short-term and help them to grow in the long-term.
The Role of Technology
The process of scaling a startup is much different today than it was 20 years ago. Prior to the globalization of the market through widespread Internet access and marketing through tools such as social media, most businesses were geographically limited in their growth. They were forced to grow outward slowly, often through the use of franchises, sales representatives, and other strategies that expanded their reach slowly and somewhat uniformly. Those that became firmly established in their respective markets eventually reached national and sometimes global customers, but most remained regionally relevant at best. In today’s era of interconnected, online commerce, however, virtually any company can go global at any stage of their growth—provided that they have the demand and capacity to scale at that level.
Taking this new dynamic into consideration, it is important to integrate the most recent technology into the scaling process where beneficial. This might include search engine optimization, online marketing, the use of social media influencers, and using cloud- and AI-based services to upscale information technology infrastructure and increase productivity. By leveraging modern technology to increase reach, streamline processes, access further rounds of investment, and tap into new markets, even small startups can successfully scale their operations if their fundamentals are sound.