Startups start small, from an idea, but can turn into billion-dollar unicorns like Amazon, Airbnb, and Uber. While only 0.00006% of startups turn into unicorns, startups can still scale into incredibly successful and lucrative businesses worth millions or hundreds of millions of dollars.
Scaling a startup is about fostering growth despite the odds stacked against new companies in an ever-changing market. If you think your startup is ready to expand, take on new challenges, and reach a new level, you’ll want to take it slow and get it right. 50% of all startups fail by their fourth year, so it’s essential to plan thoughtfully and make strategic decisions.
What is Scaling?
Scaling and growth aren’t exactly the same, although the terms are often used interchangeably. Growth is about increasing revenue through investments in your teams and technologies. It’s low-risk and relatively predictable. Your startup invests, increasing profits and creating more funds for new investments.
Scaling, especially for tech-based startups, is about manipulating existing resources and implementing new strategies to reach a wider audience and manage larger workflows. This is when your startup aims to increase reach and revenue without aggressively dumping funds into additional investments. Instead, it’s about process management, technological adjustments, and critical innovations to help your startup serve more customers and deliver more value.
Is it Time to Scale?
From this understanding, it may sound like prioritizing scaling is the better option. It doesn’t require as much investment and can provide more revenue in a shorter period of time. But scaling can be riskier and far more unpredictable than traditional growth strategies.
It all comes down to timing. Scaling a startup prematurely can cause all sorts of upheaval in your business and quickly reveal areas of weakness. Some signs that your organization has grown beyond its nascent stage and is ready to start scaling include:
- Strong Management and Leaders – Your startup may fall apart during the scaling stage if you don’t have a strong core team. You need reliable, passionate, and talented individuals willing to go the distance with your startup. These folks need to be influential in driving the forward momentum.
- Positive Cash Flow & Too Many Customers – If your startup is making way more money than it’s spending and you’ve found yourself needing to turn away customers because your company is maxed out operationally, it may be time to prioritize scaling strategies.
- Surpassing Projections – When your organization is consistently exceeding sales and profit projections, this is a very good sign. You may believe in your startup, but when you start outdoing your own aspirational expectations, the groundwork has been laid to make scaling less daunting if you play your cards right. Keep in mind, consistency and performance repeatability is key here.
If your company is not yet hitting all these marks, your team should consider keeping their heads down and continue working on core growth strategies. A promising sign it’s time to scale a startup is the feeling that your business is starting to run away without you. When you and your team are fighting to keep up with the success, scaling can take your business to the stratosphere. This can be a lovely problem to have if you’re willing to do what it takes to scale.
4 Strategies to Scale Your Startup
If you’ve determined your company is ready to begin scaling, there are a few key strategies to implement to move your company in the direction of serving more customers:
- Enhance MVP for Advanced Funding & Customer Acquisition
If you haven’t yet made significant changes to your minimum viable product, that should be one of your first steps towards scaling. You’ve conserved funds until this point and built a strong foundation for your startup, but now it’s time to further develop your MVP to ensure your product can support the growth needed at scale.
An enhanced product is the key to your next phase of funding. Investors will be keener to push extra funds your way if you have a scalable product to showcase. You can build the software in-house or hire a software development company like Modern Launch to build out your product according to your specifications. Keep in mind that product development and iterating on customer feedback should never stop. It’s important to focus on enhancing, iterating, and pivoting as necessary throughout the entire lifecycle of your product.
- Outsource Wherever Possible
During an expansion phase, your already busy team will face more work than ever. If your team is stretched to capacity, they can’t focus on doing the job you hired them for, with a high level of service. If the funds are available, now is the time to outsource everything you can (within reason of course).
Consider outsourcing software development, human resources, marketing, and legal while scaling a startup. Anything you outsource now, you can always bring back into your fold later on.
- Focus on Automation and New Technologies
Now that your startup is scaling, there’s no time for outdated technologies or labor-intensive processes. Identify and automate areas of your business that use up valuable resources like time and labor. Usually, this starts with human resources, payroll, billing, and invoicing.
You can also fine-tune your marketing pipelines and custom service offerings with new technologies. By investing in automation software and building out defined processes, your team can easily handle a growing customer base.
- Be Careful with Excessive Hiring
Streamlining processes, automating where possible, and outsourcing as needed are key to helping your current employees more effectively manage their workloads. Scaling is a time of growth, but that doesn’t mean your team needs to bloat to accommodate the growth.
If you’ve set up your team for success, then an employee that might have managed 50 customers can now handle 100. You’ll still need to hire but focus on quality over quantity. Continue hunting for and slashing bottlenecks in workflows, and your business will run more efficiently than ever.
Scaling a Startup with Modern Launch
If you’re interested in a software development agency that can enhance your product and drive business automation while you focus on running your startup, Modern Launch can help you. Software development is what we do every day, and we’re proud to serve our clients. You’ll have access to our talented developers, project/product managers, and established product development pipelines. We’d love the chance to help you along your scaling journey.
We hope you found this article helpful. If you have any questions or comments, feel free to reach out to us.
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