According to the Small Business Administration, only about half of all new businesses even survive to reach their fifth birthday. Only one-third of those make it to the 10-year mark. Scaling up a startup takes clarity of purpose, a feasible business model and a team that is ready for the challenge of operating in a fast-paced environment.
Some startups seem promising with decent cash flow, repeat customers, and a stable culture but scaling up is no small feat. Here are some of the key aspects of sustaining a rapidly growing startup in a fast-paced environment:
Grasp the tension that exists between scaling up quickly while also maintaining a firm culture foundation for your team. When the company starts to experience growth, it is harder to define core values. Developing a culture from the beginning will help guide peoples’ expectations and behaviours.
Maintain transparency within the company/ business. The team should know and understand the vision, objectives, and strategies of the business. Create and maintain an open communication environment and proactively share information and updates about the company.
Revise and understand your customers’ expectations. Businesses scale-up mainly because of their customers – the people bringing in the revenue. It is important to consider your customers’ needs and expectations when scaling up. Keep on interacting with your customers to keep their needs at the forefront of your scale-up.
Stay focused. Most scale-ups die because of the excess of opportunity rather than lack of it. You need to know exactly what your focus is to avoid excessive stress and disorganisation. Do not go overboard trying to add everything new at once. It is important that you do one thing better than be average at everything.
Hire the right people. Fast-growing companies are tempted to grow their hiring process to accommodate their growth. Have a process that helps you hire the right employees for the job and not just fill up with those who look good on paper. According to signature analytics, a bad hire costs a company 30% of an employee’s first-year salary.
Closely manage your cash flow. Scale-ups have a lot on their plates but running out of money should never become part of the problem. Taking a proactive approach to cash flow management ensures that the business forecasts the right timings of when cash is to be paid and received and whether the company is at risk of running out of cash. If there is a risk of running out of cash, have your action plan in place early on and get ready to impress investors earlier than you have intended.
Focusing on marketing too little or too late. Many entrepreneurs think that marketing is a function they can do without, so they don’t give it enough attention until it comes to gaining traction. Too little strategic focus on marketing can result in becoming dependent on one marketing channel only. You need marketing to scale-up and this has to be a strategic decision with clear KPIs and ROIs that are well measured.
Have the right infrastructure. Nothing scales automatically, you need to have the right infrastructure in place. Your systems and procedures should be set for scaling up to keep up with the pace and make optimal use of your company’s momentum.
One of the biggest challenges, when you lack experience with scaling up, is that you don’t know what you don’t know. CEOs and executives of fast-growing companies struggle and fail because they try too many things at the same time. It is really important to be focused and disciplined. Remember that for every problem you encounter, another business has already faced something similar, you can implement the tools and strategies that have proven to work.
Experience is the teacher of all things.