From Startup To Scale Up: Are You Ready To Transform?

It’s not a secret that few startups become major international corporations. Scaling up is a time-consuming process that requires much effort. If the revenue generated by your company tends to grow consistently from one month to another, it may be time to expand the business. Read on to know whether your company is ready to scale up and how to do it correctly.

What Is the Difference Between Growth and Scaling?

Growth is not equal to scaling. If the revenue is growing along with the investments, it is not scaling. For example, when the number of customers is increasing, you have to increase the number of employees. In other words, the more you earn the more you invest and vice versa. This is growth, not scaling. The scale-up process begins when you don’t need to invest more to get more profit. This is an exponential growth of revenue with minimal investment.

An example of scaling up is Google’s experience. As the diagram below shows, in certain periods, the company got a lot of new customers with no extra investment.

Is It Time to Scale Up?

Experts believe that choosing the right time for scaling is crucial. Thus, according to StartupGenome Report, most (74%) startups collapsed due to their attempts to scale up too early. Meanwhile, there are clear signs showing that it’s time to scale up your business – try not to miss them.

1. Initial goals are achieved and exceeded. When you launch a startup, you don’t know for sure which results you will reach. So, you set approximate goals based on the experience of other companies. Once these intermediate goals are achieved and exceeded, you may consider the need for scaling.
2. The revenue significantly exceeds expenses. Your business must be not just profitable. It must bring enough profit for you to invest in scaling without affecting the current business processes in any way. Keep in mind that your investment in scaling can return only in several months.
3. You have a strong IT system. Before scaling up, you need to make sure your IT-system is powerful enough to cope with an increasing load.
4. Your team is ready for changes. Will your employees cope with a higher load? How many specialists will you need to hire? Are your employees motivated and competent enough? Answer these questions before deciding on scaling.

Getting Ready to Scale Up: 7 Steps

Once you’ve decided it’s time to scale your business, you can start getting ready for the transformation. Here are seven basic steps to consider.

1. Creating the Strategy of Development

A good strategy should be simple and transparent enough. At the same time, it needs to be comprehensive. To develop the right strategy try to single out your company’s benefits and drawbacks. Define your major goal and split it into smaller goals for each year/quarter/month. At this stage, don’t be shy to consult experts or experienced business owners.

2. Finding Ways to Automatize the Business Processes

Technology is everything. There are plenty of modern solutions that help optimize the workflow by routine tasks automatization. Here are some of the most popular ones to consider.

• CRM, which stands for a Customer Relation Management system. There are some good ready-made CRMs to choose from; alternatively, you can order a unique CRM development. Such systems store all the information about your customers and help manage this information most effectively.
• Cloud storage space. The cloud technology is used for storing and processing large volumes of information. It can be of use if your business is growing, and the customer database is getting too large. If you are an owner of an online business, you may consider the possibility of placing the entire project on a cloud.
• ERP, which stands for an Enterprise Resource Planning system. When the company is getting too large for you to plan everything on yourself, it’s time to make use of an ERH app, which can replace several specialists at once.

3. Outsourcing

Scaling up has nothing to do with overmanning. There’s no need to hire all sorts of specialists. Outsourcing is an effective way to cut down the staff and reduce expenses. In most cases, developers, designers, and copywriters can be outsourced. At the same time, make sure you have all the essential specialists in-house and these specialists are motivated enough.

4. Improving Marketing

Scaling is impossible without promotion, while the promotion is impossible without the right marketing strategy. Depending on the type of business you may take advantage of the following types of marketing:

• direct marketing;
• content marketing;
• social media marketing;
• influencer marketing.

5. Improving Reputation

This step is closely related to the previous one. The results of your marketing campaign need to be strengthened by building good relations with your customers. If you succeeded in gaining new customers, it’s time to think about branding. It can include website creation, and if your business is a website, think about its unique design, logo, and so on.

6. Staffing

We’ve already mentioned that you should opt for outsourcing whenever possible. At the same time, it’s important to make sure you do have all essential specialists in-house and they are professional and competent enough. To make a brief self-check answer some questions about your employees:

• Are they performing essential tasks that can’t be outsourced?
• Can they do something that machines cannot?
• Can one person perform several tasks?
• Are they creative thinkers?

If the answer to most questions is “yes”, probably, you are doing everything correctly.

7. Making Your Company Function without Your Participation

Scaling makes a business more difficult to manage. At the beginning stage of a startup, you can control everything on yourself; however, a grown-up business requires professional managers. Your primary task is to build a proper hierarchy and appoint managers that will take control of the business processes while you are away.

Things Not to Overdo

Trying to reach the best results, business owners tend to waste time and money on unnecessary things. Meanwhile, there are, at least, three areas where it’s important not to go overboard.

• Withdrawing money from the business, spending too much. Big money often gives a false feeling of freedom. Try to stay reserved and disciplined.
• Hiring too many people. Make sure your full-time employees are essential specialists engaged in the company’s core activity.
• Expanding the product line/the field of activity. If you’ve reached your goals with one product, you don’t have to add something else immediately. Instead, focus on your main product or service improvement.

Other Companies’ Experience

No matter what stage your business is now – sometimes, it makes sense to have a look at other companies’ experiences. Let’s take just a couple of examples.

Letgo

This online marketplace reached a revenue of $1 billion for just two years of its existence. Its co-founder says that you can’t avoid obstacles and pitfalls in your way from a startup to a big corporation. But you need to take your obstacles as a learning experience and learn on your mistakes as well as the mistakes of your rivals.

Cobone

Cobone is a discount service that has grown from a small startup to an internationally recognized brand. It’s co-founder Pieter Sleeboom recommends startups to focus on the division of roles. Every employee must play his/her role.

Scaling up a business is a time- and resource-consuming process. We hope our recommendation will help you to scale up with the minimum hassle.