Let’s say your startup has survived the first few years. Well, now, you and your business might need to improve and go to the next phase of the company, which might be scaling up your startup. Scaling up can increase the survival rate of your business, which is essential in these times of uncertainty.
Getting your startup from the ground requires a lot of effort. But maintaining the business and scaling your startup further requires new skills and knowledge and brings new issues.
To have a successful scale-up in 2024, you need to know if it is the right time, how to do it, and what mistakes to avoid.
And luckily for you, we cover all the content you need to know:
- Scale up vs growth
- When should you scale up your start-up
- How to scale up your company
- Mistakes to avoid when scaling up
Scale up vs growth
So, what is a scale-up and is it the same as saying you are “growing your business”? Well, no. Growing your company means revenue and expenses grow at very similar rates. For example, when you get more clients, you need to increase your number of employees. So you get additional revenue, but also additional costs.
When you are scaling up, the situation is different. You don’t need an increase in expenses to have exponential revenue growth. In other words, you can maximise your profit with lower costs.
But the critical question still remains, what does that mean and…
What is a scale-up?
Your business is classified as a scale-up when your company has a proven business model, and you’re increasing your revenue. When you have a startup, you are still exploring its potential and discovering what products and services are best for whom. Well, the scale-up already knows all these things.
Scale-ups have already figured out their product’s market fit and can provide investors with more validation and robust results. In general, scale-ups are companies growing at 20% per year over 3 years.
Your startup can have a scalable business model but not become a scale-up because of a lack of customer growth. Or you can be a startup with revenue growth of over 20%. However, you still need the scalable infrastructure or product you offer.
But how do you go to the next phase? And is your startup ready?
When should you scale up your startup
Before starting your scale-up, you should ensure your startup is ready for scaling up. Having the right timing is a crucial point.
But don’t worry. We found four aspects your startup needs to have before taking your business to the next level:
1. Strong revenue flow
Going to the next level for your business requires a lot of financial investment. At this point, it’s not enough to be profitable. You need to analyse carefully whether your revenues are enough or not.
You can ask yourself: “Will the business suffer if you invest a part of your earnings into scaling? And what preventative measures can you take in case something happens?”
Predicting profits and controlling costs is essential at this stage. You can start by making a list of expenses. Then, calculate the approximate costs and define whether you can invest money in scaling up.
Remember that profit takes time to come. It can take at least 4 months to see a return on the investment.
2. Set goals are being achieved
This is the most vital sign of startup scalability. Startups don’t have much information to predict cash flow, costs, and further objectives. So, they observe market statistics and set goals following them.
When your startup meets and exceeds previously set goals, it might be time to reevaluate and scale up your company.
3. Good IT systems
If your company uses or promotes business software, you must ensure your IT systems can handle clients’ growth.
Your IT systems need to be able to store more information. If the systems only perform small tasks, scaling up might cause some trouble. But if your IT system can handle a lot of information and various tasks, you are ready to scale up!
4. Good teamwork
Look closely at your team and employees, and ask yourself, “Are they ready to bring innovative ideas to the table? Will they be able to handle new challenges and tasks?” Scaling up will need a team ready to have new tasks and ideas.
Some people might not be interested or ineffective as new tasks arise, so look at your team and understand whether the employees and teamwork will work in this new scenario.
How to scale up your company
Now that you know the perfect timing to scale up your startup, you can follow these critical points to scale up your company effectively and efficiently.
Develop a good strategy
Of course, having ambitions and a deep desire to make a dent in your industry is significant. Still, a good strategy for scaling up is the most essential. It doesn’t need to be a complex strategy; you can start by following these simple steps and create a strategy that works for your business:
- Create a list of strengths, weaknesses, and prospects of the startup.
- With the list, set a goal for each quarter, then for a year. You should include information such as market research and investors.
You can also ask other scale-up owners and businesses for advice and tips on creating the best strategy.
Select the right people
Having the right people on board is essential to scale up your startup. You should hire the necessary people at this stage and outsource the rest.
You need to hire people that will bring something new to the table, something that a machine cannot. Multi-skilled and innovative employees will be able to handle various tasks, stay flexible, and help you in times of rapid change.
Collaborate with others
This is the moment to have a growth mindset, create partnerships with other businesses, and outsource employees and projects.
Outsourcing teams and tasks will be the best solution for your scale up. It will cost you less money and reduce unnecessary expenses. Start building a network of partners, like providers, sales partners, and suppliers.
Are your processes automated, or is there much manual work in your business? To take your startup to the next level, you might need systems and technology that will help you automate your manual processes and tasks.
By automating and standardising processes, you can free up time and resources. It will help you access data faster, hire faster, pay more efficiently, and streamline operations.
Now that you have all the essentials to scale your startup, it’s time to boost your marketing. Let everyone know about your company and products/services! But how can you do that?
The solution is quite simple. You need to pay close attention to marketing and what types of marketing will help you when scaling up. Below, we have the four types of marketing:
- Direct Marketing: Word-of-mouth marketing. This is useful at the beginning of your startup development, but more is needed at the scale-up stage.
- Content Marketing: This is the goldmine for scale-ups. It has viral marketing and continuous value.
- Social Media Marketing: It is tricky because it depends on your company and social media. In that case, this method can help your business reputation and your employer branding improve.
- Influencer Marketing: This is a new type of marketing in which you cooperate with an influencer. An influencer is a person who is famous on various blogs or social media and can advertise your products to their followers. They will give a predominantly positive opinion about your products and encourage their viewers and followers to use them.
Make sure your startup can run without you
A promising scale-up can work without a CEO. This means you need to onboard new leaders that can manage different teams without your help. With more employees and tasks, you need more leaders and management positions. Build a good hierarchy and ensure your company can keep running without you.
Mistakes to avoid when scaling up
Before you start scaling up, be careful and try to avoid the following common mistakes:
Bad planning (or none at all)
Scaling your business requires a lot of strategic planning and commitment from everyone in the company. Sometimes resources or experience will be lacking, so you cannot let loose on your planning and have broad goals or focus on revenue growth.
Systematic planning and prioritisation are essential in your company. Everyone must agree and understand the goals your company is trying to achieve!
Bad hiring process
The hiring process is essential to your success, and there are many ways to mess up easily. You should hire employees who will shine in your company’s new direction. Ask them questions which will allow you to see if they are a good fit for your business and the changes you are making.
Also, don’t hire in a rush just because you need to fill a position quickly. Create standards and processes in your interview process which will prevent you from bad hires. You can check our interview question templates and get the best questions for the positions you need to hire!
Scaling up your startup means you must let go of the reigns and let others take charge. Effective delegation is essential with all new leaders, especially in this hectic process.
You can’t do everything yourself and will have to give some control to others to take the lead on crucial tasks and projects. This will lead to many benefits, such as employee engagement, spread out responsibility, and a committed workforce.
Losing sight of your goals and values
With all the hectic processes and the increased number of employees, you must constantly set your eyes on the goal. With this, you risk spending too much time and money on activities that lead you nowhere because you need to know what you are trying to accomplish or why.
You can avoid this by asking yourself and your managers to come up with clear answers to the following questions:
- We are scaling up for what reason?
- How will we get to our final goal? What incremental goals will we need to accomplish?
- How does each department contribute to these goals?
Taking consideration of these mistakes, you will be able to take your startup to the next level and scale up today!
You can also read other articles we have to help you scale up your business and improve your processes: