When it comes to starting a business, tasks like creating a product, assembling your team and chasing investments is challenging enough. Launching a startup, and making the transition from small, bright-eyed entrepreneur to a larger, more sustainable operation, is another beast entirely.
If you’re one of the lucky ones who have managed to scrape their way through the fraught landscape of your startup’s early days, then you might be in the early stages of scaling.
Scaling is one of those business buzzwords that gets repeated ad nauseam until many entrepreneurs aren’t even really sure what it means anymore. The most important thing to note here is that growth does not scalability make.
Acquiring a new customer that adds revenue is technically growth, but if you then have to shell out more on overheads to service that customer, that’s not scaling. Scalability is about boosting your bottom line over time by increasing revenue, while at the same time keeping cost increases to a minimum so that you don’t cancel out your profit.
Scalability is central to creating a successful, and long-lasting, business. It’s something that budding entrepreneurs need to think about in the embryonic stages of creating their business model.
Given the high rates of collapse for startups, you might think that factoring in scalability when creating a business plan is hubristic, or even tempting fate, but not planning for scaling your company creates a self-fulfilling prophecy. Startups that don’t account for scalability won’t be able to grow efficiently and may even find themselves another unhappy statistic in a pile of unsuccessful initiatives.
It’s easier to plan for scalability early on than to try and force a square peg into a round hole once your business is already up and running.
Building a scalable startup (and why that matters)
Scalability is the first thing on an investor’s mind when they look at your startup.
They will consider the whole picture; including your product, your staff and your long-term business plan. Being able to show that you have a plan for how you’ll scale your business and maintain profitability in the long-term can make or break an investor’s interest in your company.
So, how do you build a scalable startup? It’s about people, planning, structure and support.
Create a strong business plan (but be prepared to change it)
A business plan isn’t just something to flash at investors. Your business plan is for you, too; it maps out your goals and objectives, and how you intend to achieve them.
That said, if you want to be attractive to potential investors (and who doesn’t?), then you want to pitch yourself as a scalable startup from the outset, and your business plan is a great way to achieve that. To be truly scalable, you have to lay a solid foundation and be prepared to flex where necessary, so you can achieve continued success even when the goalposts are moving.
Investors won’t shell out on a business that hasn’t considered the future. Startups that are willing to revisit their plan and restructure their strategy are much more likely to find funding than those that don’t build in some elasticity for growth. Focus on innovation, and plan for change.
Build a structure that’s easily scalable
At the heart of every successful startup is a clear vision. Great entrepreneurs think about how the product or service they’re offering will be relevant in 1, 2 or 10 years’ time, and how they’ll adapt to continue to meet customer needs in this ever-changing world of consumerism.
You should make the same considerations about your company structure. Maybe you envision being at the helm of your startup forever, maybe you don’t. Either way, you need to map out a corporate composition—primarily your management structure and your business processes—that can be scaled up fast without compromising your operations.
In order to remain profitable, and therefore scalable, as you grow, your startup should remain as lean as possible for as long as possible. But even if you’re not suddenly adding additional staff, you do still need to set up your company and align your people in a way that will be able to effectively manage your growth and handle more business.
Many startups hit a ceiling because they’re not structured properly and become too dependent on their founders. You can’t scale a business if everyone is still relying on one central point of management for all their direction and decisions. Embrace delegation and be prepared to resist the approach where everyone does whatever needs to be done in favor of defined roles and hierarchies. If you absolutely can’t do that from the outset, then at least detail how your organization will operate when you’re ready to scale.
Invest in people
It’s not just having the wrong co-founders that can cause your business to fail to scale. Every member of your team should be aligned with your plan for today and your vision for tomorrow.
The people you bring on board early on in your startup’s journey have a big impact on the durability of your business. As your business grows, the culture that you’ve created, consciously or otherwise, will be amplified.
Bad habits scale—if you have a problem in the early stages that you don’t deal with, then it’s only going to be magnified as you grow. This is especially true when it comes to scalability, as often you’ll be changing the way you work to try and do more business without spending more money on things like staffing.
Make it clear what you want from your team at the very earliest opportunity, hammer home your values, and defend them. Your people are your foundation; if you allow cracks to form, things will crumble as you try to scale up.
Get the right tech
Having the right tech at your fingertips can make all the difference when it comes to making that all-important transition from startup to scale up. A good tech stack can help you engage with your customers, monitor important metrics and document your processes to make scaling what you do much easier.
Software implementation can be notoriously disruptive, and trying to scale a startup is tricky enough without throwing various roll-outs into the mix. It’s far better to bring in a piece of software in the early stages, allow your team to truly get to grips with it, and have it ready to wield when more business starts coming in. You don’t need to go wild with your tech investments; start with only what you need, automate what you can, and make sure you’re buying into flexible software that’ll grow with you.
Put in the work now, because factoring in scalability when creating your business is imperative to its growth down the road.