Nida Bohunr | November 30 2021
Founding a startup is all well and good but, where do you go from there? One of the questions we get asked frequently is how to go about scaling up the startup. No one starts a business only to have it stagnate in the water. The aim is to see it grow and reach its full potential. But, starting a business and scaling it are two completely different things.
Sometimes, it’s not the founder who wants to propel growth but the other way around. Some startups prove so popular and fulfill such a unique service that they need to scale up to fulfill the demand. But, the question remains – how does one go about it?
You must have seen this word a lot in your financial papers, and your business magazines; but what does scaling mean? It is very different from growth, because it focuses on increasing revenue while increasing efficiency. There is no one-size-fits-all scale-up strategy that can be applied to every business and startup in the world. It’s more organic, and each startup needs to develop its own strategy with the tools in hand.
But, there are some breadcrumbs you can follow. The fundamental idea of a scaling-up strategy is to get as much information and learn about three areas of your industries and startups ecosystem:
Resource providers – potential suppliers of both material and human resources.
Forces and trends – shifts that occur in your organization as well as the industry at large.
Allies and rivals – potential partnerships, collaborations, and competition to watch out for.
You need to set this groundwork before you can even think of taking any steps to scale your startup.
There are seven practical steps you can take once you’ve formulated the beginnings of your scaling strategy:
You need to have a very thorough understanding of who you are and what you bring to the table. It will be impossible for you to scale your business if you don’t know the parameters of your product or service reach, or its potential to evolve and upgrade. Once you know what you offer inside out, you can formulate a scaling plan around that.
Standing out is imperative to the success of any business. Make sure your marketing strategy differentiates you from your competition and there is no confusion. Increase your visibility and position your startup as the up and comer, the one to watch out for. The target audience is limited and you need to ensure all eyes are on you. There is no point in scaling if there aren’t enough potential buyers.
There needs to be short-term and long-term funding prepared before you take steps to scale your startup. If there aren’t enough funds to support your strategy, it will arrive dead in the water and hemorrhage a lot of money. Be aware of which areas will require the most funding during the scaling process and how much will be needed in case of unexpected expenses.
Scaling is a long-term goal and can take anywhere from six months to ten years. Keep a detailed timeline, and tasks to be performed in writing to keep you on track. Pinpoint the startup’s strengths and weaknesses to assess as you go along. The aim is to make it a more efficient business model, and not just a profitable one. From things like future fundraising avenues, growth strategy, and risk management, to digitalization and internalization, keep it all on paper.
The startup’s bookkeeping needs to be immaculate. You need to know where each penny goes to be able to strategize how much you’ll need for scaling and growth. If the current department is lacking and can’t handle the workload that scaling and growth will bring, you can outsource the department.
Increase the scope of your operations. This could be for as minimum as a year to test the waters. The steps that come before this are supposed to weed out any weaknesses in the operations that already existed, so when you scale operations it’s a smooth ride. This could be expanding your office space, opening a new store, increasing production, or upgrading an app.
When the operations increase, chances are you’re going to need a larger team to handle the increased workload and the expanded parameters of your startup. Just like scaling strategies, there is no one right way to scale a team. You’ll have to play it by ear and bring HR on board. Identify which areas need the extra pair of hands, and minds. Which are the most important? Fill positions in as needed.
There is a pessimistic saying in the industry that about half of the startups survive their first five years and only 1 in 200 ever scale up. Don’t be discouraged. There is no set timeline for when a startup should scale by. Just like children, they keep their own pace and reach their milestones when they’re ready. Some see immediate success and scale too soon, but then there is a lull in the market that they didn’t expect and they’re stranded. Some take things too long, not capitalizing on opportunities when they present themselves.
The key is to have an understanding of your startup and what you want from it. If you follow the scaling strategy and the steps to scale your business, you should see success sooner than you might expect. But, remember that there is no rush. As long as the startup is making money, and is seeing steady growth, keep your hand in the game. Look out for opportunities, keep track of the trends, and don’t let the chance to upgrade your product or service go. It can change the landscape of your business in no time.
A highly skilled accounting professional at Monily, having extensive and diverse experience of working in US healthcare and agriculture industry. Nida is a CA finalist with expertise in Bookkeeping, Auditing, Bank Liaison, Tax Preparation, Accounts Payable, Accounts Receivable.