There' no one-fits-all scaling recipe, however, there are a few things you have to be mindful of to even begin thinking about the process. See tips based on our 12+years of experience in cooperation with scaleups.
Growth vs scaling — what’s the difference?
It seems that in the modern business world there’s nothing more important than growth, even the big players are judged on their quarterly and annual growth rates. And it’s the same for startups when it comes to scaling. And they’re not quite the same. But what’s the actual difference?
To put it simply, growth implies you add revenue while also increasing the costs and resources incrementally. When a company adds new people, tech, capital and it increases their revenue, we can say the company’s growing.
Scaling is a bit different as it’s growing revenue more quickly than the costs. Whereas increasing the headcount of your sales team is considered growth, finding a solution for your already existing sales team to deal with a larger client base is considered scaling.
Both have different opportunities and constraints tied to them, but because of the growth’s biggest challenge — the amount of resources you need to sustain the constant growth, many companies are turning to scaling as the answer. It’s good and it’s bad as there’s no one-fits-all recipe for successful scaling and every company has to find the path on their own. But there are a few things to be mindful of.
You need your product-market fit (and better check it twice)
Spoiler alert: your users might not always be your customers (e.g. if you offer free plans, not the same people will pay to use the service, and even if they will, it’s not something you can freely assume without researching it first).
Before even thinking about scaling your business, be sure that you established your actual product-market fit, know exactly where your customers are, what their needs are, and that the solution you propose checks the boxes enough for them, and also for your business, so you’re profitable.
If we’re talking digital products, a Product Design Workshop held by an external contractor that doesn’t bear any connection to your business might be a good idea. No matter your product stage, it’s always beneficial to evaluate and reevaluate your business assumptions based on the real-time market conditions and on the data you gathered.
Ideally, a workshop comprises people with different backgrounds together to sit down and brainstorm what’s on the table. It’s a highly customizable solution and it can be tailored exactly to your business need, including assessing or broadening your product-market fit. Although it may not be a magic pill for all your troubles, it’s definitely an eye-opening anti-risk cushion with proven results to work in your favor.
See more on Product Design Workshop
The actual capacity to scale (so basically a product strategy)
Many companies are fortunate enough to find their niche, but the question remains: are they able to scale it further? And react to the market changes if need be?
Even when you’re successful with your established niche, multiplying the initial success is different from having an actual plan on how to design the organization and prepare it for different scenarios as you scale. The common “rinse and repeat” approach, ignores the fact that the wave of growth you may have stumbled upon, will, undoubtedly, end, and hence, it cannot replace a solid product strategy. And by strategy we don’t mean your mission, vision, customer segmentation documents, etc. They’re all very beneficial, but only as add-on points to the actual strategy.
The market is full of examples of amazingly thought-through products for a given niche that failed at scaling. Though the exact reasons may vary, they’re all somehow connected to the strategic standpoint of the organization's structure and planning. Workshopping and the mindset of “incessant questioning” of your company’s adaptability to change and ability to scale is necessary to actually do it. It allows you to react to risks in real-time and in overall, be more prepared for any changes, both inside and out in the market.
Only create processes that will work in the future
Standardization is not a bad thing when it comes to organizing your business and it becomes a necessity when you scale. The lack of standardization can lead to a lot of confusion, repeated conversations, doubled responsibilities, and more. Contrary to the popular belief, standardizing your organization’s efforts does not constrain the company’s creativity, it embraces it as employees don’t need to spend their time reinventing every process on every occasion when something is done.
Prepare your organization to deal with an increased demand, headcount, etc beforehand and define processes that are repeatable. Remember to apply a filter — if a process cannot be scaled to suit an increased demand, workforce etc, maybe it’s not beneficial to implement in in the first place.
Hire for quality, both in-house and external contractors
Cliché or not, a good team goes a long way. When you’re scaling, it’s easy to get into the mindset of hiring just good-enough people and move forward with your work. But hiring the wrong people is one of the top reasons startups fail. Considering it takes approximately 42 days to fill a position, it’s best to focus on the positions that bear the most impact, but also present the right culture fit to your company. Finding people with aligned vision and values, makes it easier to maintain your organization’s culture when scaling.
It is the same when choosing your external agency. Happy and vision-aligned team members are productive team members, regardless of their place of employment. Sometimes it takes only one passionate person to induce this kind of spirit inside a team and it’s definitely worth searching for this kind of people when hiring. Ergo, it’s really worth the effort to screen your external contractors just as you would screen your future employees and find that perfect fit, that makes you and your team comfortable to work on the daily.
See more about team extension and culture-fit:
Summary
There's no running away from your product-market fit; no matter the economic conditions this is your go-to research territory that needs to be exercised a number of times to enable successful and sustainable scaling of the business. Apart from this and eliciting a solid product strategy allowing you to detect risks in real-time, the other factors are mostly internal and in the way you prepare for the whole process. It's hard to forget that Instagram had only 13 employees when they were acquired by Facebook. Thinking about standarization from day 1 and mindful hiring will prepare you better to deal with scaling later.
Check out also
