How to Scale a Startup. The Definitive Guide
Posted 31 May by Sophie Kleshchuk
One of the biggest known challenges that founders face is to scale their startup into an established entity - one that is fully functional and decently profitable.
Scaling is more of a death-or-glory phase for any business which can potentially define its growth or cause a full shutdown. Most often, scaling doesn’t confine to a particular stage of a startup that can be achieved by following step-by-step guides.
When it’s time to scale a startup?
There are a lot of factors, including the market timing, ideas from the board, or even the organization’s revenue and results.
More so, if an organization intends to scale at the wrong moment, it may lead to more serious issues that can not only impact existing operations but also shakedown macroeconomics for a longer-term.
If industry experts are to be believed, 70% of tech startup failures are caused by premature scaling.
Without the correct guidance, organizations find themselves prematurely trying to grow or follow the wrong strategy to encounter negative results. But luckily enough, by following the right strategies and best practices, it is very much possible to prevent such situations from occurring while scaling up.
Though challenging, growing a startup is simple with the right guidance. This article delves into various factors to success while scaling up a business, whether through an in-house or an outsourced remote team.
Benefits of Scaling a Startup
Scaling up a business is the process of growing revenue, user acquisition, or any other measurable aspect of a business with limited resources, efforts, and cost.
Expanding a startup often is a major program that involves extensive planning for growth while mitigating risks associated with unforeseen challenges.
Efficient planning for an organization’s growth brings numerous benefits including:
1. Enhancing Effectiveness. Organizations are able to plan for various circumstances while ensuring their operations can run efficiently in different market conditions.
2. Business Stability. With increased revenue and efficient planning, organizations can factor in business resources to stay operational throughout the planned duration.
3. Flexibility. Putting up with the adjustability of the socio, economic or geopolitical changes by perceiving where and when to change scalability levels as required.
4. Long Existence. Businesses that plan well are likely to have a longer and more successful operational lifespan once they transition to an expansion mode.
5. Competitiveness. Scaling up gives the business a competitive advantage. The advancements make the organization a stronger competitor, making its product/service stand out.
With these in mind, organizations also need to ensure that they choose the right scaling strategy to achieve expected positive results.
A proper scaling strategy is one that clearly outlines steps and plans required to initiate changes in initiatives, processes & policies, and delivery of service. Let us delve into these in detail.
How Do Tech Companies Scale-Up Operations?
One of the most important factors of scaling a business successfully is to build a team of efficient professionals who are experts in their individual domains.
More so, such a team also requires outstanding leadership that keeps the team motivated and achieves difficult targets.
For organizations that rely on technology, they may choose either a remote or an in-house technical team, however, there are different guidelines for both models.
Scaling Up With a Remote Team
Here are 6 essential practices of scaling up a business with a remote development team:
1. Build Up a Favorable Remote Team Design
A remote team consists of both people and systems. It is to an organization’s advantage that it creates a friendly environment of team members for efficient productivity and efficiency.
2. Come Up With a Culture for the Remote Team
The secret to forming a high-performing team is to create a culture that consistently motivates and supports it. With highly skilled people giving their best, an organization grows faster and smarter.
3. Enhancing the Hiring Process
Knowing the role you are hiring for is essential. It is of utmost importance that in the planning phases of the growth, organizations identify key skills and experience levels. Onboarding the right resources, and then giving them the liberty to innovate are always the keys to a successful startup culture.
4. Design an Onboarding System
The onboarding system helps you to integrate and inform the newly hired remote team members of how your organization operates and its goals. The induction process must be straightforward and simple that clearly outlines where the organization is today, and where it wants to be. While communicating this, the newly hired member should clearly understand his role and its importance to the organization’s success.
5. Taking Use of Right Tools
Organizations must ensure that they use the right tech stack and tools that support a remote model. As such teams depend on efficient collaboration and efficient management, providing them with the support of the right tools is considered critical.
6. Granting Ownership
Frequently remind team members of the duties given to them and inform them that it is their responsibility to ensure they reach the required standards. This helps keep them on their toes, working toward producing the best results for the organization.
Scaling Up With An In-House Development Team
Similar to leveraging a remote team, getting an in-house development team comes with its own merits and demerits.
While setting such a team comes at an increased cost and the effort of forming the team, efficient communication and collaboration in such a model is always the biggest advantage.
As an internal team, the organization also gets insights on roadblocks and faster decision-making.
Here are 6 essential practices of scaling up a business with an in-house team:
1. Growth Commitment & Leadership
A team is as good as its leader. As a leadership highlights its willingness and readiness to grow, not only does it define the path and objectives of the scale-up strategy but also gives the team starting motivation to collaborate and succeed together.
2. Create a Large Management Skill Set
A large management skillset simplifies processes. This makes most processes still executable in the leadership’s absence. In return, it also helps save time while allowing other members of the team to assume leadership.
3. Create Collaborations
Building collaborations help is one of the most crucial parts for an organization, whether they are using a remote or an in-house development team. This means all members of the scale-up project including Developers, Operational Execs, Testers, etc. are connected and communicating. This also breaks operational silos and forms an extremely efficient model that helps save time and cost to a great extent.
4. Set Up a Standardized Process
Leaders must put limitations in place. This helps organizations regulate the extent to which code versions are changed, keeping in mind the available resources, including time, money, or technical capabilities.
Customers must be involved in an organization’s growth strategy too. It is recommended to get first-hand information about a customer's experience with the MVP or the real product. With such information, an organization tends to get real unbiased feedback that matters to the success of its growth.
Scaling Up a Business: Success Factors
An organization prepares for upscaling by planning for the possible outcomes that are expected in the future. Planning helps identify measures and precautions to take when unexpected situations occur during upscaling.
Here are the key aspects of the planning that helps businesses prepare for the unforeseen:
- Clearly identify business objectives.
- Have enough financial support that supports the scale-up project. It must be noted that the financials required for scaling up must be projected differently than running regular day-to-day operations.
- Have reliable IT systems as enablers to the scaling activity.
- Forming the right team (either in-house, remote or hybrid) that you can rely on.
- Clearly identify critical components of technology that are enablers during and after the growth phase.
- Maintain the right documentation, version control, and code changes for rollbacks and backup.
Startup Scaling Challenges
Startups face various challenges when scaling up.
More so, as such changes often differ for different domains and organizations, thorough due diligence is a must during the planning phases.
Some of these challenges include:
1. Premature Scaling
Scaling before time can be detrimental and lead to severe challenges to current and future operations. To avoid so, consider the existing skillset, robustness of your infrastructure, and financial capabilities before scaling.
2. Innovating Before Optimization
Scaling may need the addition of new marketing strategies. An organization may face challenges when it tries to eliminate previous systems in lieu of new scalable systems. Try to initiate the processes that increase your work efficiency beforehand.
Scaling Up A Startup With Enkonix
At Enkonix, we take pride in claiming to have helped multiple startups scale up their operations to date.
Whether an organization prefers to use an in-house, remote, or hybrid development team to scale - we have a solution for each.
Here is how.
Organizations that are bootstrapped or have limited cash flow generally tend to choose a remote team model for developing the Minimum Viable Project (MVP).
In such cases, Enkonix acts as a reliable IT Consultancy that helps you design and position your MVP, that has the right features, developed at the right cost.
Once the MVP is a success, a general tendency is to transition the engineering team to an in-house development team. Whether your organization intends to continue with the remote model or transition to an in-house development model, Enkonix can help.
In the event your organization prefers to form an in-house development team, we at Enkonix, ensure that our Tech Lead oversees the entire transition, helps form your in-house engineering team, and hands over every technical aspect, including documentation, source code, and other necessary instructions.
Whether it's team building and hiring, writing documentation, optimizing code, or retrofitting code to the in-house infrastructure, Enkonix can help to make the entire transition seamless.
Contact us today to know more.