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6 minutes read

Startup to Scale-Up: Startup Scalability

By Robert Kazmi
By Robert Kazmi
Other
6 minutes read

Growing from a startup to scale-up company is an exciting transition, but not every startup will make it to the scale-up phase of the business lifecycle. Startups face significant challenges, and the scale-up process often makes or breaks a young business. Successfully scaling an entire company requires skilled project management and a solid business model.  

If you want to take your organization from a startup to a scale-up and ultimately a successful business, you need to understand how to nurture your company’s growth. Of course, rapid growth is great too, but if your business grows too fast, you might not be able to handle increasing demands, which might also lead to your business failing. 

Let’s explore some ways you can sustainably grow your business from a startup to a scale-up and beyond. However, first, let’s quickly define the terms startup and scale-up. 

Startup to Scale-Up Defined 

The term startup typically conjures images of tech companies and app development services. However, just because a company is new or even a tech company does not necessarily mean that it is a startup. A simple definition of a startup company is a company that innovates or uses new or emerging technologies

The key difference between a startup and a new small business is that startups pioneer their processes, which in turn help define their unique business model. For example, a retail or eCommerce business could easily be a startup, but in many cases, these companies follow well-established business models and, therefore, technically are not startups. On the other hand, FinTech and MedTech companies are typically startups because they generally create new innovative services and technologies.  

Startups are often forced to sacrifice their short-term profitability to find, stabilize, and scale their business model. Businesses do not remain startups forever. Eventually, they must evolve into scale-ups. However, there is no set age or time when a business ceases to be a startup. 

So, when does a startup become a scale-up? A scale-up is a startup company that has successfully proven its market viability by stabilizing its business model and industrializing its product offering. Typically, a scale-up is defined by a few key indicators, including:

  • Annual company growth of at least 20% with a minimum of 10 full-time employees
  • Annual revenue generation between one and three million dollars 
  • At least one million dollars in fundraising 

Startups stand on very uncertain ground. A scale-up is simply a successful startup on its way to expanding its market and business model. Not all startups will make it to the scale-up stage. 

Growing From Startup to Scale-Up

If you’re a startup company, you’re likely wondering how you can assist company growth and scale-up. While every startup is unique, there are a few things your business can do to create a repeatable, scalable business model. If you’re ready to scale your startup, here are a few things you can do to increase your odds of success:

  • Make sure you are ready
  • Automate and outsource 
  • Focus on scalable marketing 
  • Don’t overhire
  • Don’t overspend 
  • Don’t overbuild 

Make Sure You Are Ready 

Many startups fail because they try to scale before they are ready. You must walk before you can run. Don’t get ahead of yourself in a rush to scale up. Inevitably, this will lead to failure. Before you attempt to scale your business, make sure you have a product-market fit for your core offering, know which marketing channels offer you the largest ROI, and finally, make sure that you have the financial resources necessary to scale up. 

All businesses want to be profitable, but profitability is something you cannot afford to worry about while you are in the process of scaling. You might need to pursue extra investment capital through an additional round of funding before you attempt to scale. You don’t want to run out of money. 

Automate and Outsource 

Labor-intensive tasks will inhibit scaling. Before you can scale up, you need to determine the most effective ways to streamline your business processes. This includes automating time-consuming tasks like bill payment and payroll. There will be areas you can’t automate. In these cases, it will likely make more sense to outsource rather than hire internal specialists.

While graphic designers, SEO specialists, and lawyers are important, it likely won’t make sense for you to hire internal specialists until your business grows. In the meantime, outsourcing these types of services and tasks is the most cost-effective approach. 

Focus on Scalable Marketing 

If you want to grow, people need to know about your startup. Marketing can help your business gain brand recognition and establish itself within the market. In addition, a solid marketing strategy can ease many of the common pain points associated with scaling. First, however, you need to make sure that your primary focus is on scalable marketing. 

Direct marketing is not an example of scalable marketing. Content creation and SEO are both forms of scalable marketing strategies. Content has the potential to go viral and drastically increase the attention your business is generating. Many startups highly value content generation because it is viewed as a potential growth hack. 

Don’t Overhire 

During the process of scaling, you need to keep your business lean and focused on your core competencies. A common mistake startups make is hiring managers and specialists before they are ready to put these employees to good use. This distracts from the business's core competencies and typically leads to the business artificially trying to scale other areas to keep up with the new hires. Remember, you can always outsource until you are ready for internal hires.

Don’t Overspend 

Startups that successfully raise money fall into a common trap. They overspend. While your business is growing, you need to keep spending focused on things that will aid company growth. There is a common saying; you need to spend money to make money. While this is true, you need to spend money in the right ways to ensure growth and eventual profitability.

Don’t Overbuild 

If you have found a product-market fit and started scaling up, there is a common tendency to want to add more features or build related products. Perfect your product offering before you start building new products or adding new features. 

Final Thoughts 

Making the transition from a startup to a scale-up can be a difficult journey to navigate on your own. If you are looking to innovate, reach out to an app development partner. A partner can help you create innovative apps and digital products that help your business grow from startup to scale-up and beyond.

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