From Startup to ScaleUp
Feb 06 , 2017 | By Inevert
Sudden dramatic growth, poor market access, inefficient systems, managing talent requirements, and accessing capital are some of the typical challenges that a business is likely to face when transitioning from a Startup to a Scaleup.
All of these pose a potential risk to your scaleup momentum; here we explore the most common challenges and offer some handy solutions to overcome them.
In a typical startup it’s important to understand that the majority of initial growth will likely come-about through determined marketing & sales efforts. This is where tools to help market your Startup, as well as growth-hacking techniques and good SEO can help you reach your target audience, and convert them into early adopters and customers.
Accessing market and scaling can also come from building valuable contacts, getting a valuable early investor on board, finding a industry-specific mentor, securing the buy-in and reach of influencers / media, and collaborating with other businesses for whom the relationship will have benefits, such as non-competitors in your industry.
Many startups choose an Accelerator Programme to nudge them in the right growth direction, however another way to access market more immediately is to work out a value proposition that makes your product or service invaluable to an already established corporate brand.
Working collaboratively with corporate partners can prove very effective in expanding your presence more quickly and successfully, both within and beyond your local market. Large businesses operate across many countries and in multiple continents, have an existing large scale audience and customer base, experience of individual markets, relevant industry connections and a presence that can be vital in maintaining the scale-up momentum.
This doesn’t mean selling out, but rather applying common sense; most startups don’t survive long enough to get off the ground, never mind scale, so if piggybacking is what you need to do to keep your business alive, that is what you need to do.
Structure and Accessing Talent
Typically the next major challenge will come when dramatic growth occurs; You are on the way to becoming a scaleup, but the business is still highly vulnerable because it doesn’t have the right structure in place, or the right team on board to weather the challenges ahead.
Early-stage / pre-investment startups typically have very small teams, perhaps just 2-4 people, all of whom are well used to multitasking, taking on extra work roles, and covering gaps in the team. However if you are growing from a Startup to a Scaleup, you’ll find that this way of working very quickly becomes untenable.
Now, there needs to be less multitasking and more defined team roles where each and every person is aware of their responsibilities and can manage their workload with autonomy. In the short term, while demand is high and staff numbers are low, consider short-term hires or temporary staff to fill gaps.
But aside from the immediate need to cover roles and responsibilities, first you should define each new job role that your company needs to fill, and then in a structured way, recuit to make sure that the best talent can be employed into these roles.
Consider too how your new employees will fit into the existing team team, i.e. ensuring that there is a good company fit so as to not upset team cohesion. Scaling you team from 3 to 15+, could mean that for the first time you’ll need to manage different personalities and characters within the work environment. Indeed, even as a founder you will need to make significant adjustments to the way you work, perhaps becoming less hands-on and instead setting yourself new targets and goals in relation to the challenges that managing a scaling workforce can bring.
Your existing staff too will need to adjust to differences between working in a startup and working in a scaleup; a more formalised structure, often means a more targeted and less laissez-faire work culture, which requires more dedication than they might be used to.
Again use technology to assist in creating this structure - online clocking in and out systems, team communication systems such as slack and customer service solutions such as Zendesk can all help you and your team to work smarter.
Scaling is without doubt an expensive business! Not just because of increased headcount and associated costs - but hardware, software, internal systems, office space and all of the other things required to continue growing cost a lot of money.
How to access that capital is a key challenge for any founder, but ultimately if you have a startup that is beginning to scale, your ability to raise significant levels of capital via an investment partner greatly increases.
Make sure that you review your pitch-deck and and that all forecasts show your current growth, revised with appropriately adjusted targets and forecasts based on this scaling status. Bear in mind that just because your startup is now scaling, that doesn’t necessarily mean that revenue will have increased, but in order to get investment, you will need prove how more capital will eventually come rolling in. Finding an experienced and relevant investment partner to access that capital is key, but at the same time do not be afraid to walk away from a potential investor if you think the fit isn’t right; this is about finding a long-term investor and partner for your scalup, not just hard cash.
You should also be aware that there are a number of routes to funding beyond the traditional investment model, such as collaborating with a corporate partner who is willing to support your business, and can see the mutual benefits of doing so.
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