Scaling a startup is about investing your time and your money in smart places so that the business revenues grow. It isn’t always about hiring more people or investing in more technology although these can be components to your growth strategy. It’s about knowing how, where and when to put your money and time. After all, these are limited commodities.
In 2017, Forbes Magazine published statistics that said most (70%) of startup tech companies fail. The article went on to list the top ten reasons that most startups fail.
- No market needed
- Ran out of cash
- Not the right team
- Pricing/Cost Issues
- Poor product
- Lack of business model
- Poor marketing
- Ignore customers
- Product mis-timed
To help you avoid some of the common pitfalls and mistakes, let’s take a look at these 5 tips for scaling your startup. While this method isn’t a guarantee that you won’t become a statistic, you will have entered the process with a better knowledge and understanding of how to tackle the hard problems.
1. Create a Business Plan
Any small company just starting out should have a business plan. A business plan determines first and foremost what is it that you are trying to accomplish. Is your product or service unique to the industry and if not, how can you make it unique? It looks at whether or not you would have competition. If so, how will you approach the problem. For any company looking to obtain a business loan or looking for financial backers, a sound business plan is an essential component. The business plan should contain your one year, five year and ten year projection both financially and structurally. This is where all the hard thinking is done, before you even open the doors for business.
2. Consider Back End Costs, Up Front
Often when companies start out, it is one or maybe two people working at the kitchen table. They have little to no overhead, are willing to work long hours for little pay and are trying to do it all themselves. This is great for when you are starting, but as you grow not everyone is going to want to sit in your kitchen and write code. Put together a budget that includes all your projected costs. These could include software, overhead including hardware, rent and benefits for employees. As you think longer term, what will be the costs incurred for the development of your product or service, maintenance and upkeep? You will need to keep your eyes wide open as you develop your projections.
3. Develop a Staffing and Recruitment Plan
Once you get beyond your core group of innovators, you will need to bring on team members with specialized capabilities. This is where you will need to determine if bringing people on full-time is a wise business investment, outsourcing is the model you would like to pursue or a hybrid of the two. There are arguments for both models. If the position is a long-term one that will require constant care and maintenance, you should consider bringing someone on full-time. These kinds of positions could include customer or client facing employees for sales, database managers or engineers or HR positions. If your budget or requirements don’t lend itself to full time, think of looking toward a recruitment agency like Numbersowl to assist with managing the financial aspect of your business.
4. Devise a Comprehensive Marketing Strategy
When companies hear about marketing, they think of money that is thrown up in the air with no chance of determining the effectiveness. In today’s economy, this is not always the case. Employing the marketing firm can provide you the feedback you need to decide which marketing avenues are best for your company. Using a variety of media forms such as social media, pay-per-click ads, and developing a presence through blog posts are all effective, low cost methods of advertising. Other areas to consider are trade shows and giveaways. Before you venture down one particular path, create an overarching strategy that fits your product and your budget.
5. Determine the Long-Term Plan
Before you enter the marketspace, determine what your goals are going to be for your product or service. Do you have projected number you would like to hit in terms of dollars or units sold? Do you have a time limit that you planning to invest in your company and with the plan of looking for a way to sell off the company in the future? Some investors are in it for the long haul while others are looking for a way to exit quickly. If there is more than one person involved, be sure that everyone agrees on the long-term plan.
Before you open your company for business, invest time and money into thinking about the company, its purpose and its value added. The business plan is a great place to start but remember that it is a living, breathing document that needs care and tending. Refer to it from time to time and correct your course if necessary.