Major Scaling Challenges
Making the choice to scale your startup is an exciting one, with the potential to bring significant success to your business. Yet scaling a company isn’t necessarily easy, as the necessary changes can derail even previously successful businesses. I recently came across an article featuring seven challenges you’ll need to watch out for as you grow. Here is what they had to say:
Scaling before perfecting product-market fit: The first mistake many founders make is starting to scale their startup too soon, before working out the errors still present in the product. Other founders start to increase growth and production before finding out who their customers actually are. If you try to scale before resolving these issues, your company won’t scale. So do your due diligence and perfect your product.
Choosing the wrong people to work with: Whether it’s adding suppliers, staff and/or investors, this is one of the most common mistakes that founders make. It might be easy to accept these differences early on, but these represent long-term relationships, and any issues are guaranteed to come back to haunt you. If you can, hire people who have experience with scaling, but don’t forget that culture fit is just as important as competence.
Focusing on sales and marketing instead of building long-term demand: When they’re scaling, many founders focus on ramping up their sales and marketing activities, yet these are short-term initiatives. Creating a strong buyer market and building long-term demand is just as important to your overall success.
Competing on price: As you start scaling, it’s tempting to compete on price, cutting your price when you ramp up production. This works occasionally, but competing on price often seriously hurts both profit and quality. Competing on quality, ingenuity and customer service is a lot better than to position yourself as a low-cost provider. Selling to your customers on the value you provide lets you keep prices reasonable.
Not changing management structures: Style of management and leadership changes with the size of a company. Remember that scaling brings changes, and your leadership needs to adapt. A flat structure that worked well with 50 people won’t work well with 250.
Ignoring issues that pop up: A founder scaling a business can’t afford to ignore the issues that pop up. Growth takes almost everybody out of their comfort zone. So don’t convince yourself that things are okay when they aren’t. As a leader, you need to be prepared to confront issues head on to avoid long-term damage to your company.
Forgetting to trim fat: As your company grows, you may find things that no longer work, departments that are no longer needed and staff members that aren’t as effective as they used to be. Dealing with these issues that aren’t working is an important part towards scaling.