If you're looking to make the jump from startup to scale up, you might be feeling a little overwhelmed. What does it mean to grow beyond your current capacity? How do you get there? And—perhaps most importantly—what does it take for this growth process to be successful?
The journey from a startup to scale up can be arduous, with many twists and turns. And scaling up is a natural step toward success, but it doesn't happen on its own. Many people think that opening branches or selling franchises is scaling, but these are just tools that should be used wisely.
We’ve gathered years’ worth of “practical wisdom” to help an aspiring startup owner scale up successfully.
Startup Scaling: Choosing the Right Startup Strategy Leads to Startup Success
Startup success heavily depends on the founders' level and the team's preparedness to modernize, optimize, and constantly consider scaling up every process. Startup scaling is an intricate process that requires strategy and execution. While growth is always the goal, the strategies and metrics for achieving it can vary depending on the stage of the business.
In the early stages, startups focus on classic growth to achieve their scaling up goals, which gives a more controlled and specific approach. As a startup transitions to the scale up stage, the focus shifts to increasing efficiency and optimizing strategies for quality, profit, and growth.
You’d want to focus on several key areas for a successful scaling a startup. And here is a “business startup checklist template” detailed below so that you can model your efforts following the proven tactics and practices:
Processes
When a startup has the first growth indicators, it is necessary to move from manual management in the “everyone is responsible for everything” format to controlled tools - analytics, task managers, and BI tools.
First, you must identify key areas that require systematization, which include sales, product development, customer service, finance, and human resources. Automating processes would help a lot.
For example, using existing solutions like Zendesk or Hubspot helps to organize customer support. Also, you can utilize such tools as Atlassian for a knowledge base, Notion as an Intranet building solution, or a learning platform like Academy Ocean.
Then comes delegating non-core tasks. Delegation starts with establishing criteria to determine the priority of different processes for the business. Outsourcing software development is one of the most straightforward and efficient ways to progress while saving resources and getting high-quality results.
Sales & metrics
The first big deal in a startup comes through the personal contacts of founders. This creates permanence. Then, you must test alternative sales channels and track their dynamic to evaluate sales effectiveness.
Good indicators to start with are:
- The calculation of the “unit of the economy”;
- The estimation of the duration of feature development;
- The estimate of the sales cycle;
- A prognosis of conversion in the context of the industry.
Simple CRM systems focused on small teams and marketing analytics will be your best friends here. Say goodbye to endless chats and notepads so that you don’t miss great ideas in the waves of uncontrolled communication.
Documents, lawyers & compliance
At the first sales stage, the team can safely get by with a template version of documents. But legal support is essential at the stage of significant obligations to external parties. It helps tackle the risks and extra costs in the future.
The optimal scenario is to find an external lawyer or team and form a framework relationship (hourly or fixed rate) to close current tasks.
When choosing lawyers, consider their expertise in working with similar companies and their recommendations and compliance. For example, a well-known law firm with a practice in criminal law will be just as useless for a startup as a giant of the legal market with a focus on the real economy.
The key questions you’d like to negotiate on legal terms are:
- Defining relations between founders "on the shore";
- Defining relationships with customers - licenses, service level agreements, user agreements;
- Intellectual property - to avoid someone working under your TM or using the component of your product codel;
- Raised capital; Data security - is a key asset of any technology company.
Venture & operational models
Initial income confirms the product's value for the market, and income growth confirms its potential. But here comes a question, should you choose a venture or operational model of development?
To choose the right model, it is worth considering several factors:
- Market size;
- Industry development dynamics in the segment;
- Current financial performance, potential, and the possibility of selling the company in the future.
A venture path may be a reasonable startup strategy for a segment with access to venture capital, low dependence on physical assets, and good M&A dynamics.
However, if the project serves a local industry, has a high market entry threshold in neighboring geography, and can generate operating profit on a small scale, the operating model will be more rational.
People & culture
At the moment of moving from the founders' kitchen to the big voyage, it is worth determining what is important for the founders of a startup in the people who come to the company.
When scaling a startup, selecting and training a team is a priority investment. At the scale up stage, the team selection should focus on people with managerial competencies who are unafraid of impossible tasks. That’s where you can use the STAR (situation, task, action, result) method to evaluate candidates’ behavioral characteristics.
Read more: Why Your Startup Needs a Technology Delivery Manager and How to Choose the Right One
But as soon as the team grows, it must be prepared for turbulence, super-high development speed, and multitasking. These are basic business development conditions. Scaling up for a technology company is about realigning and focusing on what matters most without losing momentum.
Read more: In-house Development Team or Outsourced IT Services: Which Is More Beneficial for Your Business?
How to Scale a Startup Effectively: Startup Scaling Strategies
If a company starts getting more revenue but also increases its costs, it needs to scale. Before considering scaling up to achieve overall startup success, you need to answer these questions:
- Do you have an MVP? Have you confirmed your idea for the product?
- What is your target client?
- What marketing channels generate better leads?
- Do you have enough resources to survive the scaling-up phase?
If you clarified all the questions, you are ready to scale with one of the next “scaling-up strategies:
OKR (objectives & key results). This startup strategy helps synchronize processes and understand goals. As a team grows rapidly and a startup transitions to a scaling-up stage, you should consider such aspects as synchronization, cascading goals, and ways to deal with emergencies. People must move in the same direction when a company grows and work towards common goals.
With a Metric Tree strategy, each employee should have goals and metrics for their specific type of activity. Metrics can be of the first, second, and third levels. You can fix metrics using the simplest tools - Google Docs, Notion, etc. You can create real-time dashboards and track changes in metrics.
If some metric starts to grow, you can understand why this is happening and how to use this situation. For example, in the early stages of startup development, it often seems that everyone is growing very rapidly, working 15 hours a day, but more often, it is running through a dark room in search of a switch.
The “Fast Startup Strategy” is used when startups need sharp growth and the company is ready to sacrifice efficiency for pace. How to understand that your project is ready for fast scaling?
- You have a well-established business that works without your participation. There is free time to think about the startup strategy for swift development and search for partners and investments, which are discussed below;
- You have start-up capital - an amount comparable to the value of your business in the current version. It is good if there are investors ready to invest in the project;
- You have experience in opening and managing at least two or more branches. If you only run one branch, it might be too early to think about scaling a startup. Working with 2-3 branches will be a lot more challenging, so you can try this format first. That’s how you get used to multitasking and working on multiple fronts;
- You make a high-quality product and have something to offer the market. Competitors don’t rest, and competition increases at the same speed as you expand your business. Improving the quality of your product along the way is difficult unless you’ll engage more resources.
And finally, here comes Blitzscaling.
If you want to scale rapidly, this is your “Champion Startup Growth Strategy.” This aggressive startup scaling strategy allows start-ups and long-established companies to create world-class businesses in record time.
This is the riskiest but also the most effective strategy used by all billion-dollar companies (not just startups) to grow. Moreover, access to capital opens only with blitz scaling. But you need to remember the high risks present in this option for business development, so this strategy is best for those startups who have weighed all the possible dangers and nuances.
The Role of MVP in Startup Scaling
MVP is a minimum viable product. It is a tool designed to give you access to get meaningful feedback from users. This, in turn, allows you to understand what they need (while avoiding investing in a full-featured product.)
A minimum viable product can help you:
- first and foremost, save money (by not investing in a failed project);
- investigate user interest in the potential product;
- determine the optimal direction of development (through multiple iterations);
- finally, build a potential customer database.
Instead of investing time and resources into developing a full product, launching an MVP and testing the hypothesis of whether users need it is often more effective. This approach has helped many famous companies succeed and avoid becoming part of the disappointing statistics of startup failures.
ElifTech Helps You with MVP, and MPV Helps You with Startup Scaling
According to Forbes, 90% of startups fail, and taking every possible step toward your startup success is important. Launching an MVP has been the proven path for many successful companies.
At ElifTech, we understand that an MVP should never be a rushed, raw product. Our MVP development process includes only key features that make your idea feasible for real users and relevant to investors. That’s how MVP reduces the project launch time and lets you get feedback as soon as possible.
With ElifTech, your MVP development process will look this way:
- formulating a hypothesis;
- determining the criteria of viability;
- making a minimum viable product to confirm the hypothesis and launching it;
- measuring performance indicators;
- drawing conclusions and testing the next hypothesis, if necessary.
Are you on the verge of scaling up or launching? Contact ElifTech for professional MVP engineering assistance. We do these kinds of jobs for startups all the time.
Startup Scaling: 10 Startup Success Strategies to Help You Scale Up
Scaling a startup can be unnerving. However, it can be a smooth and successful process with the right strategies in place. So, let’s get down to “How to scale a startup?” Here are ten startup success strategies to help you scale up:
1. Crash test your ideas
Many startups focus on short-term goals like attracting customers, introducing new features, or building business relationships. However, in reality, the most important task at a startup is to test the idea, understand its viability, and see if it works.
2. Don't chase perfection
You don’t need to overload your product with extra functionality for a first release. Instead, you can choose a product MVP - a minimum functionality set with minimal effort and resources. The time saved is better spent gathering a user base and getting feedback on whether the market needs your product or service.
3. Focus on problems you comprehend
Over the years, we’ve noticed a common issue - teams focus on secondary problems rather than the problems their startup was supposed to solve.
Separate your main task from secondary tasks if your idea requires back-end autoscaling. You can save time building it yourself and look at solutions. Then use your time and energy to solve the main tasks.
4. Tame your expectations
Imagine you are the startup founder, and you have a task to develop an MVP of a mobile application for the healthcare industry and have about two months before the first round of attracting investment.
Naturally, your tech experts delved into the technical nuances. And no surprise that there could be six months' worth of work. Every time this happens, the simplest solution is to make a visual prototype of the application and prepare for pitching so that in two months, you should receive the investment. This way, you can turn to the same experts for developing this product.
However, practice shows that only the MVP development took about nine months because of extra nuances. The only way to keep up with steep schedules is to ask for help from experts and adapt to the situation in time.
5. Analyze the market
Analyze the market regularly because many ideas you now consider innovative may already be implemented by someone else. It is important to understand that today the dynamics of change are so high that people can only afford to invest in research only once - at the stage of birth. While designing, researching, looking for investments, and developing a prototype, a similar product could already enter the market and occupy a niche ahead of you.
6. Build structures & learn processes
A lack of structure and established processes can lead to conflict, frustration, and rapid team turnover. Successful startups have built-in processes, clear business goals, and proven project management methods.
7. Ask for help
Startups often need more experience, different but rather technical. When you start building a new project, an experienced tech leader first insists on auditing the client's infrastructure and hosting providers. This can help the startup save money. We must mention that “scaling up” is not the tool to solve startup internal issues, which should be discussed separately.
8. Scaling up wisely
The startup boom has become almost the main feature of modernity. The issue of scaling up challenges many startups. At this stage, they experience phenomenal growth and, at the same time, add headaches to the founders.
It should be the right specialists in the right positions: HR, support, admin staff, developers... that's the price of success. The ability to scale up quickly, upwards and sideways, is one of the secret ingredients that should become a life jacket for many startups in today's global crisis.
9. Choose "your" people to team up
When embarking on a journey called "startup," do not neglect the issue of forming a professional team. The right specialist can ensure the launch of a startup for an indefinite period. Scalable startup entrepreneurship requires 100% of every team member’s efficiency.
Pay attention to the candidate's professional skills and the extent to which they meet your startup's needs. Remember soft skills because, initially, a startup is a small boat where you have to row side by side towards a big goal.
Read more: How to Hire an Offshore Software Development Team: The Full Guide for Startup Founders
10. Be your idea's biggest supporter
Believe in your startup's success. Apply all your energy to it. Successful startup owners do everything to achieve success, namely:
- Diving headfirst into business;
- Being in touch with the team 24/7;
- Communicating with beta users;
- Presenting their idea at every conference;
- Meeting with investors;
- Actively promoting a product that does not yet exist in social networks.