How Do You Scale a Startup Despite the Global Context?
STORY INLINE POST
Scaling a startup to convert it into a global scale-up is definitely a challenge; the most experienced CEOs in the world have experienced obstacles, pain, and trouble, and they usually admit that it’s completely “normal.” what makes the real difference is to understand the stage your company is at and do what the company needs at that precise stage. More on this is below.
Most business leaders aspire to scale their companies, which is not the same as growing, but why? Growing means growing your income but, at the same time, growing your expenses, which doesn't improve your profitability. This perspective creates an increment of trouble and drama among your team, extra working hours, and a lack of focus without the benefit of the profit.
Scaling is different. Here, the objective is to grow your income faster than your expenses, which creates a profitable company and provides you and your team more freedom to focus on the strategy rather than the execution (the crucial things). You can also invest time in innovation and tools; the most important factor is to dominate your industry and enjoy the ride.
One of the main reasons business leaders fail is because they try simultaneously to accomplish different goals. Through 25 years of being a business leader and 12 of being a CEO coach, I have developed a list of topics you have to consider to scale faster and with less drama.
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Do your scaling process at the right time.
Although often used to define a type of organization, the terms “startup” and “scale-up” refer to company phases or growth stages. Startups and scale-ups aim for the same amount of tremendous growth and impact but they are in different stages of their business life cycles.
It is common to see business leaders with a startup stage company trying to scale prematurely. After getting one or two2 clients, they feel they already have product market fit. Remember, you have to know your actual client, ideal client, the market size, market share, and do A/B testings to improve your sales and marketing process. In general, be sure you deeply comprehend the data of your business. In that way, you really validate your business model and go-to-market strategy. Now, you are ready to scale.
Just as it’s essential to get comfortable using a basic formula to solve easy algebra problems before you jump onto the complex ones, being satisfied with the current flow of the business is vital before you think about scaling.
According to Startup Genome's survey of 3200-plus startups, 74 percent of failures can be explained by premature scaling. So make sure you have a clear picture of who your customers/core users are, know which marketing channels bring you the most significant ROI, and have the resources to scale. Ask yourself:
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Do we have the right team in place?
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Are customers demanding our products or services?
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Do we have predictable revenue?
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Can we predict our profits?
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And are we able to control our costs?
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Remain focused and aligned.
Are you familiar with the shiny objects syndrome? It is related to the behavior of paying attention to something that looks good, captures our attention, and seems easy to get. But the reality is that those ideas just create a leakage of energy and focus from what is essential in your business and life. It is easy to get distracted by new ideas, suppliers, business models, and competitors and lose sight of your big objective.
Verne Harnish, author of the best-selling book, “Scaling Up,” mentions that more companies die from indigestion than starvation. So, you need to have the right tools and systems in place so that everyone on your team knows their No. 1 priority and you keep the team aligned and focused.
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Do not assume that leading is the same as managing.
When your company is small, you can take different roles at the same time: sales, strategy, marketing, even cleaning; you are inside every department to ensure everyone is doing their jobs correctly, but it is a terrible mistake to assume that you can do the same when you jump from a startup to a scaleup.
At the same time your company is evolving, you and your leadership have to as well. You must start delegating more and more responsibilities attached to the execution of the business. In that way you can focus more on the strategy, innovation, and strategic movements necessary to thrive in this new stage. Before scaling your company, you have to scale the decision-making at your company.
This evolution requires a lot of leadership on your part. But what is leadership? In a few words, it is the ability to inspire others to help you achieve your goals. Also, a leader can build strategic partnerships, anticipate challenges and opportunities, and offer that knowledge to his team to execute better. These qualities are not necessarily related to a good manager or boss, so be prepared for this mindset shift.
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Establish long-term goals.
I know it might seem counterintuitive to set realistic long-term goals, especially in the current fast-paced, boom-or-bust business world. But if you want some top-line revenue growth, then I’m here to tell you that you need to nail down your strategy and set a Big, Hairy, Audacious Goal! (BHAG).
In a nutshell, a Big, Hairy, Audacious Goal, or BHAG — a term coined by Jim Collins and Jerry Porras in their book, Built to Last: Successful Habits of Visionary Companies — is a long-term, 10- to 25-year goal guided by your company’s core values and purpose. But it’s more than just a goal.
We’re talking about a challenge that is so audacious, outside-the-box, and hairy that it might feel like you’d never achieve it. We’re talking about a “put a man on the moon” level goal. However, your BHAG must be connected to your company’s underlying strategy, or it just becomes an aspirational statement or a random number without a clear path.
Here are the elements of a good BHAG:
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It feels as if it’s 70 percent achievable
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It has to be clear and compelling
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Expands your company’s current capabilities
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Is measurable
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Must be connected to your company’s strategy
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Is long-term, probably a minimum of 10 years or longer.
If the answer to all the above is “yes,” you may be ready to start scaling. But how do you transition smoothly from a startup into a scale-up?
Scalability is a mindset that’s all about having the right systems and people in place to achieve that major growth you’re aiming for. As business leaders, it is our responsibility to be in constant education and prepare with the correct tools and information to lead the scale-up plan of our companies.