Scalability in Startups

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What are the fundamentals a new business needs to have in place in order to be able to scale up quickly?
Process is key. Spend the time in your early days figuring out what works for your company and create a process that your entire team can follow. Lead by example in following that process. When customer demand rapidly increases, you won’t have to take time to figure out how something should be done. This is not the end-all solution, but a great start for efficiency.


What kind of technology resources do they need to have, or at least have access to?
Communication tools like Slack, file sharing like Dropbox, project or product management tools and everyone’s favorite – accounting software. As you scale up you don’t need a high level enterprise dashboard to pull reports, that’s overkill. However you need the tools to enable your team’s productivity, especially around communication. Tools like this are also offer scalable pricing models (some with free tiers!) – use them.


How about human resources? Capital?
From what I’ve found, most of your best talent comes from referrals – either from other industry friends or from your own employees. When scaling up quickly – do NOT hire the first person you meet because of pressure. This leads to making the wrong decision, typically based on the emotional driver of fear. Fear that you have to ship a product, or fear that you’re not going to meet client demand. Hiring the wrong person can be the WORST decision you can make as they can completely derail your vision and dig a deeper hole for you to get out of. In terms of capital, if your company is growing like crazy – finding growth capital will not be hard. There is no shortage of money in this world – it’s where you look. The decision of capital comes down to one thing: do you want to get a loan to repay over time (maintaining your equity position), or do you want to give away a portion of your company to an investor? There are benefits to both: if you get a traditional bank loan you don’t have to offer equity, but you owe the amount plus interest over time. Sometimes the process of getting a bank loan can be time consuming as well. Conversely, if an investor likes you – he or she could send you a wire transfer same day if you sign a deal together. You typically have to offer a convertible debt note or an equity stake in your company to an investor – so that is a decision you should make before the pressure hits and you actually need $1MM to keep your lights and servers on.


How can a startup create a strategy to ensure it will have all the pieces needed for scalability in place when the time comes to scale up?
There is no perfect solution for scalability for every company. Again, you can plan and prepare as much as you want – but industries, customers, technology and people are continually changing. What works to scale this year may not be sustainable for the next 5 years. Scaling to your first million dollars versus scaling to a $50MM company has completely different challenges. Meet with your team to create your process, identify roles and responsibilities and try to reduce points of friction as much as you can. Revisit this strategy quarterly to see what works and what doesn’t.


What are the biggest mistakes to avoid?
Not learning from your mistakes is a horrible misfortune. Correct your problems with new process and prevent repeating yourself. Make sure you always put aside money for taxes, unforeseen expenses and know that one of your most important resources – humans – are not perfect. People will have bad days, people will need to leave your company mid-project because of personal reasons. It happens, expect it and keep moving forward.


Where can they turn for additional help with this topic online? What are some online resources they can tap for help with this topic?
Many of the tools listed above have corporate blogs with tons of tips on productivity and growth, as they’ve faced the same challenges. Join a local MeetUp group in your city, connect (network is an overused phrase with a negative connotation) and brainstorm with others in your industry – you most likely have the same challenges.