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  • Mark Davis

Making Operational Scaling Less Risky

Ultimate checklist for taking the pain out of start-up scaling



Scaling for business growth requires exceptional discipline and execution

How often have you heard that a start-up company failed because it scaled up too quickly, too late, or did it poorly? Do you know what? While often this assessment was dead-on, it’s not always clear just how scaling could have been done better or how these failures could have been prevented. Typically the companies most likely to require scaling meet these criteria:

  1. Have a “Big Idea” that most believe can be turned into a $100M+ business

  2. Poised to either: (a) disrupt an existing market; or (b) able to create a new market

  3. Likely to provide an extremely high ROI to founders and funders

One often-cited survey from Idealab, an early and successful business accelerator, identified and weighed the five most crucial start-up success factors:

Success Factor

Weight

Timing

42%

Team/Execution

32%

Idea

28%

Business Model

24%

Funding

14%

Success in every area is essential. However, you should focus on three scaling-specific factors: timing, team/execution, and business model. Failure in any of these areas or lack of coordination could be catastrophic for proper scaling.


Following are the key scaling variables within each of these three factors:


Timing

Team/Execution

Business Model

Too Early

Right on Time

Too Late

Leadership / management

Expertise/experience

Efficiency/adaptability

Traditional business model

Remote/distribute teams

Integrated virtual services

So, what mix of these variables is ideal for optimal scaling? To make this decision, you must first consider the current state of your business regarding:

  1. existing management team

  2. business lifecycle and growth stage

  3. success factors and major drivers

  4. operational processes and systems

Once you have completed this comprehensive company assessment, you will be in a much better position to refine your business model, consider the ideal team to execute the next stage in your business journey, and determine the best timing. Ideally, the approach you adopt for scaling will blend the best aspects of each business model, incorporating every positive team and execution attribute, all coordinated for timely delivery. Following are some important ‘rules’ to follow as you prepare your company to excel at scaling and make your ‘big idea’ a huge success:

  • Use financial KPIs to better time, align, and measure scaling progress:

  • Key metrics: net income, marginal revenue, and gross profit

  • Cash flow management, as it pertains to day-to-day operations

  • Monitoring burn rate on an ongoing basis to inform needed changes

  • When adding new talent, focus on quality and fit, not headcount and titles

  • Assess primary business needs, particularly as they pertain to scaling

  • Bring on the expertise that will achieve operational maturity at scale

  • Look externally for cost-effective business process services solutions

  • Don’t let your business focus become diminished as you scale

  • Founders cannot afford to take their eye off mission and market fit

  • Integrate operational partners to help scale the business on your behalf

  • Define operational metrics so you can continuously monitor results

  • Make acquiring additional leadership across your organization a top priority

  • Leaders who will champion and build operational excellence

  • Key managers for the processes and technology needed for success

  • Domain experts in start-up scaling of critical business operations


Scaling does not have to be so difficult and risky if you develop a solid plan and stick to it!

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