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:
Have a “Big Idea” that most believe can be turned into a $100M+ business
Poised to either: (a) disrupt an existing market; or (b) able to create a new market
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:
existing management team
business lifecycle and growth stage
success factors and major drivers
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!