In business, the scale-up phase of a company is where, after you prove your concept and establish a solid base, you’re ready to share your offering with the world — setting the stage for exponential growth and success. But in 2023, the entry criteria for this stage look a lot different, demanding a nuanced approach.
During a period of higher costs with less capital available, the importance of precise timing and frugality has become paramount. Having scaled four companies by 1,000% — two of them during economic downturns — I’ve learned some tough lessons about what not to do.
Related: 7 Ways To Scale Your Startup or Business
Mistake 1: Scaling too early
Fire, ready, aim. Scaling too early these days can be a fatal mistake. If you’re still figuring out your category, your ideal customer profile (like what specific problems you solve) or your best route(s) to market, it’s not time to scale.
If your unit economics are wildly unsustainable or the nucleus of your core team isn’t in place, it’s not time to scale.
If you’re not getting pull (inbound demand and word of mouth) from the market you play in, it’s not time to scale.
Mistake 2: Scaling too late
Whoops, missed out on that one. On the flip side, scaling too late can mean missed opportunities. If you’re inundated with demand (leads falling on the floor), in the midst of a buyer platform/paradigm shift or have overly superior unit economics, it might be past time to scale. Don’t let competitors with inferior products steal your market share because you’re under-resourced while they’re expanding — especially if you’re in a winner-take-all or major first-mover advantage market.
Mistake 3: Hiring the wrong leaders at the wrong time
They were great at that one company. Hiring is a critical part of scaling. It’s also one of the most difficult. It’s about finding the right people for the right roles at the right time. Avoid the temptation to hire people just like yourself. Embrace diversity, and cover different perspectives. Be wary of hiring leaders from companies that are too big or too small. Document what specific outcomes you need next and what requisite skill sets and experiences will deliver those outcomes. And ensure that hires fit your culture. If you’re hiring a sales leader, be especially alert and consider things like your go-to-market motion, stage and buyer.
Mistake 4: Not delegating
I tried delegating once, but it was too much work. As a founder, it’s natural to want to control every aspect of your business. But as you scale, you need to let go. Trust the leaders you’ve hired. It’s why you worked so hard to recruit them. Give them the direction and support they need, then step back and get out of their way.
Related: How to Know When It’s the Right Time to Scale Your Business
Mistake 5: Overlooking infrastructure and operations
We’ll get to that someday. As you scale, your infrastructure and operations need to scale with you. Document your core processes; shared documents, checklists and playbooks work great early on. Invest in HR, including hiring the people/HR manager. Try not to skimp on technology, data tracking or analytics. The same goes for sales and marketing operations. And avoid accruing too much product or architectural debt. These are the foundations upon which your scaled business will stand.
Mistake 6: Getting stuck on the funding treadmill
More money, more problems. Funding is a means to an end, not an end in itself. Don’t get so caught up in reaching the next funding milestone that you lose sight of your business fundamentals and economics — especially in today’s market. Ensure you’re consistently improving your fundamentals (product-market fit, customer value creation, distribution, growth strategy) and economics (growth rate, margins and profitability, customer acquisition cost and customer lifetime value). Make sure you can see — or at least paint — a clear path to sustainable profitability.
Mistake 7: Losing your beginner’s mindset
What got you here won’t get you there. Things change fast. Stay open to new methods and ways to evolve your business. Don’t overlook things that change quickly, like pricing and packaging, your product roadmap expansion, category expansion, market segmentation and targeting, and second and third growth acts. Keep that beginner’s mindset.
What’s next?
Scaling a business is exciting. It’s also challenging and complex. But there’s no reason to repeat the mistakes of the past.
Listen, learn, and plan to grow your company successfully. With awareness and careful planning, you can avoid these common pitfalls. Remember, the goal of scaling is not just to grow bigger but to grow better — to deliver more value to more customers, create more opportunities for your team and make a greater impact on your market. So take the time to scale wisely, and you’ll reap the rewards for years to come. Remain curious, keep that beginner’s mindset, and stay inspired by thought leaders who’ve done it before — while you pave your own way.
Related: 5 Pitfalls to Avoid When Growing or Scaling a Business
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