The essential steps to scaling a startup
An adventure from startup to scale-up requires tremendous effort. Sometimes, founders see a period of quick growth to be the point where they have made it and are about to get a unicorn status, which is the Oscar equivalent for the startup industry. But the truth is, things don't always go as planned.
As reported by the Startup Genome, 74% of startups don’t succeed because of premature scaling. Paradoxically, failed startups often have a viable product and a huge number of loyal customers, but have trouble scaling in the right way. If teams don’t think one step ahead, a startup journey can turn into a nightmare.
Arriving at the right answers means asking yourself the right questions about scaling your business. That’s why, apart from the golden rule of avoiding the premature scaling death trap, you should consider the following:
- Where can I find a perfect team?
- How do I organize a work plan?
- Should I prepare the code in some way?
- How can I reduce unnecessary spending?
In this article, we address the above-mentioned points and uncover some key critical factors you should remember on the path to a successful scale-up.
You're growing, but are you scaling?
Essentially, there is a big difference between growing a business and scaling it. Growth means increasing the company’s revenue and its resources or costs at the same or a very similar pace.
On the other hand, in the scaling scenario, a startup increases revenue exponentially and resources incrementally, if at all. In other words, you reap maximum benefits from the minimum amount of money invested. A classic example of an outstanding scale-up is Google. Google managed to add customers rapidly and simultaneously invested few resources to maintain a service.
Let’s also consider Facebook. It has lots of applications such as Messenger, Ads Manager, Pages Manager, etc. This social network is a vivid example of scaling from a single product to a platform.
Is it a good time to scale up your startup?
Let’s discuss the nuts and bolts of scaling a startup.
It's not all black and white when it comes to deciding when to scale your business. There are some distinct signs your startup is fully ready to reach this highly important milestone.
Take some time to carefully decide whether you have achieved the goals that were set at the outset of the project. Moreover, bear in mind that it’s not enough for your startup to show overall profitability. Without a strong positive cash flow, you won’t be able to take your business to the next level.
Also, scaling up means leveraging software that can easily handle serious tasks and store a wealth of information to help you conquer the startup space.
So, if the checklist is completed, then it's high time to hurry and turn on scaleup mode.
Technical perspective: How to scale a startup the right way
Companies looking to get ahead of the curve should be aware that the startup ecosystem is the universe of multiple dimensions. As can be seen from the chart below, many factors have to be looked at before you can grow sustainably.
Today, we consider the scale-up question from a technical perspective.
Connect with peers
At early stages, don't hesitate to ask. It would be a good idea to contact other business owners who have been through this before. Also, there are special meetings for entrepreneurs looking to scale their businesses.
For example, Startup Scaleup is an annual event where “newbies” mingle with experienced founders through a multitude of workshops, networking sessions, and pitch presentations. This enables the startups to drastically increase reach and get into the world of scale-ups.
Invest in automation
Scaling is all about finding ways to perform the same tasks faster, more efficiently and at a lower cost. Thankfully, when "digitization of everything" became a reality, everyone was empowered to streamline the workflow with countless automation tools.
Customer relationship management (CRM) software such as Pipedrive, Salesforce, and Insightly assist you in organizing and storing data, since the more customers you have, the more issues may appear across the ever-increasing network.
Cloud computing also gives a great opportunity to meet the growing demands with less expenses. Furthermore, think of utilizing Enterprise Resource Planning systems. Such programs provide anytime, anywhere access to data, report about possible workflow changes, and enhance cooperation.
Prepare your code
If you expand your team while scaling, it may be difficult to work with somebody’s code. There are some important clean code best practices to follow.
- Use descriptive names. The intention-revealing titles of variables, functions, and classes should answer all possible questions. It must be clear why they exist, what they do, and how they can be used.
- One purpose to a function. Make your code way simpler by replacing one complex calculation with a couple of specific functions.
- Cut the arguments. It’s better to avoid too many arguments in functions. Sticking to less than 3 arguments makes the code more readable and easier to test.
- Choose one word per concept. It’s vital to stay consistent with your code. It may be confusing to use controller, manager, and driver at the same time as they are basically interchangeable. Therefore, choose the most suitable names to not mix them up.
- Avoid using output arguments. The use of specific object’s methods clarifies your intentions while general methods usually leave more room for misunderstanding.
- The code should speak for itself. The code should be understandable without any comments. When you comment too much, you need to maintain the comments, as well as the code.
Don’t underestimate the challenges of scaling infrastructure
AWS and Azure cloud services are intended to make scaling smooth, but they may be too expensive. This is especially true when you use compute-heavy systems like AI. Given that many companies may not initially have enough resources, it is recommended to look into Heroku or Lambda.
The problem with databases may also arise in some cases. The NoSQL databases (Neo4j, Redis) have more opportunities for scaling than SQL ones (MySQL, Oracle, etc.). Moreover, irrespective of the database types, you will inevitably face lots of various challenges, which essentially require the experience of high demand database engineers. It’s possible to solve this problem by choosing fully managed cloud database services like Firebase, MongoDB mLab, and Amazon RDS.
Find a startup-minded team
Startups are scalable only with the right people on board. But it may be extremely challenging to find workers with the desired skill set needed to grow your business.
What’s more, saving time and money is important for all companies, but for a scaling startup, it’s critical. That’s why the dedicated teams model is a truly life-saving option. Outstaffing lessens the expenditures of traditional in-house hiring, such as benefits, office space, and equipment costs.
The ability to scale-on-demand is one of the best options outstaffing offers. Dedicated teams solve all of the above-mentioned problems complementing your capabilities and helping stimulate the innovation that is sometimes unable to achieve in-house.
Ready to scale?
Upfront preparation that addresses all of the above-outlined questions can ultimately facilitate your startup’s growth. The only ‘silver bullet’ for overcoming startup scaling challenges is to build your team, infrastructure and product in a healthy and balanced manner.
As startups grow, a lot of them face the same scale-up challenges. Our dedicated teams are here to help!
With our client eTouches, we managed to scale up to 14 developers within 8 months. With ClassPass, we were able to quickly provide them with 6 engineers and further scale up to 30+ developers over 2 months.
We have the proven expertise and overwhelming desire to share your vision and translate it into superior solutions. And most of all, we believe that with the adoption of the “scalability-in-everything” mindset, scaling up startups becomes easier and more manageable.