Measure Twice, Scale Once
Successfully scaling a startup requires everything to fall into place at exactly the right time. In the early stages, staying alive is largely about being smart regarding you spend your money. The core principle of any business, regardless of how big or small they are, should be to nail the product-market fit before scaling their operation.
The fact is, it’s a lot cheaper to redesign your product before launch than it is to higher (and likely fire) a full, in-house team of designers. When done right, scaling is a great thing. Scaling should always come out of startup growth—not the other way around. Scaling is by no means a sustainable way to drive your startup’s growth—that’s what your product should be doing.
Some Examples of Premature Scaling
Premature scaling happens when a startup tries to do too much, too quickly. Making unnecessary hires, leasing a brand new office, and overextending your early marketing budget will not help you further develop your product-market fit.
Creating a solid MVP (minimum viable product) that validates your key value proposition should be your number one (and only) priority during the early stages of startup growth. Don’t worry about perfecting all of your product’s features at launch—believe it or not, it’s actually more effective to test one value proposition at a time.
The traditional order of investing in your product early on, making strategic sales hires, and continuing to expand may make sense at a major corporation, but you have to remember that startups are far from normal—they don’t play by the rules. When you’re testing a new business idea, staying lean means staying alive.
User testing is everything—slim your idea down as much as possible to start getting feedback early. Building on your product over time makes it significantly easier to iterate on your idea before it’s too late and you’ve spent +$100K overdeveloping features nobody wants to use.
Successfully starting a business and launching a product almost always takes longer than initially expected. If you’re in tech, there are always going to be random roadblocks due to changes in the industry or logistical errors. Be ready to adapt—don’t think about scaling until you’ve built a dedicated customer base within your niche.
A niche office space may improve your team’s culture, but keep in mind, staying lean helps your team change direction and adapt easily. If you want your startup to stay alive, you need to be adaptable—something that’s not easy to do with money sunk into marketing, an expensive office space, and payroll to worry about.
Why Expanding Too Early Kills Your Momentum
Regardless of what stage your business is in, scaling always ties up a certain amount of cash flow and makes you much less agile. At a startup, both of these are vital resources—if you can’t iterate quickly, you’re screwed. And the fact is, cash is undeniably important—you need it to stay alive.
As opposed to dedicating resources to early expansion, it’s best for startups to focus on becoming sustainable by optimizing revenue channels and generating organic growth. Saving cash enables startups to iterate with more freedom if they need to rethink their product after getting customer feedback.
Instead of using all of your power plays at once, it’s best to preserve some of your resources in case the industry starts to head in a drastically different direction.
Surprisingly, It’s an Easy Trap to Fall into
Hindsight is always 20/20. The early scaling trap is easy to avoid as a third party, but when you believe in your idea, you’re much more likely to throw excess money at your idea in an attempt to drive sales.
However, it’s important to keep in mind that spending extra money to sell your product is always speculative—regardless of what stage your business is in—putting up capital always comes with some amount of risk. You should never rely solely on capital to acquire customers and sell your idea, let your product-market fit do it for you.
There’s no way to successfully build a business without first creating a solid product-market fit. The less money you can do this with, the better—there’s a high probability you’re going to need to make a slight change to your idea at least once after taking it to market and getting your first round of feedback.
How to Find the Right Way for Your Startup to Scale
Start With the Basics
When you’re getting ready to scale, whether it’s hiring a marketing team, building up your inventory, or making an acquisition, it’s best to start with the basics. As mentioned before, the first thing you need to do is line up your product-market fit.
Startups that solve their own problem will always have an enormous advantage—ruthlessly dogfood your own product and get feedback from your core users by conducting in-person interviews.
If you’re ready to expand you’re marketing efforts, start by creating in-depth customer profiles and identifying which marketing channels will generate the strongest response for your business. Always test new growth tactics with a small starting budget to avoid wasting money on channels that end up having a low ROI.
Set up all of your marketing automation, payroll processing, employee training, and cloud storage in the early stage to save you a ton of hair-pulling when things get exponentially more complicated.
Focus on Free Marketing Channels
Content marketing doesn’t cost any money, and if you’ve got the time, it’s actually one of the most effective ways to build a loyal audience. Blogs may be old, but they’re still effective—link building is incredibly important if you want to generate targeted traffic to your website.
Social media is free, targeted, and doesn’t require much time to master. Find the best platforms to reach your customers and see what types of content resonate with them. Instagram is typically pretty great for engaging millennials, Snapchat for teenagers, LinkedIn for entrepreneurs, and Facebook for everyone else.
Always Be Ready to Outsource
You’ll never be able to scale without outsourcing certain processes of your business. Start by targeting the non-essential roles like graphic design, legal advice, and even SEO consulting.
If your business can’t breathe without you micromanaging, you need to go back to the drawing board and figure out a more sustainable way to scale.