How to Scale a Business?

‘The Lean Startup’ by Eric Ries and ‘Growing Pains’ by Eric G. Flamowitz and Yvonne Randle. If you’re an entrepreneur, you have surely heard about them or even read these books. Scaling a business is not an easy task; a helping hand is always welcome. What makes a good change in the organization? What metrics really matter? What to do when you don’t know what to do?

First of all, don’t panic. You’re not the first and you sure won’t be the last to find yourself in the situation of change. Explosive growth or not – your company is going through a transition and it’s up to you to steer the ship while avoiding reefs.

Scaling a business – What will happen

Here’s what’s going to happen:

• You will be faced with multiple changes on multiple levels
• You won’t be able to finish at least one topic, you’ll have to wait for consequences from another one
• Explaining the reason for a change, its implications to the whole organization and its customers will drive away some percentage of employees. They won’t understand the necessity and the impact. Let them leave, find new ones. The loss of experienced and valued staff should be counted in. It’s a natural process, not everyone will agree with the nature of tectonic shifts.

What you can expect from the change:

• Better understanding of your own organization, its vision, mission, business goals, customers and surroundings
• More bandwidth for communication, tasks and customer support due to elimination of bottlenecks
• Clearer and shorter decision paths
• More efficient marketing and PR
• Better products and services
• Higher employee and customer satisfaction rates
• More efficiency and better roadmap execution for future changes/products/services/internal and external announcements

Startup’s challenges

There are challenges that all startups face on the way to an established company.

1. Rapid growth. This is a tricky one and can easily spiral out of control. The ‘too big too fast’ rule seems to be a very democratic beast. It doesn’t discriminate – no industry is ever safe.
2. Rapid scaling. The opposite situation takes place when a company believes that demand justifies everything. The sad case of Zenefits shows us that anything can happen. Hyper-growth driven policy is never a good idea. In fact, a joint study conducted by University of California, Berkley and Stanford University proved, based on a research of 3200 internet startups, that 74% of them had failed due to a premature scaling. Hiring specialists, managers, large staff with generous compensations without a stable stream of revenue. Failure to bring on board a talented sales team, overbuilding the product with ‘nice-to-have’ instead of ‘must-have’ features. Cultivating users not impacting profitability, focusing on wrong market segments, lack the consciousness to monitor market’s reactions, pursuing growth too quickly. All these are very common among failed startups.
3. Rapid competition miscalculations. Startups often find external financing. So what? A lot of people with passion, vision and determination can bring an investor on board and get funding. Not many of them find loopholes to make money. Everything is said and done? Everything gets recycled every few years with a little room for improvement? New companies, business models, products, services, features, marketing slogans? Everything has already been invented? Not exactly. It’s a good idea to not only watch your competition but also to embrace and transform their mistakes. Find out what works and where’s the room for improvement. Look intensely for cheaper but quality materials, talents, know-how. Don’t throw away what they’ve been throwing out for years. It’s not about trash-bin ideas, it’s about the fine print nobody out there bothered to read. Compensate for their miscalculations, use it, innovate!
4. Rapid hiring. Finding talent isn’t easy. Companies that scale extensively, tend to hire without due diligence. Their needs for employees and managers are so big that the struggle doesn’t equal quality. Firing people in order to look for new talent only deepens the chaos.
5. Rapid fire. Market is demanding, no matter what your company does. Anticipating competition’s movements and customer migrations, searching for niches, lower costs… Everything is spiralling very quickly and the only way to guarantee success is to react. Preferably with a finger already on the trigger, with multiple targets in crosshairs and the intent to kill. Yeah, that’s not how an established company deals with growing pains.

How to keep the business on rails

Easy does it. There are a few things you can do to not only keep the business on rails but also thrive with a relatively decent sense of security.

1. First of all – forget about the profits. No, seriously. Money is only a by-product of your success. Drive your company with passion and knowledge coming from experience. Add the impact you have on the company – your personality can be an asset.
2. Be flexible. Previously quoted study clearly shows, that companies able to adapt and pivot when the market is changing, can make 2.5 times more money and can experience 3.6 times more user growth than everybody else.
3. Build a balanced team. According to the study, teams consisted of both business and technically oriented employees earned 30% more money, experienced 2.9 times higher user growth and on top of that were 19% less likely to scale prematurely compared to teams that went heavy on either business or technical site.
4. Seek council. Asking for help doesn’t have to mean an admission of failure. It rather shines a light on what kind of leader you are. Responsible, conscious, eager to expand horizons and search for opportunities. Utilize advice, read, pay attention to performance metrics and don’t assume old ways of doing business will work 2-3 years from now. Everything changes.

At CSHARK we pay great attention to mentoring. We work with startups – Husarion, which focuses on robotics, the Knights of Unity – a group of software product development professionals dedicated to gaming, AR and VR, and with VecCtor – a German telematic and logistic startup.

Here’s what Piotr Sobolewski, a CEO of Knights of Unity, has to say about cooperation:

For us, scaling our business was all about hiring competent and proactive project managers, salesmen, marketers, financial manager and so on. That was the challenge. We’ve managed to overcome it by inviting CSHARK to participate in the process. Our internal trainings for new hires and participation in meetups turned to be very beneficial but CSHARK’s help with international leads in the field of Industry 4.0 made a real difference. We’ve also gained legal and economic expertise, that was invaluable as well. CSHARK saved us a lot of headaches by not sentencing the team to learning on our own mistakes.

If I were to give advice to a company that needs to grow using a rational timeframe and cadence – you can’t handle everything on your own. Find a partner that can help you and does what it does well. CSHARK turned out to be a great partner!

Dominik Nowak, a co-founder and CEO of Husarion:

For us, scaling was about becoming a world-leading company offering cutting-edge technologies for engineers making robots, drones and autonomous vehicles. The second big challenge involved reaching our potential customers. The solution? The team of talented and ambitious engineers, working hand in hand to expand and improve our technology. Free educational and handy content also helped.

CSHARK played an invaluable role in the process of scaling. The company helped us by sharing know-how and experiences. CSHARK achieved a goal of being a big organisation working for the customers all over the world and it’s inspiring to see how scaling developers and sales can boost a business. Good partners understand your product, technology and goals. They feel market trends and help you reach customers. We’re happy to say that CSHARK delivers on all fronts.

These words, however very kind, prove that the most important part in company, scaling business or not, lies in trust, communication and understanding of the nature of your business, surroundings and partners. Smooth scaling depends on you as a board member or a manager. The rest comes naturally.