How to Scale Your Startup Without Spending a Fortune
Why do some startups take off like rockets while most others drift like leaky rowboats?
The key to startup growth is what’s commonly referred to as “scale.” Scale is something everyone will say you absolutely must have, but no one ever tells you what that means or how to get there.
Scale is this: Once your company settles on a working business model, you can’t just execute and repeat. Somewhere in there is another mandatory step: Refine.
In 20+years of taking startups from troubled-but-promising small businesses to efficient growth machines, I’ve learned that when startups stagnate, more often than not it’s because they spend all their time executing and zero time refining.
Scaling a business isn’t rocket science, but when done right, you could end up with a rocket.
What does scale look like?
If you’re thinking about growth, your company probably already has a compelling story. Or maybe you’re not quite there yet, but that doesn’t mean you can ignore growth. If your goal is to build a lawnmower, you’ll be just fine with a lawnmower engine. If your goal is to build a rocket, that engine will need to be replaced pretty early on.
So plan for it.
Your company’s growth phase starts when your product, your data, and your sales show that you’ll be approaching profitability in the coming six-to–18 months. Anything before that means you need to focus on viability — Will your product survive on the market? Anything after that means you should already be writing your company’s next story.
Every startup has three stories. Story A is what your company is chasing today. Story B is the near-term future. Story C is the billion-dollar story. We can use Amazon as a general example. Story A was selling books and CDs. Story B was owning eCommerce. Story C is owning commerce.
Applying that example to your startup: Scale is moving from Story A to Story B with an eye on Story C. You don’t have to be 100% accurate in the details of your Story B or Story C, but no startup every got to Story B without refining their operations and their approach to the market.
Here’s a general outline of a plan to do just that. Since every startup is different, apply these concepts to your own Story A. It won’t be cheap, but it doesn’t necessarily take millions of dollars in funding.
Plan A: Lean on data and technology
There’s just no excuse for any startup in this day and age to not have a data plan and a technology plan. It doesn’t matter that your business isn’t a technology play. If you have customers, you have data. If you have a website or an email address, you can exploit technology to grow your business.
If you are a technology play, your data and technology plan should be the first thing you address every morning and the last thing you refine every night. On the other end of the spectrum, if you’re a technology-agnostic company with a static website and a single email address, there are countless options available for you to refine your operations with every email you send and every visitor to your website.
No matter where your company is on that spectrum, don’t keep taking shots in the dark with your customer data and your technology adoption.
The plan: Develop a data and technology plan that will help you make decisions on launching new initiatives, creating new features, introducing new products, and entering new market segments, all with a focus on eventually building your company into a compelling Story B.
Plan B: Everything is geared to revenue and value
In any business, from the smallest to the largest, the only metric that counts is revenue. But revenue alone isn’t going to make a company successful, because any business can tell a good revenue story until you start digging into the details. The first layer under revenue is profit, which is determined by margins, which are defined by costs, which are spent acquiring and retaining customers.
When you keep digging, the source of all startup success is the value your company provides to your customers.
The plan: Develop a company-wide focus on revenue and value by adding high-margin value at every point in the chain. This starts with refining how the product is built, and extends through to how it’s sold, fulfilled, and supported.