Don’t Scale to Fail: What Your Startup Needs in Place First

fast-blur-train-e1436302768491-Optimized

Initial growth is an exciting time for any startup. It’s a powerful and compelling feeling to watch your product start to increase in users. While it’s encouraging, initial growth can also be misleading. As your startup begins to pick up some early momentum it’s easy for first-time entrepreneurs to get ahead of themselves. In a survey of  3,200 startups, Startup Genome recently found that 70% of failure came from ‘premature scaling.’

Taking the time to be a 100% confident in your product, service, and positioning can save you time, money, and a lot of aggravation. Bob Sutton, organizational behavior expert at Stanford’s School of Engineering, states, “The hallmark of successful scaling is knowing when to hit the brakes so you can scale faster later.” Startup growth isn’t an overnight process, and scaling isn’t a guaranteed method for success. Before deciding to scale, companies should make sure they have the following:

A Well-Tuned Product

Before even considering to scale, you should be absolutely sure that your product is in the best shape possible — no matter what it is. If your selling gloves to protect ice-cream lovers from a drippy cone, then it better be the most stylish, environmentally friendly, ice cream proof glove money can buy. Yes — that was an Ali G reference…

And what a perfect segue. In order for your startup to be successful, people need to want your product enough to spend their own money on it. If they won’t pay for it, then neither should you. A few conversions and a little bit of research do not guarantee a customer base either. You may have a brilliant idea, but there’s no point in investing money into an idea without an existing audience to sell it to. Your market research needs to be exhaustive. Field studies, interviews, focus groups, etc. Leave no stone unturned.

A Customer-First Philosophy

Once you’ve identified a base of customers and a need, user experience is especially important. Even the smallest differences can have the biggest impact. For example, Uber saw an exponential increase in user adoption after switching to Braintree, a simple and easy payment platform used by other successful startups like Airbnb and StubHub. More users mean more revenue, which eventually enabled Uber to scale into the successful company it is today.

Equally important to the experience you provide your customers are the relationships you build with them. It’s imperative to build positive relationships with these people who are sustaining your product and business. A successful entrepreneur makes customer service a priority from the beginning. Keeping it top-notch will only become more difficult with growth, so it is a good idea to set that foundation early.

Simple things like replying to comments and engaging consumers through social media can help build customer loyalty. Especially in the early stages, your initial customers are key to converting new ones. Arming them to be advocates by providing good service enables them to spread brand awareness and trust. Brand awareness and trust = growth.

A Strong-Team

During the initial growth phase of a startup, it’s essential that your team shares the same mindset, vision and values. Your team should be made up of driven and motivated individuals who value the growth of the company as much as you do and will make similar sacrifices to ensure it. One wrong team member can damage the effectiveness of the team by 30 to 40%. So choose your team members wisely.

In the beginning stages, while your team is still small, establish a consistent means for open communications. When you can’t be in the same space physically, utilize tools like Slack to ensure that steady line of communication doesn’t waver. With a philosophy of transparency team members are more prone to voice new ideas and suggestions for improvement. As author George Bernard Shaw once said, “The single biggest problem in communication is the illusion that it has taken place.”

Growth can be exciting and make you crave for more. Before you jump the gun, however, you need to make sure you have all the necessary pieces in place. A contractor wouldn’t build to the penthouse of a building before making sure it had a solid foundation. Neither should you.

What else needs to be in place before you scale?

Leave a Reply

About BMV


Phone: (617) 564-0446
745 Atlantic Ave (Inside WeWork South Station)
Boston, Massachusetts 02111