Launching a new company is hard, but scale a startup is even harder. It requires bigger risks, a more complex organizational structure, and the challenge of “turning a startup culture into corporate values”.
If you’re thinking about moving your business to a new level, there are different options for how to do this.
Not every startup has the expertise, infrastructure, and budget to turn the idea into a real product on its own. Scaling a company means finding ways to optimize processes. It requires planning, some funding, and the right systems, staff, processes, technology, and partners.
So, let’s discover what scaling is and who needs it, and finally, how to scale a tech startup?
Let’s start with defining the terms scaling and growth and the difference between them.
Growth stands for the process when the company’s revenue increases in the exact same way (with additional investment in technologies or human resources). In this case, the formula may work like this: more orders lead to the need to hire more workers, which brings more revenue in general.
Scaling refers to the process of increasing a company’s revenue exponentially (without additional investments) To get a maximum income with minimum expenses.
According to Forbes: your company is ready to scale “when you have a proven product, proven business model and about to expand to new geographies and markets”.
The first thing you need to do before starting this process is to ask yourself whether your company is ready for this. There are a lot of startups that failed because they started this journey too early with the same approaches and didn’t realize that all the business processes have to evolve as well. Basically, what got you here won't get you there. So, be ready to pivot.
Are you preparing your startup to scale up? Here are a few thoughts:
According to Michael Alter, a clinical professor of entrepreneurship at Chicago Booth:
“Business is really a movie, sometimes the plot's a little different. But once you've seen the movie, there's real value. And the issues you have around scaling are very similar across businesses. So finding somebody who's seen the movie is really helpful, and when you get somebody who's seen the movie, it's like, it's magical.”
From the very beginning, every startup evaluates the same questions: how to get to the next level, how to reach the audience, does the business has the capacity to grow? 90% of new startups fail, 50% of businesses make it to their fifth year,40% of startups actually turn a profit.
How can you know when your startup is ready to scale? Here is our list of the signals that you are ready to expand:
An example of such transformation is Jellyvision, a software company based in Chicago, Illinois. Initially, it was the company that made games on CD-ROMs. Eventually, those things became outdated, just like the company’s original business model. And so, there was a critical need to change. Jellyvision went from a hits-driven B2C gaming company to a B2B enterprise SaaS company. They got into health insurance, and this transition is recalled as their scaling.
If you filled out the checklist mentioned above and are still wondering how to scale a startup, let’s proceed to the next part.
Once you decide to scale the software startup, here are the steps worth taking.
It may sound obvious, but start with the basics and come up with a startup scaling strategy that shows continuous innovation.
To expand your business you need to attract new investments. Build a thoughtful business plan of the exact sum you need for development. The most convenient way to do so is to reach out to investors and your ability to justify a strategy will definitely help.
To strengthen the team, you may consider hiring globally with lower rates but the same work quality. It’s a great tool that gives the opportunity to concentrate on core processes whether you delegate some company functions or hire a vendor to conduct the full cycle of product development.
Imagine if you need to develop your product or you have an idea to launch a new one. Of course, you can rely on an in-house team or even expand it. But to do so you need to recruit and train a staff of developers. Set up a workplace, think about the HR team to keep work-life balance within your company. The strengths of external development are the ability to quickly attract specialists of the desired industry and the ability to optimize costs. When working with vendors, you pay only for the working hours of specialists and do not cover other expenses.
Besides, if at first, outsourcing was mostly used to save costs, now startups and little businesses are delegating not just non-essential activities but those that demand high-quality performance.
Other benefits of scaling up startup with dev team
To be scalable, your company should function just fine without you. Trust us, it will save a lot of time if you set up
That is worth remembering that your target audience will be different from the one you are used to. Users have found you and remain loyal despite some of your bugs or other issues. Now it's time to pay attention to those who expect a little more from your product. Turn the focus from a set of customers that got you here because it is usually not the same set of customers that will get you there.
The world’s finest products don't always win. Somebody else who may have had a great product but terrible scalability is losing while your plan makes the product recognizable and successful. So, don’t forget about the marketing strategy of how to attract new customers, because what worked to get them earlier differs from modern approaches.
Software is fundamental. If you invest in technology, it would make the process of scaling more convenient and less expensive. Automation, for instance, minimizes manual work, runs your business at a lower cost and in a more efficient way. An established CRM system helps with managing customer data and offers them a better user experience.
So, how to scale up business or startup? Why does someone succeed and others fail? There is an opinion that winners are those who intersect technology invention with the business invention (that include new business models, approaches, etc) and then they move really fast to establish it. Those who pay attention only to the technological component and forget about other processes (e.g. marketing) don’t keep up with competitors.
The last question is whether your business system and the team will be able to accommodate growth? If so, here is one of the most convenient approaches, hiring a dedicated software development team. It works if:
Outsourcing vendors have the technical staff and experience that enable them to be more efficient than your company. To incorporate these functions internally takes a lot of efforts, resources (such as time or money). So, the solution is to find a reliable partner that will scale your business if you want it.
Inoxoft stands as a trustworthy software development provider and efficient user experience design company. Our clients obtain the best cost-effective solutions, convenient software development services and build with us long-term partnerships.
If you have any questions, feel free to contact us. Let’s implement your business idea together!
Publish Date: August 6, 2021 11:20 AM