Your start-up has been in operation for a while now. Profits are streaming in and stakeholders are starting to get used to seeing your company’s name around. You know a scale-up is in the works, but what exactly is a scale-up? And when do you decide that it’s time for one?
Here’s a quintessential guide to navigating a scale-up.
A scale-up, by definition, is not a start-up. A start-up is usually, though not necessarily, a new entrant into an industry who is very much still in the development stages of product positioning and consumer segmentation. A scale-up is a product or service that has already been validated in its market and is looking for methods to achieve exponential market growth.
So, in short, a scale-up is the next step that every start-up owner seeks to embark on. But not all start-ups are ready or suited for the scale-up.
According to StartupGenom, 74 per cent of business failures are due to premature scale-ups. Scaling up is risky, especially if your business is relatively new and still struggling financially.
In response to a Quora thread on start-ups and scalability, Growth Advisor John Seiffer says that a start-up is ready for a scale-up if it has found a viable business model. Such a model, according to Seiffer, is “loosely defined as finding a way to acquire customers such that the cost of acquiring a customer is less than the lifetime value of the customer”.
Regardless of expert advice, the final decision ultimately lies with you. Once you are confident that your current business model is able to systematically and effectively accelerate growth with a small margin of loss, you are ready.
There are many financial and administrative concerns to keep in mind as you prepare for the transition from start-up to scale-up. Don’t let it overwhelm you. Here are three basic, baby steps to guide you through the initial stages of scaling up.
1. Automate your business — Now that you have a business model that works, it’s time to maximise efficiency and bring in new opportunities. Invest in necessities to accommodate your expansion such as having an automated payroll or investing in a large cloud storage for administrative organisation.
2. Hire the right people — Automating things won’t completely get the job done. Part of increasing efficiency and effectiveness means getting the right people on your team. Used to doing things yourself? You’d be surprised at how much more you can accomplish with more people on hand managing different aspects of your business.
3. Stop making it about you — A big part of scaling-up ironically involves you letting go. A business is truly scalable when it is able to function without its founder at the driver’s seat. Pick a good team and trust them. It might seem unsettling to let go of the steering wheel, but giving ownership to a team means establishing trust and rapport while letting your business grow and develop organically.
Scaling up is every start-up’s dream and one that has become a reality for Singapore shopping app, Carousell. It recently accelerated its international expansion, moving into its latest location, Hong Kong. It has also risen to become a direct competitor of Rakuten Ventures in Southeast Asia. Rakuten Ventures was its one-time investor.
It can be done. So, here’s wishing you every success in your ambitions to scale up.