The Ultimate Guide To Successful Startup Scaling

Maddy Martin
|
2023-03-07

Your new product or service is gaining traction, attracting customers, and bringing in a steady stream of income. Your startup is no longer an idea — it’s a reality. So what’s next?

To move from startup to corporate giant, you have to be willing to take some leaps of faith. In many cases, you have to be willing to invest time, energy, and money into startup scaling.

At Smith.ai, we have the resources to help you scale your startup. From virtual receptionists to sales and support staff, we can help boost your approach. But first, you need to choose a scaling strategy, know the risks and challenges, and understand our 11 startup scaling tips.

Table of Contents:

What is startup scaling?

Startup scaling is the process of growing a business and its profits without substantially increasing its investments. Usually, a startup considering scaling has already gone through a season of growth.

In order for a startup to succeed long term, customers and revenue should grow exponentially as costs and investments grow incrementally — or not at all. 

Growth vs. scaling 

The main difference between startup growth and scaling is the cost and investments. During a period of growth, a company will invest a significantly larger sum into its strategies in order to boost revenue. 

In contrast, scaling startups have usually already invested money during their growth period, so their cost sums should be lower even while seeing the same type of continued revenue growth.

What to consider before scaling

Before jumping into scaling, it’s important to determine whether or not your company is ready. Consider these aspects of your company before scaling:

  • Team: Determine if your current team is ready to change the organization’s operations, brainstorm innovative ideas, and increase productivity.
  • Customers: Determine if your company has a strong, loyal customer base.
  • Goals: Determine if your company and team have reached or exceeded previously set goals, or if they are consistently outpacing goals.
  • Cash flow: Determine if your cash flow can support scaling investments. 
  • IT systems: Determine if your company’s software systems and infrastructure can handle substantial growth, more customers, and more tasks.

If you feel your organization is lacking in one or more of these areas, you may want to reconsider scaling. It may also be possible to involve investors, add new team members, or update IT systems to move forward with startup scaling.

Choose a scaling strategy

There’s no right way to start scaling. Every company's team, product, cash flow, customers, software, and goals are different, so each needs a personalized scaling strategy.  

While your strategy may be unique, your company will likely focus on one of these seven objectives:

Funding 

If your company has followed a general route of funding so far, it may be time to change up your options. Be sure to communicate with investors and be transparent about your plans for expansion.

Technology

Investing in new, scalable technology systems or updating existing ones can help your company serve your customers better. Communications platforms, business and SaaS applications, CMS systems, and cloud-managed computing systems should all be efficient and flexible enough to support a startup that is considering scaling. Plus, following a technology strategy will set you up for future goals. 

Marketing

Creating new marketing strategies and assets will expand your company’s reach, effectively increasing visibility and supporting sales. Popular options for this strategy include:

  • Updating content formats
  • Paid advertising
  • Search engine optimization (SEO)
  • Email marketing
  • Social media marketing

Product or service

Expanding your business offerings can help your startup’s scalability. Producing new products, features, add-ons, or services can increase your customer reach and better support current projects.

Processes

If your organization is using processes that are inefficient or expensive, it’s time to look into new and better options. Streamlined and automated processes — including workflows, production schedules, sales systems, and more — are popular choices for companies using this strategy. 

Management

For effective scaling, it can be important to have workers who know what they’re doing. Hiring experienced management can reduce stress and confusion while keeping employees and processes organized.

Company independence

Your startup will eventually need to survive without you. This strategy focuses on creating processes that are able to be done by other people, leaving your business flexible and independent.

Startup Scaling Strategies

11 Tips for startup scaling

After creating a startup and initiating a period of growth, it’s time to begin startup scaling. To successfully scale a startup, follow these 11 scaling tips.

1. Strategize

Even if you know the types of scaling strategies, you may not know which one is best for your company. First, make a list of your company’s:

  • Strengths
  • Weaknesses
  • Prospects

Use this information to determine which goals your company could reach with the least amount of monetary investment. This is also when you should talk with other business owners or experienced scalers and attend events for startups to gain additional insight into startup scaling.

2. Streamline systems

If your startup is using a variety of different systems or software for video conferencing, file sharing, team messaging, email, and other company activities, it’s time to streamline. Do some research about what systems are the most flexible and versatile, or search for options with compatible CRM integrations.

A few of the systems you should consider investing in include:

  • CRM system: Customers can make or break a startup, so investing in a strong, reliable CRM system can help you gather, store, analyze, and protect customer data, as well as measure performance. 
  • Cloud computing: Access to information is also critical during startup scaling, and keeping information on cloud-based systems can simplify data access.
  • ERP system: A system dedicated to your company’s resources, reports, labor, and facilities can streamline management decisions and keep processes transparent.

3. Automate

If you’ve strategized and streamlined, it’s time to automate. Time is a valuable resource when you’re scaling, and automating processes can redistribute your workers’ time.

Some tasks you can automate include:

  • Website chat: Automation can improve customer service, answers to booking inquiries, consultations, tech support, service suggestions, and more.
  • Appointments: Customer and vendor appointments can be scheduled or canceled and reminders can be sent.
  • Payments: Payments, receipts, and invoices can be automatically received and sent.

4. Outsource

For large established companies, it may make sense to hire employees for every need. However, startups may not have the funds, time, or expertise needed to hire people for one-off or nonessential tasks. If this is the case, outsourcing is the solution.

Outsourcing refers to the act of hiring companies or individuals from sources outside the internal workings of an organization. The most common benefits of outsourcing are:

  • Time: Less time is needed to find, hire, and train employees, so projects can begin and end faster.
  • Cost: Outsourcing can be expensive, but there are less labor and administrative costs than an internal team would require — including office space and labor taxes.
  • Talent: If you’re outsourcing, you can hire teams from almost anywhere. This expands your talent pool and project possibilities.

5. Invest in marketing

Marketing is the best way to reach your audience and appropriately advertise your company’s values and products. There are a variety of strategies to consider when marketing your startup, so spend some time researching their benefits and understanding their limitations.

Consider:

  • Direct marketing where email or SMS messages are sent directly to your clients.
  • Content marketing where targeted content is created, published, and distributed online through blogs or other platforms.
  • Social media marketing where posts keep your company connected to its customers, share news, receive feedback, and promote product growth.
  • Influencer marketing where popular content creators promote your company or product.
  • SEO optimization where content is optimized using keywords and other marketing strategies.

6. Improve branding

Want to set yourself apart from the competition? Focus on your branding. This includes company values, culture, product advertisement, logos, and other important company aspects like:

  • Website design and other online and offline assets
  • User experience of products and platforms
  • Colors, fonts, and tone of voice
  • Customer service

If your branding is strong, your customers are more likely to remember you and recommend your services.

7. Staff effectively

Even though you may choose to outsource some of your work, your startup still needs to have a strong, reliable staff to scale. Your in-house employees should perform essential tasks that cannot be done by machines or people outside your company.

When staffing, choose individuals who are:

  • Multi-skilled
  • Quick learners
  • Innovative thinkers
  • Great with time management
  • Diverse

This is even a great time to hire people with past scaling experience, which can add an additional layer of knowledge and experience to your company.

8. Know your audience

A well-defined target audience can help direct your company goals, products, and marketing. To take it one step further, knowing your audience allows you to create solutions:

  • Designed with your buyers in mind
  • Worth paying for
  • Valuable enough for recommendations

Targeting a certain demographic is one thing, but knowing the questions they ask, the reasons they need your product, the ways they obtain your product, and future problems they may encounter is another.

9. Address finances

While successful startups have usually already spent time investing, fundraising, and raising equity, a startup’s finances are still important at this stage. Consider if you will need:

  • To fundraise more
  • To move investments
  • To pay off outstanding debts
  • To bring on strategic partners

Without a strong financial position, opportunities, or cash flow, it can be difficult to scale a startup.

10. Determine expansion

Before moving forward with scaling, it’s important to determine how you want to expand your business. You may consider one of these two expansion approaches:

  • Vertical expansion: diving deeper into your niche market and current customer base
  • Horizontal expansion: creating new products and services to reach new areas or countries

Your chosen approach will help determine where you should focus your time, energy, and money, and where you need new or experienced staff.

11. Prioritize accountability

Scaling can only be successful if your entire organization is invested in the process. By asking everyone to be accountable for personal and organizational successes, you can increase their feelings of ownership, opportunity, and commitment. This is where company culture and teamwork matter most.

Accountability can also:

  • Encourage communication
  • Build team trust
  • Create a safe space for critiques and feedback
Tips for Startup Scaling

What is premature scaling?

Premature scaling is when a company expands too quickly for technology, products, or services to keep up, and it is one of the top reasons many startups end before truly succeeding.

Hiring too many employees, attracting new customers to an out-of-date or nonfunctional website, failing to update IT systems, or producing new products or services that need large investments could all lead to premature scaling.

6 Premature scaling risks 

Besides the end of a startup, premature scaling comes with many risks. The top six premature startup scaling risks include:

  1. Negative cash flow
  2. Overloaded systems
  3. Worker burnout and turnover
  4. Lack of legal compliance
  5. Lack of customer growth
  6. Loss of product-market fit

To protect against these risks, it’s important to make sure your startup is ready to scale by following the startup scaling tips above.

Scaling challenges

Even if your company is ready to scale, you may still face challenges. If startup scaling is the next step for you, be aware of scaling challenges, including:

  • Hiring the right people 
  • Investing funds and capital in the correct spaces
  • Failing to adapt to changing circumstances and business markets
  • Moving too quickly for your current products and processes
  • Operational issues with supply chains and vendors
  • Managing data flows as they grow

If you’re prepared for these challenges, startup scaling could be an effective next step for your company. 

Startup Scaling Examples

If you’re considering investing time, money, and energy into startup scaling, it may be beneficial to look at examples of prosperous companies that used scaling to grow. While these three companies — Pinterest, Amazon, and Airbnb — began as small startups, scaling helped them mature into industry leaders.

Pinterest 

Strategy used: Marketing

Pinterest launched in 2010 as a photo-sharing platform, effectively targeting a market before other platforms like Instagram launched. While many people weren’t originally interested in Pinterest’s offerings, the company invested heavily in marketing for their “invite-only” platform and met with existing users to better understand their ideal customers.

Eventually, their marketing efforts — especially word-of-mouth marketing — took off, allowing the company to grow without investing large amounts of money into other areas. Pinterest also simplified the ability to share pins, boards, and ideas, taking advantage of other social sites like Facebook.

Amazon

Strategy used: Product or service; management

In 1994, Jeff Bezos began Amazon as an online book retail store, believing that the internet would continue to grow and prosper. Almost immediately, Amazon began a backward approach to product development. Instead of creating a product for an unidentified audience, Amazon found audiences and created products specific to their needs and queries.

Amazon has also created services and products designed to offer similar or better experiences than well-known competitors. These product designs have been spearheaded by intelligent, well-versed employees — like Mike George — who were retained or hired due to their product and development knowledge.\

Airbnb 

Strategy used: Marketing; processes; technology

Airbnb launched in 2007 as a response to Craigslist and is now the largest vacation rental marketplace. It scaled by enhancing its processes, investing in unique marketing, and creating easy-to-use sites and technology. Airbnb began advertising door-to-door and then allowed potential customers to repost their Airbnb bookings on Craigslist. 

The company’s website was more user-friendly than its competitors’, and the eye-catching product photos, personalized experiences, and affordable prices helped propel it ahead of Craigslist in the rental space. Additionally, Airbnb chose to invest in international sites and programming in order to continue its growth in countries outside of the U.S.

Start Scaling with Smith.ai

If your company has strong and reliable teams, customers, cash flow, and IT systems, it may be time to consider startup scaling. Streamlining and automating systems are a great place to start.

At Smith.ai, we can send email and SMS follow-up messages after phone calls, automatically respond to Facebook messages, run outreach campaigns, and provide 24/7 outbound calls for sales support to help you scale with ease.

Book a free consultation or check out our pricing page to learn more about how we can help prepare your startup to scale.

Maddy Martin

Maddy Martin is Smith.ai's VP of Marketing. Over the last 15 years, Maddy has built her expertise and reputation in small-business communications, lead conversion, email marketing, partnerships, and SEO.

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