signs your startup is ready to scale

Signs your Startup is Ready to Scale

Startups are increasingly becoming the more popular model of business as they show the most potential to grow. So what is scalability? Well, quite simply it’s the ability to grow and multiply profits without involving any additional funding and resources than what the company had initially. However, nearly 70% of startups fail to achieve this scalability. Without the scalability element, your firm would just be a small business and not a startup. Now let’s get into the signs that your startup is ready to be upscaled.

Product Market Fit

Only when your product fulfills certain needs of the consumers in the market will it be considered to be a viable product and show the potential of scalability. A more positive sign of scalability is when you start receiving an order in excess of your ability to produce, then your startup will be goaded into stepping up its production to meet this new demand.

product market fit

Solid business model

In order to have a rapidly growing business, one must plan ahead and ensure that a proper game plan is in place to direct such spikes in output. A solid business model would involve projections of growth for a good amount of time, around five years or more, else keeping up with a rapidly scaling model becomes a problem. The business model must factor in the cost of acquiring a customer and costs of production; when the cost of acquiring a customer is less than the lifetime value of a customer then the business model gets viable.

solid business model

You have the right team

Without the right team, nothing can be achieved, you’ll need a team that is willing to duke it out through tides and storms and whose values are close to your own. The closer your team feels to each other and the more committed they are to the company’s welfare the more likely it is you have the right resources to be a rapidly scaling business.

right team

Company ethos

A company’s ethos is something that evolves naturally as the company grows, not exactly something that you need to consciously ideate. A company’s ethos dictates how a company relates to its employees and customers. Once your company has a well-defined ethos, growth will naturally follow in suit.

company ethos

Profitability

This one is a deal breaker unless you’ve been turning a profit for a while and in good measure, you cannot hope for scalability of your startup. Just turning a profit is not enough, but one needs to have the ability to assess one’s product and see which parts are turning a profit and scale up those components.

profitability

These are the signs that your startup is ready to make the leap and scale upwards, so if you see yourself clearing all these parameters, then good news!

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FAQs

Scaling refers to the period in a startup’s life when management and board feels like they can systematically accelerate growth with  confidence that the resources they put in will yield great and measurable results.

Scaling generally involves 4 things-

  • Making sure Product can operate at Scale .
  • Marketing the product at Scale.
  • Designing the product for scale.
  • Gathering the right team for the process of scale.

Ability to predict/ forecast the change in the demand of your product or service is by far the most important factor while scaling a startup. While factors like a solid business model, the right team, and profitability may be important, your ability to keep in check the demand cycle of your product/service will surpass/trump the rest.

When a company is ready to scale, it will typically start to utilize many more resources, primarily money, people and systems, to aggressively grab market share.
Here are the 3 most common reasons for Premature Scaling-
1. Issues of cash burn and working capital requirement will start amplifying.
2. It’s much more difficult to pivot or retool the organization with numerous individuals within the organisation and multiple  layers of management.

A solid business model would involve projections of growth for a good amount of time, around five years or more, else keeping up with a rapidly scaling model becomes a problem. The business model must factor in the cost of acquiring a customer and costs of production; when the cost of acquiring a customer is less than the lifetime value of a customer then the business model is viable.

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