Scaling a startup should only happen after the startup has the right team, the right business model, product-market fit and traction. Scaling before you have those things in place can put your company in danger. According to the Startup Genome Report, 74% of high growth internet startups fail due to premature scaling.
It is therefore vital that you have those ingredients in place before you take steps to commence scaling.
During the startup phase founders usually roll up their sleeves and get involved in all areas of the company and become ‘good’ at doing lots of tasks. I think some founders get addicted to the chaos and ‘hustling’ of the early stages.
However, founders need to step back and trust their team to become experts and empower them to do so. For this reason, founders must delegate responsibility to responsible and effective managers who monitor staff, KPIs and other company metrics.
The managers are responsible for maintaining the standards were created in the pre-scaling stages. Great entrepreneurs must fuel the creative genius within the company and continue to innovate, lead and inspire. If you are a founder, stay in this zone.
Build a Successful Board
Australian startup founders have every right to be excited about their prospects of succeeding, given the support that is available. From Government grants, tax incentives & concessions to accelerators, mentoring and growing investor confidence.
The world is starting to take notice that Australia is fast becoming a haven for leading tech talent. This should come as little surprise, given Australia’s historical reputation for producing some of the top innovators and inventors in the fields of science, engineering and robotics.
Given the level of talent that can be found Downunder, everything looks rosy, right? Well – sort of. You see, while Australia’s innovation, research and development may be charging ahead, some say one area Australian founders can improve upon is company management. Particularly when establishing and managing company boards.
Having the right company board is integral to a startup’s success. Typically, in a startup’s infancy, there are 2 or 3 founders who are on the board by default. However, once the startup starts gaining traction in the market, it requires the expertise of an experienced board.
The board plays a critical role in your company’s development. Problems with company boards can have catastrophic consequences. To make matters worse, board problems usually become apparent at the worst possible time – before scaling.
A recent KPMG study “The Startup Board Report” spearheaded by Amanda Price of KPMG Australia along with co-founders of Think & Grow – Anthony Sochan and Jonathan Jeffries revealed only 55% of Australian startups would choose the same board again if they went back in time. The report also found 92% of startups said they have board members who are external investors. This data arguably indicates Australian startups entrepreneurs are willing to sell their seats at the board – and later regret it. Yet another contributing factor to poor board selection is 65% of startups that were questioned, do not have a formal recruitment process for board members.
The key when ‘hiring’ for board positions is to leverage skills, experience and connections. Treat the board hiring process in a similar way that you would when hiring key employees. You must look to the value that board members can provide.
Board members must complement one and other. It is not just the skills and experience you should look for in a board member. You also need board members who have deep connections in your industry and who can assist form strategic partnerships, advise on employing the right team members and advise on strategy.
Instead of accepting just anyone onto your board, write down a list of what you specifically want in a board member and then take it to the next step and identifying ideal candidates and pick up the phone have a lunch meeting and share your vision with them. You never know, if it does not work out with the person you target, they may recommend someone who may be better suited. In any case, take your time and do your homework before appointing anyone to your board and work on building relationships early in your startup.
The Important Aspects
As I am sure that you are very well aware, each startup is unique and it is therefore vitally important for you to get the right advice on your board as early as possible. This is where many startups get it wrong in the beginning, which often leaves them locked into inefficient or dysfunctional boards.
There are a number of factors to look for in board members. You may wish to hire a particular director for her experience in your industry. This director may have the market knowledge necessary for guiding your startup to achieve product-market fit. You may wish to choose another director for her connections in your industry to leading talent and can make significant progress in hiring key management or technical staff.
When seeking board members, it pays to be strategic. When considering the background, experience and the professional networks of potential directors assess how these attributes align to the goals of your startup.
Remember, relationships take time – founders regularly underestimate the amount of time it takes to form their board. Many founders and board members have known each other for a number of years, before hiring for a board position.
There may be many great people that you will likely meet in your quest to find the right directors. While your personal connection with those you meet is important, you must ensure candidates meet the criteria on your wish list. If you a director, you have a duty to make proper decisions for the benefit of the company and its shareholders.
Start reaching out to potential board members as early as possible. When you are unknown, it is far easier emailing a potential director asking for a small piece of advice than it is to arrange a pitch for an investment round. Build the relationship step-by-step and give people a chance to get to know you, your team and your company’s vision, capabilities and achievements.
You will likely need to speak to a lot of people, buy some lunches and attend plenty of events. Be relaxed in your approach, do not be too eager.
Develop Strategic Partners
Tapping into an established customer base can accelerate growth incredibly well. The name; strategic partnership is not a mistake. In fact, there is a lot of strategies (and creativity) you need to use to find the right partnership and it is important that your brand values align. For example, Nike and Apple partnered by cobranding Apple’s new sports watch. I cannot think of a better example of a strategic partnership than that.
Nike and Apple’s brands fit perfectly together, as they reinforce each other’s brand of being young, innovative and healthy. This powerful combination resonates powerfully with an exceptionally large audience.
More recently, another strong strategic partnership was formed between Spotify and Samsung. These two giants joined forces to provide a deeper integration of Spotify into Samsung phones, greatly improving the user experience.
There are many other examples of successful strategic partnerships. If you want to use a strategic partnership, you need to understand your company’s value that it can bring to the partnership. You also must be clear on the value that you want in return. Most importantly, you need to research to find exactly how that value will benefit both parties’ customers.
Explore New Markets
You need to think about two things. Do you want to expand your product or services to new markets in your country, or do you want to expand the same product or service into other regions? Perhaps you would like to do both.
Sometimes it is great to have a home-court advantage. Take for instance when international eCommerce giant, Amazon made its move into Singapore. It was faced with huge competition from Lazada – an epic stoush that will likely continue for some time. The lesson here? Be sure you know your competition, before moving into a new territory. Arguably, if it were not for Amazon’s extremely deep products it could have lost the stoush in Singapore.
Many Australian founders are tempted to move their headquarters to international regions because they will have better access to larger markets and more generous venture capital. However, there are cultural differences in other countries which can mean chaos.
Of course, it can be done. Absolutely. However, you need the right expertise to execute efficiently after you have a strong local market. Aside from the cultural differences in other regions, you must also be aware of currency, units of measure, tax, religions, beliefs and customer expectations.
Having an experienced manager in charge of addressing these areas before you set-up shop in other regions is critical. If you are planning on scaling internationally, you need to find the right people to advise.
Double-Down on What’s Working
Sounds simple, right? Well it is. As you begin to scale, it is tempting to move to new systems. However, before you scale, you should have a proven system for being profitable. For example, if your LinkedIn and webinar promotion is generating a return on ad spend (ROAS) of $3 for every $1 you spend, then you should increase your budget on that campaign, before considering hiring salespeople.
The lesson here is to only double-down on what has been proven to work, before you consider moving to another sales strategy, or entering another market.
Innovation should be woven into the fabric of your startup. As legend has it; Google allows employees ‘20% Time’ to develop their own projects. Google’s Gmail & Adsense are two of its most successful and insanely profitable concepts that were reportedly developed during Google employees’ spare time.
There are varying reports and rumours around 20% Time – some arguing that it never existed. Be that as it may, 20% Time is a brilliant example of how innovation can form part of an organisation’s culture.
Committing 20% of employee time may not be possible at the beginning of the scale stage. Instead, it can be as simple as engaging your team in weekly brainstorming innovation workshops. This can assist with company direction for the future. Small steps toward innovation can help build an innovation culture that should involve everyone.
A word of warning though: it is important not to lose sight of your core product. Innovate – but not at the expense of your core product.
It is critical in business to have business processes in place. You must simplify those processes; your team must be using them and your operation must be streamlined before you scale.
Ray Croc, the man who took over McDonalds, was renowned for his systems, processes and documentation. Croc also made his systems as simple as possible. He once said:
The simplicity of the procedure allowed the McDonalds to concentrate on quality in every step, and that was the trick.
You may also like to get a hired gun to review your processes in this stage. Not because your team doesn’t know the best way to go about it, but because it is always beneficial to have a fresh perspective.
I am a firm believer in all businesses having a process manual that steps out the process for every business task. That way all processes in a central place. The manual needs to be a living document, as it will change over time as you perfect your systems and your company grows.
Automating processes with technology is an important part of the scaling process because it prevents tedious and repetitive tasks that are boring for your team to do. Aside from the expense of having staff repeat boring and repetitive tasks, repetitive manual tasks lead to inefficiency, mistakes and poor morale.
There are many processes you can automate with technology. From sales, sending invoices, marketing and a whole lot more.
Let’s explore some of the best software tools on the market that can help you to automate tedious manual, repetitive tasks.
- Zapier allows integration between software that are not normally meant to be integrated. The integrations are called Zaps, which represent taking data from one application to another. For example, if someone submits feedback via a Google Form, the customer’s data can be zapped to MailChimp – which then sends a thank you email.
- ActiveCampaign is a leading platform I mentioned earlier. It is so good I want to mention it again. ActiveCampaign allows you to automate email marketing by sending a sequence of emails to your prospects on autopilot. It also doubles as a customer relationship manager (CRM) on the higher paid plan.
- Hootsuite and Buffer are essential tools if you want to automate your social media marketing – which can be very time-consuming. The amount of time that you can save with these software suites is incredible.
- RevealBot is a fantastic tool that you must check out. It allows you to create bulk ad variations for Facebook which is truly amazing. It also allows you to automate the ad scaling process. You can also automate the management of Google Ads, Youtube Ads and Snapchat ads on the platform.
- Calendly is essential if you are taking appointments. This incredible app automates the booking and calendar process. Now, with the assistance of Calendly, your customers can manage this entire process themselves.
- Viral Loops – while this is not business automation, I have to give this contest software a massive wrap! I have used it on a number of projects. Upon registering for a competition, users are asked to share the competition to get more chances to win.
Obviously, not all steps within a process can be automated with technology. But you need to automate as many steps in your processes as possible.