Three Mistakes for Startups to Avoid When Preparing for Growth

Founding a startup and overseeing its operations until profit margins are reached – and sustained – is no small feat. Yet what lies beyond can be an even more significant challenge for first-time entrepreneurs. Small businesses with a good track record and the promise of high potential for development will be able to secure funding to grow, but the execution of a growth strategy can make or break the company.

Non-essential investment

When a company invests in new systems, employees often need to receive the appropriate training as well. It’s difficult or impossible to recoup money and time spent in this way, so startups often look to examples of proven success to follow their template. But this can lead to the wholesale adoption of processes which aren’t always the best fit for a given company. For example, a small-scale manufacturer might copy the warehouse and logistics model of a bigger competitor, but if they don’t handle the same volume of material, automatic conveyor loading systems will not yield a good return on investment; manual loading of pallets with a truck skate would be better suited for such an outfit. As the saying goes, your mileage may vary. Whenever possible, test innovations on a small scale before committing major resources to what will be a long-term process change.

People at a business meeting

Not preparing for complexity

Holding on to old practices is a part of human nature; it may be linked to survival, as evidenced by the persistence of traditions and beliefs. You can probably think of a few examples from personal experience, often harmless or amusing. Entrepreneurs – being human – are prone to the same behaviour, but in a leadership role, the consequences can hold back growth. A typical example would be hands-on involvement in almost everything; this may have been a driver for success at the startup stage (not to mention the practicality of the typical startup budget), but on a larger scale, businesses can’t realistically operate with the founder’s sign-off on everything – it becomes a bottleneck.

Growth brings increased complexity, and in the words of leadership coach Marshall Goldsmith, “what got you here won’t get you there.” Business leaders need to be able to adapt to the new realities as their operations scale up. Tasks which a single team member could have performed under the startup framework may need to be handled by a committee; higher transaction volume could require hiring or consulting with a full-time accountant. A standardized process for handling leads will enable the business to close a much higher volume of sales, and so on.

Ignoring the human element

When startups move on to the next stage, the game changes in many ways – and this isn’t always welcomed the same way by everyone in the original team. In a transition state, people are usually expected to be flexible and handle responsibilities that don’t necessarily match the job description; for those who prefer a stable workload, this can lead to their departure from the organization. Others may also use it as a platform to take their career further at another company. Employee churn can lead to a loss of culture, and new hires may not be similarly focused on the customer experience as the pioneers were. Strong continuity is vital and will help any business maintain a strong human element in the face of change.

Startup growth is a good thing, but even in this aspect, there are potential mistakes to avoid; recognizing them will help any business make the transition process much smoother, and hurdle challenges efficiently.

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