These days, “opening” a business or launching startups is considered one of the most straight-forward things anybody can do. People don’t even bother to put down workable business plans anymore. It’s become a sort of “get to that bridge and cross it situation.”
Just come up with an idea that seems profitable, find a name, file for an LLC, get a website, set up a funnel, and start putting out your products or services. There’s barely any preparation for adversity or a time when the current setting is no longer suitable for a growing business. Essentially, the business has been started, but most people don’t know when it’s time to scale out of the startup phase.
Scaling a business simply means growing an existing venture without losing the present stability. Having the skills, funds, and attitude to sell a product or provide a service is just half of the recipe. Excellent entrepreneurship is achieved when a businessperson knows exactly how to set the stage to enable growth and progress in a business.
According to the U.S. Bureau of Labor Statistics (BLS), “20% of new businesses fail during the first two years of being open, 45% during the first five years, and 65% during the first 10 years.” Generally, research shows that over the years, 90% of fresh startups are at the risk of failing. The most common reasons have remained constant – poor investment ideas, bad marketing, poor location, inadequate or nonexistent planning, poor financing, and so on. However, not many people are talking about the cumulative issue of proper scaling and expanding.
At some point, you’d have to outsource it
According to entrepreneur and online business growth expert, Hanson Cheng, several promising startups end up hitting the rocks too early because the business owners are convinced they can handle everything themselves. With over ten years of experience with scaling and promoting online businesses to successful companies, Cheng has dealt with several cases of founders hanging on to the “I can do it all” mentality at the risk of losing everything.
“It’s one thing to acquire the necessary skills and technical know-how to run a specific business, but the most avoidable problem starts when they are convinced they can do everything themselves and the solution is simply to keep working harder,” Cheng said.
Many entrepreneurs are so determined to see their startups grow even when they are doing the wrong things, so much that it locks their mentality into one mindset – they, the captain of the ship, will never give up their command even if it means sinking with the vessel.
Sadly, burnouts are as destructive as they are common. A lot of motivational speakers and business coaches promote the idea that startup founders have to pour in at least 23 out of 24 hours a day into their businesses while it’s still at that crucial incubation stage. You are supposed to work so hard and constantly keep busy that at some point, staying busy becomes directly proportional to productivity. You end up burning so much of your energy and time on things that could simply be delegated.
In the long run, you’d discover how much of a penny-wise-pound-foolish situation you’ve dropped into, trying to save funds by running the business alone and losing money because you can’t take on as many customers and clients as you could.
According to Cheng, the core objective of any business scaling model should be to build efficient systems that allow entrepreneurs to distinguish the several workable parts of their businesses. Essentially, breaking a business down into a correlation of essential activities that can be handled separately. This allows you to allocate the appropriate amount of attention and energy to each functional unit without running yourself ragged trying to push one large bulk of activities forward.
“A lot of people are just intuitively running around,” says Hanson. “However, because they haven’t taken the time to just plan and look at the impact that each activity is bringing, they’re giving equal weight to everything they do. Everything ends up being important.”
Getting out of the hole – what can you do?
Firstly, a businessperson interested in solid growth needs to dump the mentality that they can do everything by themselves. It doesn’t matter if this conviction is fueled by excessive self-confidence, trust issues, or greed – whatever it is, it has to be dealt with if any real growth is to be seen.
Time will come when you will need helping hands, advisors, consultants, and even educators to scale even the most successful startups. They all form part of the growth process and you’ve got to be ready to make room for everyone else coming on board.
You don’t have to hire twenty people at the same time to grow your business. Come up with a plan and break your business down into the most essential and functional units. For instance, a food delivery business could be split into production & packaging, marketing & promotion, delivery & logistics, and accounting while the founder focuses on creating partnerships and closing deals that really move the needle. One or two people could constitute each unit and everyone would clearly understand their roles.
At this point, a tiny startup formerly run by one person and taking only four customers a day has been scaled up to a four-person business that caters to at least 50 people a day – a typical example of exponential growth.
On hiring and recruitment, Cheng encourages startups to always look out for capable and trustworthy people within their own immediate network – family, friends, neighbors, ex-classmates, colleagues, and so on. If you can’t find the right people within these networks, you can try finding talent on LinkedIn. The recommendations section of the more established competitors’ profiles are gold mines for finding excellent people to add to your growing company. Usually, you’d find professionals who may already have worked in operations more advanced than yours.
“Most people don’t take enough time to understand their business so they don’t know what they’re hiring for,” says Hanson. “So it’s really important to take the time to lay out every step of your business so you can see which one moves the needle the most. By doing this, you can prioritize on who to hire and who to look for.”