In the early stages of a startup, your priorities will likely focus on articulating a problem, defining a value proposition that addresses a large market opportunity, and coming up with a breakthrough solution that creates a defensible basis around which to build a company.
Eventually, and often quickly, this focus shifts to execution. Knowing when to scale is a key part of that.
Too Early or Too Late? Sync and Pace…
Scaling can become a critical issue. If you scale too early, it will cost you dearly. But if you scale too late, you may miss the opportunity to lead a market transformation.
It comes down to two things: sync and pace.
Stay in sync with your team, and ensure you’re keeping pace with the opportunity to win. With that in mind, here is a framework to help you think about scaling, known as “The Deliberator’s Dozen.”
These 12 things can help take the guesswork out of whether you are ready to scale or not. So if you’re in doubt, because you’re not getting repeatability and predictability in some or all of the metrics and measures below, then that should inform your decision.
Signs You’re Ready to Scale
- You can package your product or service and sell it repeatedly without major modification.
- Your marginal cost of customer acquisition is reducing.
- Time and cost for customers to adopt and deploy your product or service is lessening and the engagement from your customers is increasing toward a long life cycle value.
- The servicing costs for your customers are reducing.
- The upgrade cycle for your customer is shortening and the dollars generated from upselling are increasing.
- Customers and partners are building on your products and services, validating your ability to create differentiated IP and meet market needs.
- You’re developing disruptive and defensible business capabilities in things like your go-to-market model.
- Your business model is showing real leverage and at least a potential path to profitability that attracts the funding needed to keep growing.
- The time and cost to attract and onboard people in all major areas of the company (e.g. sales, services, R&D, etc.) reduces.
- Your management team is successfully developing and promoting people from within, building on a cohesive startup culture. This culture enables you to deal with both problems and success and is respected as such inside and outside the company.
- Your market opportunity is continuing to be validated as big enough and growing fast enough for you to be able to meet stakeholder expectations for years to come as you scale successfully.
- Even if you are “changing the world for the better,” you have learned not to “drink your own Kool-Aid” and instead validate your metrics from the outside in. And with all that your gut still tells you you’re excited to get up every morning and do it again faster, better, cheaper!
What is your experience and what could you add to this list? Please share your thoughts in the comments below.
