Answer these 5 questions before you scale up your tech startup
Many tech startups go off the rails despite having the right people, enough resources, a good base of customers. Why? They often scale up too soon without working on building a cogent framework for transitioning to mature firms.
In fact, premature scaling contributes to 74 per cent of startup failures, according to Startup Genome that surveyed 3200+ high growth tech startups. Also, tech startups that scale properly grow 20 times faster than startups that scale prematurely, cites the same report.
So If you want to grow your tech startup at a steady pace, you should think twice before taking the leap.
Here are the five questions that can help you do successful scaling up of your tech startup.
1- Have you achieved your goals?
Every tech startup fixes goals when they started out. What are your goals? Have you achieved them?
It is not a wise decision to start the process of scaling up if you have not met or exceeded your previously set goals.
Some common goals for an early stage tech-startup are:
- Building a minimum viable product (MVP)
- Launching beta version of the product
- Hiring resource to start operations
- Launching the complete product
- Getting the first round of funding
- Setting growth milestones
You might have chosen any of these goals or different goals based on your tech business.
As all the startups are different, so are their goals. The point is you should meet or exceed your goals. Only then, you should think about scaling up your tech startup.
Also, scaling up requires you to set new goals (short term and long-term goals) for your tech startup. How can set new goals if you haven’t met your previously set goals?
2. Have you got your strategic plan right?
A strategic plan is a plan to achieve what you want to achieve. Your old strategic plan, if it didn’t incorporate future scaling up, might not work. It is because scaling is different than growing.
Therefore, you should tweak your strategic plan so that it can help you achieve new business objectives post scaling up.
And make sure that scaling up your tech start doesn’t adversely affect your existing work culture.
3. Have you made an aggressive marketing plan?
The idea of scaling up a tech startup comes into existence as the startup owner is poised to grow his/her tech business. Previously set business goals have been met or exceeded. Now, it is time to spread wings and search for a new market to grow rapidly.
However, scaling up won’t bring the intended outcomes if there is no solid marketing plan. Have you made an aggressive marketing plan?
It goes without saying that doing marketing for a tech startup is different than the marketing for a brick and mortar store. So you need to leverage tactics that will deliver the real results.
Here are the six effective ways to spread the word for your tech startup and grow your business:
- Paid search
- Display advertising
- Organic and paid social media
- Email marketing
- Digital PR campaigns
- Content marketing
Most tech startups need to educate their prospects to convert them into customers. Therefore, content marketing is found to be an effective marketing strategy for tech startups.
Make a kickass marketing plan before you scale up your startup. Believe me, it will maximize your success.
4. Do you have enough resources?
Be it hiring more people, expanding your business to new locations, launching a new product, or run a marketing campaign, you will need money to run these operations.
How is your financial health? Do you have enough resources to scale up your business?
“Contrary to conventional wisdom, the most dangerous period for entrepreneurs is not when they start up from scratch but when they scale up for growth,” states Harvard Business Review.
When you are at the initial stage, there is very little to lose. But when you are scaling up your tech business, things can turn hot really fast if you don’t have proper financial planning in place.
So make sure you are able to use multiple sources of finance and raise money from investors before you take the plunge.
5. Have you forecasted your industry for the next 2-3 years?
The technology landscape is changing so fast that many tech products are becoming obsolete in just two or three years.
The competitive dynamics may change in the next 2-3 years as you focus on scaling up your tech business, which can make it difficult for you to stay profitable.
So it is imperative that you should make an educated guess about how the industry is going to move in the next 2-3 years. And the only way to do it is to be fully aware of the latest trends in your industry.
Subscribing to newsletters of your industry, keeping tabs on Google Trends, and regularly talking to your customers are some proven ways to make an educated guess about the latest industry trends.
Scaling up your tech startup is a big decision. Once you have taken this decision, it is difficult turning back. So have answers to the above questions to make scaling up more successful.
What about you? Have you scaled up your startup recently? Share your experience. I’d love to know about it.