By Chris Christoff, co-founder of MonsterInsights
The adventure of scaling a business is exciting, challenging and frustrating all at the same time. When a business moves past the initial stages of establishment, it's time for growth.
But an expanding business doesn't come without growing pains. Sometimes there are unforeseen obstacles that test you as an owner. Having your own company is challenging and forces you to make difficult decisions for its success.
You don't want to make the common mistakes that a lot of startups do when they encounter growth. So, here are three that you should avoid if you're in the process of scaling your business.
1. Building Without a Foundation
If you're going to scale your business, you have to make sure there's enough groundwork in place. Without a solid foundation, you'll have nothing to build on.
Before scaling, make sure you have enough customers and growth in the first place. Your company has to be at a certain level of financial success before it can grow further, so your priority should be acquiring new customers and retaining loyal ones.
To lay the foundation, focus on:
- Creating a growth strategy for your business model. Prepare each step of your marketing funnel from lead generation all the way down to making a sale.
- Solidifying your company's mission and core values. Patagonia makes its values clear in its mission statement: "Build the best product, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis."
- Cultivating respectful relationships and open communication with your employees.
- Talking regularly about how company culture should be day to day. What do you want a typical day of work to look like? What behaviors do you want everyone to exemplify?
2. Poor Hiring Practices
The people who were there for the startup phase of the company aren't necessarily going to be the same people who will expand on its growth. According to a study by the Center for American Progress, replacing employees is expensive. For workers who make around $50,000 or less, it costs companies on average about 20 percent of that salary to replace them.
To get a better feel of who your prospects are and if they're a good fit, start by asking them questions that have to do with the direction you want the company to go in. Do they know its mission and values? Do they have experience with startups that are just starting to take off? Do they possess attitudes of people you'd like to work with? Do they understand the vision you have for the company?
If you aren't confident in your ability to hire wisely, invest in working with a recruiting firm who can take your company's values and match them to the right candidates. When finding someone to work for your company, create a hiring plan. When business is growing, it can be stressful not to have enough employees to run everything smoothly. But taking your time with the hiring process is essential if you're going to employ the right people for the job.
3. Scaling Too Quickly
It's wrong to assume that scaling your business as quickly as possible is the best bet for success. If you don't move at a steady pace, it can prove to be too much too soon.
A good example of scaling too fast is the video game developer company Zynga. A few short years after its inception, the company hired close to three thousand employees as sales poured in. However, it underestimated its costs and didn't properly budget for this influx, resulting in the company laying off a fifth of its employees.
When you're forming professional partnerships and launching exciting campaigns, it's understandable that you want to get your business growing at record speed. However, nothing about scaling a company should be done quickly without carefully assessing every aspect of the process.
Make sure your capital matches your growth and your day-one customers are happy. Create a plan for years ahead and predict growth before it happens. It's always better to estimate costs being too high rather than too low. Acting without careful planning will cost you time and money and prove detrimental to the company's growth.
When scaling a business, it's important to anticipate what could go wrong so that you can take preventative measures against it. It's also crucial to learn from other companies' mistakes so you don't repeat the same ones. With enough planning, proper hiring and moving at the right pace, your company will be able to scale efficiently and successfully.
Chris Christoff is the co-founder of MonsterInsights, the leading WordPress plugin for Google Analytics.