"Little kids, little worries, big kids, big worries," says the proverb. It's the same with companies. Scale-ups face as many challenges as start-ups. Fast-growing scale-ups need to create processes and structures, without losing the speed and agility of a start-up. This is sometimes like balancing on a tightrope.
The evolution from start-up to adult company is inevitably accompanied by growing pains. In recent years, the ecosystem of scale-ups around the world has matured considerably and scale-ups are raising more money than ever before so this evolution will be even faster in the years to come.
The best of both worlds: Structures of a company and the mindset of a start-up
If you go from start-up to scale-up, you have to professionalize. You can no longer be without structure and without processes. This isn't the most coherent part of doing business, but you need to adjust your operations and your organization if you want to grow. What is scaling? Double or up to ten times your turnover without doubling or multiplying your workforce. You can only achieve this exponential growth by deploying automated processes.
That's always a balancing act. Scale-ups need processes and structure, but not much. They must not become heavy. They need to maintain their speed and agility, because that's their biggest competitive advantage over companies that are much larger and have been around for much longer.
It is necessary to reconcile the best of both approaches: combining the assembly of structures with the creativity of a start-up. The advantage of processes is that you will introduce standards, working methods and principles. This is necessary when your company has reached a certain size. But, you also need to be able to keep changing quickly. If you lose that, you will also lose competitiveness.
From Founder to People Manager
Start-ups and scale-ups are often led by entrepreneurs who have no experience with people management. They are creative handymen who start a company from scratch and do it very well. They work with their product, release new features, and do business with customers while managing many other aspects outside of it. In the initial phase, when you work with a small team, this is an advantage and even a very strong recommendation. As your business grows, you need to be able to delegate, organize, and coordinate. A lot of your time has to go into people management and communication. An efficient and effective communicator ensures he keeps the big picture and tells a consistent story without getting lost in trivia. This is not only important for the outside world, but also internally. Growing a company is a people business. If you don't have your people with you, it won't work. Putting everyone's goal in the same direction is no easy task.
Of course, there are exceptions, but the best entrepreneurs are often not the best executives. They are different roles. As a founder, you can be mentored and trained to grow in this role as a people manager and communicator, and there are certainly entrepreneurs who achieve this transformation. But, if it doesn't work out, you must have the courage to recognize that your company may need a different kind of leadership and you have to pass the baton to someone else. You can stay on board safely, but in a role that suits you best and where your added value is greatest. Remember, this is easier said than done because your business is so much more than just a business it's like a child. Still, there are some great entrepreneurs who are rapidly shifting from executive roles to the companies they start and help scale.
There are different types of entrepreneurs. Founders who shine in the start-up phase are not always the best profiles to further professionalize the company in the scale-up phase. You cannot combine all functions. At some point you have to choose between an operational role and a strategic or tactical role. The longer you wait to make that choice and change, the more you'll get in the way of growing your business.
Dare to say no
We help scale-ups adjust their growth strategy and translate it to their organizations. Crafting a growth strategy means above all, daring to focus. Should the customer experience be central? The product? The price? Choose what kind of company you want to be and follow your course. It also means daring to say no.
Extensions often have problems because they start customizing products as per customer suggestions. They completely change their product for a customer. As a start-up that urgently needs customers, you can still do this. As an expansion, you can't turn your business upside down for every new customer. Unless you make the strategic decision that that customer can open up a whole new market, but you have to consider that very carefully.
Does internationalization stand or fall with the right profiles?
Scale-ups are born global and they need to become active outside national borders as quickly as possible to scale. But, internationalization remains difficult. Every market is different: there are cultural differences, new competitors are emerging, different regulations, etc. It is extremely important that you have the right people on board. Internationalization stands or falls with the right profiles. It is preferable to work with local people who know their market through and through.
Talent is scarce. Scale-ups must respond to an authentic and attractive purpose and formulate attractive employment conditions that fully encourage entrepreneurship. Talent is in short supply, and in other markets, that talent is more likely to work for bigger names in larger markets than for expansion. This, therefore, requires you to fully capitalize on an authentic and compelling purpose, as well as formulate compelling employment conditions that fully encourage entrepreneurship.
In addition, you can look at the advantages of acquisitions or franchising. But, then you have the difficulty of cultural adjustment. It will take some time looking for the right formula. It may also differ from market to market.
Inspiring examples of success
Start-ups and scale-ups need inspiring examples that drive an ecosystem forward. Now there are also many "second generation" entrepreneurs who are turbocharging our ecosystem. They share their experiences, invest and also set up new businesses.
That speed remains crucial because expansions work in a first-scale environment. Companies to which most capital flows are therefore better armed in the global arena. It will take some time to find the right formula. It may also differ from market to market.
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