Hello WU Learner!
Startups tend to to face many struggles and obstacles internally and externally. Founders are keen on scaling their business as quickly as possible and strive to turn into reputable survivor startups. Setting your sight on further expanding your business would turn into an exciting transformation and would help you to have a remarkable achievement both on the startup level and on an individual level. Moreover, you should bear in your mind that your investors look forward to benefiting from the growth promised by you. Against this background, scaling up could bring up challenges and cause a headache for entrepreneurs.
So why do the startups fail? Below are the five most common traps startups fall into:
1.Attempting to scale too soon
Premature scaling is the most common trap the startups fall into. Founders profoundly believe in their business.Therefore, they start to scale up their startups prior to bringing their product-market fit to perfection. Startups focus on team expansion, expensive marketing or fancy offices without knowing whom their products are geared towards, that is, their customers.
2.Scaling needs a common mindset
Each member of your team may not be eager to grow as much as you do. You might all have different ideas regarding the steps to take. In general, team members are the co-founders themselves and their attitudes impact scaling process significantly. Some of the co-founders may want to sell their shares or might wish to keep their business flat.
3.Expanding your team with the wrong people
The decision of scaling up brings about team expansion and specialized role decentralization. The founders focus on managing more than one function at the beginning whereas as they scale, founders don’t have to look after everything. They need to pass those functions to new managers and their sub-team that join the team. While startups hire new talents, it is hard to find right people. They tend to neglect new employees’ cultural fit and attitude. In the long term, considering how employees work with your company and culture is vital.
Moreover, lack of experienced people who have been functional in scaling up business is another problem that the founders might encounter.
4.Retention of the new team members
Even though founders build their team with the right people, they might struggle to retain those new team members. Team members are the people who emotionally and financially invest in the business up until scaling kicks in. Yet, as the startup grows, paid employees come into the picture. In this regard, the new employees might not be as passionate and committed as the core team. Against this background, the founders might have to work on keeping the motivation of the employees high and they need to make them run towards attaining the company goals.
5.Process is out of scaling
As founders scale their startups, they endeavor to keep the company as it is. Yet, scaling up brings about its own dynamics and the startups need to redesign their processes. In other words, founders have to change their internal communication structure. A communication process that works well with the company that is made up of four people will not work with a company of 15. As such, scaling up entails standardization of feature sets and customer services. In doing so, founders need to be agile in designing their structures in an attempt to have steady growth.