Business process vs start-up mindset
“Little children, little worries, big children, big worries,” the saying goes. It’s the same with businesses. 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. Sometimes it’s like balancing on a tightrope.
The evolution from start-up to adult business is inevitably accompanied by growing pains. In recent years, the scale-up ecosystem 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: the structures of a company and the mindset of a start-up
If you’re going from start-up to scale-up, you need to professionalize. You can no longer be without structure and process. It’s not the most consistent part of doing business, but you have to adjust your operations and 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.
It’s always a balancing act. Scale-ups need process and structure, but not much. They should not become heavy. They need to maintain their speed and agility because it’s their greatest competitive advantage over companies that are much bigger and have been around for much longer.
You have 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 business has reached a certain size. But, you must also be able to keep changing quickly. If you lose that, you will also lose competitiveness.
From Founder to People Manager
Startups and scale-ups are often led by entrepreneurs who have no experience managing people. They are creative do-it-yourselfers who start a business from scratch and do it very well. They work with their product, release new features, and do business with customers while handling many other aspects outside of it. In the initial phase, when working 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. Much of your time should be spent on people management and communication. An effective and efficient communicator ensures that they keep an overview and tell a coherent story without getting lost in trivialities. This is not only important for the outside world, but also internally. Growing a business is about people. If you don’t have your people with you, it won’t work. Getting everyone’s goal in the same direction is not an 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 of people manager and communicator, and there are certainly entrepreneurs who are achieving this transformation. But if that doesn’t work, you need to have the courage to recognize that your business may need a different kind of leadership and you need to hand over 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 more than just a business, it’s like a child. Yet there are great entrepreneurs who quickly move from leadership roles to the businesses they start and help grow.
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 this choice and change, the more you will hinder the growth of your business.
Dare to say no
We help scale-ups adjust their growth strategy and translate it into their organizations. Building a growth strategy is above all daring to concentrate. Should the customer experience be central? The product? The price? Choose the type of business you want to be and follow your journey. It is also daring to say no.
Extensions often have problems as they start customizing products according to customer suggestions. They completely change their product for a customer. As a start-up that urgently needs customers, you can still do that. As an expansion, you cannot disrupt your business for every new customer. Unless you make the strategic decision that this client can open up a whole new market, but you have to think about it very carefully.
Does internationalization stand or fall with the right profiles?
Scale-ups are born globally and need to become active outside national borders as quickly as possible to scale. But internationalization remains difficult. Each market is different: there are cultural differences, new competitors emerge, 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 best to work with locals who know their market like the back of their hand.
Talent is rare. Scale-ups must respond to an authentic and attractive purpose and formulate attractive employment conditions that fully encourage entrepreneurship. Talent is scarce, 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 a genuine and compelling purpose, as well as formulate compelling terms of employment that fully encourage entrepreneurship.
Additionally, you can look at the benefits of acquisitions or franchising. But, then you have the difficulty of cultural adaptation. It will take time to find the right formula. It may also differ from market to market.
Inspirational examples of success
Startups and scale-ups need inspiring examples that drive an ecosystem forward. Now, there are also many “second generation” entrepreneurs who are energizing our ecosystem. They share their experiences, invest and also create new businesses.
This speed remains crucial because the extensions operate in a first-scale environment. The companies to which the most capital is flowing are therefore better equipped on the world stage. It will take time to find the right formula. It may also differ from market to market.
Edited by Erik Linask