When you’re first starting your business, leadership is relatively simple. You have a few employees (if you’re lucky), and the degree of oversight required is fairly small. The strategic vision is your own and there aren’t as of yet too many moving parts to wrap your brain around. You work hard, but the work is rewarding because it’s your pet project and watching it succeed, even to a small degree is tremendously affirming.
If you’ve got enough money coming in to be comfortable, you might even go as far as saying that running your startup is good fun. Unfortunately, as your business grows, often, so do your headaches. So, how do you grow your business without also growing your stress level to extreme proportions? I will share a few insights here that I have attempted to implement in my own startup venture.
1. Give Yourself A Cushion
All too often, startups are boom or bust. Each new customer can be a tremendous boon to your confidence, and, more importantly, your finances. However, it is important not to become too dependent on any one account for the overall health and stability of your business. My general rule of thumb is to have twice as much revenue as I need to survive.
As your staff grows, and your flexibility diminishes, you may find this to be excessive, but it is always important to leave yourself a cushion. In the event that your finances take a hit, you are not left scrambling for cash. Consider having flex time for your employees, allowing them to work extra hours or even overtime.
Can any of the work be done on an as-needed basis? Can it be done by independent contractors? These types of relationships are often less costly than taking on additional employees and the taxes, benefits and overhead that comes with them. Do your best to incorporate a labor cost structure that is both flexible and scalable.
2. A Scalable & Repeatable Business Model
When you are first starting your business, it is easy to fall into the trap of trying to be all things to all people. If you want to make your business scalable and repeatable though, then you need to be selective with the types of projects that you take on. What are your core competencies? What are your profit margins on the tasks you perform for customers, or the products that you sell?
All things being equal, you want to focus on the activities/products that have the highest margin. This can become difficult when you operate a service-based business. It helps to think of your service as a product and create packages that are highly systematised and can be easily replicated. Creating efficient processes for your service offerings is going to be instrumental and save you time and money.
3. Switching Hats For Scalability
There is a theory out there that often the people who start a business are not the ones to manage it once it reaches maturity. While this may hold true in many cases, I maintain that the business can be better served with the original founders steering the ship. The company was built on your vision, knowledge and expertise. I see no reason while this can’t continue to be the case. However, doing so requires a shift in mentality and function.
Risk taking and out of the box thinking is encouraged in a startup. Often, it is the very reason the business has any success in the first place. While you don’t want to lose your ability to iterate or pivot, or discourage creativity, there comes a point when you need to focus on scaling the business model you have and sticking to your strengths. This is why the innovators and creators and often not the ones to grow and scale.
If you want to remain in that role, you need to put on your CEO hat and be very selective about what changes you choose to implement. The larger the business grows, the larger the ripple effect when these sorts of shakeups occur. If you hope to find yourself among the ranks of startups turned success stories, you need to grow alongside your business. You cannot continue to operate as you once would when your group was tight-knit and agile.