We have seen the explosion of startups in today’s businesses, those innovative and emerging companies based on technology. Well, at some point in the life of these companies, they aspire to “climb a step” and become a Scaleup, going from entrepreneur to businessman. But what is a Scaleup? How can a startup continue to grow? Do not miss this post where we explain everything!
What Is A Scaleup?
When the turnover of startups grows 20% per year for more than three periods in a row or they reach more than one million dollars in financing, they are called Scaleups. Scaleups are those companies that started their activity as startups but intend to expand, reach new markets, and new customers, and improve their products to make them modern and innovative.
These companies are characterized by being enduring over time, the Scaleups that fail represent a very small percentage. They are companies that are resistant to job losses during recession processes and generate jobs in the long term. The Scaleups promote the professional development of their employees, since as they grow and expand their workforce, workers move to middle management.
For this reason, these companies have a great impact on economies and job creation, so they pose a challenge that makes us wonder if it is feasible to continue providing resources to new companies, even with the risk that they do not exceed 5 years of existence. activity, or start with a new trend based on promoting Scaleups, companies that have already demonstrated that they have the bases to continue growing.
Taking this step brings you numerous advantages such as the possibility of exploring new markets, new products, and new ways of doing things. However, they must be companies that have a great capacity for permanent learning, as well as living in constant change.
In short, to understand what a Scaleup is, we could say that a startup is a baby and a Scaleup is a teenager. I encourage you to read more about this blog here: What Is Scalability And How To Implement It In Your Company Or Startup
How To Go From Startup To Scaleup
Going from startup to Scaleup is based on finding a repetitive model, a trend. These are some of the steps you must follow to achieve this:
1# Choose The Right Moment
The first thing you should do before considering turning your startup into a Scaleup is whether the time is right to grow. The growth stage involves some risk and it is important to choose the right time to do it. To do this, we recommend that you ask yourself these questions:
- Do you have the right team to grow? The work structure is a key weapon for the growth of a startup. You must have employees who are trained and committed to the success of the organization.
- Are the customers looking for you? The fact that it is the markets that approach you is a strong indicator that your brand has established itself and positioned itself in the minds of its consumers.
- Do you have enough capital? To keep the company afloat while sales exceed investment you need to have some economic capacity.
- Is growth compatible with your lifestyle? Even if your company is prepared to scale, you will not achieve success if you yourself are not prepared for the commitment involved.
2# Large-Scale Marketing
Find ways to market your product to find real customers and not just “first customers.” Today a great commitment to marketing is required if you want to stand out and be able to scale in the midst of the saturation of information that consumers receive through different media. In this sense, Growth Hacking can help you grow exponentially.
3# Automate As Much As Possible
Growing a startup requires a lot of work activity. You should consider the benefits that automation can bring you. Despite the fact that at first, it involves a large investment of time, you will see that it will pay off shortly. Therefore, it automates cloud storage, new employee training, bill payment, etc. You will be able to access your data, contract, study the market, pay, etc. Too much faster.
4# Measurable Objectives
You cannot control what you cannot measure. Despite the fact that the primary objective is to grow, certain goals must be established within the process and thus divide the work into more concrete and manageable objectives. When we set small goals that can be accomplished in a short time, we give ourselves more to their resolution.
5 # Build The Right Team To Climb
The number of employees in your organization must increase significantly, making sure that it is a qualified and competent team and establishing organizational routines that lead your startup to growth. It is not only about hiring but about training your employees and retaining them.
Scaleup Vs Startup: How Are They Different?
Now that we know what a Scaleup is and how to become one, let’s see how exactly it differs from a startup:
Startups and Scaleups are at different levels of funding. The former usually have zero funding or a seed round. The latter are starting their second round of financing, or have already obtained it, which means they have the money behind them to grow.
Team Member Roles
When startups begin to experience their early stages of growth, founders and every other employee are expected to be able to do a little of everything. Typically, the startup founder will hire people with a wide variety of skills. This saves recruitment costs, as there is often very little money at this stage.
Instead, once a business starts to scale, it’s important to start hiring more people and delegating functions. Scaleups must hire specialists and create departments, all while continuing to pursue that growth.
Startups can take more risks. They have a small team, an untested product, and a meager amount of money. They have less to lose if everything goes wrong and more to gain if it goes right. The Scaleups have already built something, they have an established team, they have money from investors, and a product that needs protection. They should focus on avoiding as much risk as possible.
Another of the main differences between startups and Scaleups is the fit between the product and the market. Startups are still not sure if their product will make their money. Therefore, they continue to experiment with their product in order to perfect it. Scaleups, on the other hand, have already perfected their product. They have shown that it is economically sustainable. Your funds can be used to grow the business on a larger scale, while startups must use your funds to refine their product.
The Most Common Mistakes When Growing A Startup
The needs of Scaleups are different from those of a startup since it requires specific characteristics in terms of capital, management, skills, and organizational processes. These are some of the factors that certain Spanish companies are not capable of assuming to climb that step that allows you to define yourself as a Scaleup. These are some of the most common mistakes made when growing a startup:
Focus Your Growth On The Product
Having a good product does not necessarily lead you to turn your company into a Scaleup, the product is not everything. You can’t ignore your client.
Not Retaining The Customer
Customer retention is the most difficult part of the sales funnel and it is important to focus on it since it is essential to grow. Obviously, you have to invest efforts in getting new customers, but we cannot forget the importance of getting the customer to buy your product again.
Believe In A Magic Formula
There is no magic wand that makes your company grow, growth is based on the sum of many small things that allow you to move to the next level.
One of the most common mistakes made when scaling is trying many things in small doses instead of focusing on testing just one. It’s good to experiment, however, by trying too many things without prioritizing you don’t get deep. Focus on just one and measure, correct, and test it again, if it really doesn’t work after exhausting the possibilities it’s time to change.
Obsessed With Profitability
Despite the fact that profits are the objective of the business, it is important not to become obsessed with it, as it can affect your clients and your relationships with the company. Take care of the human factor.
Do not fall in love with your product, you must be able to go further and be objective.
What did you think of this article? Leave your comments and share!
And if you want to be able to develop and validate an idea, propose a business strategy, and learn the essential skills to succeed in a technology-based venture, take the IEBS Master in Entrepreneurship. We will wait for you!
Frequently Asked Questions (FAQ)
What Is Scale Up In Entrepreneurship?
Scaling up is a vital aspect of entrepreneurship that involves enlarging a business in terms of its magnitude, income, and influence. This process entails broadening the operations, augmenting the clientele, and optimizing the efficiency of the enterprise to enhance its returns. For a startup, scaling up is a crucial juncture that guarantees its continuity and triumph in the long run.
When A Startup Becomes A Scaleup?
The Organisation for Economic Co-operation and Development (OCDE) defines growth as a scaleup when it experiences a growth of more than 20% in terms of turnover or number of employees over a three-year period. On the other hand, startups tend to have a slower pace of growth.
What Is Scalable Startup Entrepreneurship?
Scalable startup entrepreneurship involves developing and expanding a business with the ability to grow quickly and consistently. The goal is to establish a business model that can easily adapt to growth without being constrained by factors such as production capacity, resources, or location.
What Is The Difference Between Startup And Entrepreneur?
As a means of generating income, entrepreneurs initiate or finance a business venture. Although startup founders are committed to expanding their companies and creating a positive influence on society, entrepreneurs prioritize identifying the most effective path to achieving profitability.
Learn More About What Is A Scaleup? Going From Entrepreneur To Entrepreneur From businessjohn