Scaling is not bad. However, premature or unsustainable scaling may destroy your startup. To keep this from happening, you’ll want to develop a growth strategy focused on these 4 basic principles that will help you transition from a smaller company to a bigger company more smoothly and gradually.
Let’s take a look at what these principles are:
Principle 1: Automate your business process using fewer resources
Why do you want to hire more people? Is it because you need new employees to engage with your customers and keep them happy? Or do you simply need to solve different logistic problems and want more doers on your team?
I'm asking you these questions because, in some cases, you may simply need to update and automatize some of your business processes, and you can do that with fewer resources.
Let’s say you want to run a series of virtual summits for your leads and customers. You may think that you need an entire online events team to make that happen—someone in charge of the logistics, someone in charge of the event marketing campaign, and a core team that will strategize the online event, find the speakers, and build an entire network around the event. And let’s not forget the moderator.
But what if you could simply use a virtual summit platform such as Demio that helps you automate the logistics and marketing campaign, leaving you space and resources for the online event strategy?
Then you don’t need an online events team—all you’ll need is someone from your marketing department to strategize the online event and a good moderator with a charismatic smile.
This approach will help you reduce costs significantly. So before you consider scaling, ask yourself: “Can I automate these tasks and reduce the resources I’m spending on them?” If the answer is “yes,” then go for downsizing instead of scaling.
Principle 2: Find ways of generating revenue by investing less money
As Paul Jarvis asks in his book, “What if you generated more revenue by finding a way to spend less (again, for higher profits)?” Then, he adds, “You can scale up revenue, enjoyment, raving fans, focus, autonomy, and experiences while resisting the urge to blindly scale up employee payroll, expenses, and stress levels. This approach builds both a profit buffer for your company to weather markets and a personal buffer to help you thrive even in times of hardship.”
Wouldn’t this be an awesome business strategy? So instead of investing money into growing your business recklessly or in the wrong places, analyze your current situation and find ways to generate revenue with less money.
For example, you may discover that content marketing is much more effective (in terms of time) than paid ads and helps you generate more leads. Or, instead of creating advertising for your Instagram or Facebook, you could develop a sustainable, free LinkedIn strategy to increase brand awareness and get people interested in your company.
And instead of increasing your marketing team, which would lead to needing a bigger office and more supplies, you could find one or two reliable freelancers who could work for your company remotely.
There are numerous ways to increase revenue without draining the company’s resources.
Principle 3: Reduce the number of assets and get better at selling them
There’s no bigger temptation than wanting to grow your product by adding more and more features or to “double down on your marketing strategy” by creating different media content, such as podcasts, YouTube channels, different blogs, webinars, etc.
I tend to believe that more means better: more product features, more customers, more webinars, more leads, etc.
But this is not always the case, because quality trumps quantity.
People don’t want to use a cluttered product with hundreds of features they will never try. On the contrary, your users need a well-crafted product to help them solve a very narrow and specific need.
Instead of “growing” your product, use tools such as Upvoty to collect user feedback, see what needs to be changed, and improve your platform for friendlier usage. Also, instead of just creating massive amounts of content, learn how to distribute them better by building a community.
So whenever you want to scale up, remember that increasing your number of assets (whether related to your product or marketing strategy) isn’t the answer.
Instead, you’ll want to use your resources to get better at selling the few excellent assets you have to offer.
Principle 4: Focus on reducing the churn rate
Scaling usually means doubling down on your marketing and sales teams to increase brand awareness and attract new leads and prospects. But why not use these investments to strengthen your product and customer success teams, which will help reduce the churn rate?
You see, as this ProfitWell article explains, “Statistics vary from industry to industry, but research indicates that customer acquisition is a far more expensive venture than retention."
In fact, it may cost up to 5 times more to acquire a new customer than to keep an existing one.
Why such a huge difference?
When it comes to new customers, remember that you are basically starting from scratch. They likely have no previous experience with your brand and may not even trust your company. It takes time and money to interest them in your product and even more time and money to convince them to buy from you. With current customers, you don't have to fight against as many barriers to the transaction.
Now, with that in mind, you may want to focus your scaling strategy on reducing the churn rate, especially if it’s a high one.