As a startup founder, your early stages of operation should be focused on developing a desired value proposition. Once you have a product or service that consumers are willing to buy, you have started to achieve market fit. The next step is to scale your startup by selling to as many clients or customers as possible. At this point, you need to consider how to deliver that value proposition on a large scale. This article discusses key considerations for startup founders who have achieved a market fit and are looking to scale their startup.
If you achieve service or product market fit, it is likely that your desired market sees the service or product as an attractive investment. The value of your startup increases when you:
- reach service or product market fit;
- rapidly increase in sales; and
- provide the service or product for a profit.
An increase in value will give you more bargaining power with investors and help you raise more capital for less equity.
To determine whether you need external funding, model the milestones that you want your startup to reach and then analyse whether those goals are realistic based on your financial model. Depending on the nature of your business, your milestones may range from developing a new version of your product to reaching a certain number of users. When you are scaling your business, you want to focus on achieving your goals without running out of money. So if you need external funding, it is a good idea to raise capital.
When you are a startup founder, no day at work is the same. You may personally be involved in various activities, including:
- execution; and
However, delegating effectively is key to delivering your value proposition at scale. When you are scaling and hiring employees, you will need to give them defined roles. Define the tasks your team executes on a daily basis and build teams to achieve those processes on a mass scale. Giving your employees tangible goals and creating teams with an outlined purpose ensures everyone can effectively contribute to the growth of your startup.
For example, establish a marketing team to implement campaigns or a sales team with set monthly sales targets. Measure the results of each campaign to test the return on investment.
Create a Leadership Structure
Many startups try to avoid a bureaucratic leadership structure and prefer a flat hierarchy. However, one CEO cannot effectively manage 100 people directly reporting to them. So as the number of employees in your business grows, it is essential to delegate management positions and establish an active leadership structure.
Create teams with specific roles and delegate the management of those teams to high-performing, people driven employees. Effective leadership structures:
- encourage employees to work towards a collective goal;
- increase productivity;
- foster innovation; and
- allow for adequate oversight and communication within the organisation.
As you scale, your workload will increase. Consequently, you will need to hire employees at a rapid rate. While it is essential to hire enough people to complete the required work, it is imperative that you hire the right people. Determine the skill set that the ideal employee needs to adequately fulfil their role. For example, you may need a software engineer with experience in Java or a marketing specialist with experience in the fashion industry.
The employees that you initially hire will determine your company’s culture. Skills are important, but you should also look for candidates that are passionate about the vision of your startup and align with your company’s values.
Effectively using technology is one of the best ways to scale your business and reach more consumers. Digital marketing platforms such as Google Ads or Facebook can help you spread marketing campaigns, increasing sales and therefore revenue. Using software to automate business processes, such as transactions or sales, is vital in helping you operate on a mass scale.
Leveraging technology to create robust internal systems can also help you effectively manage your growing number of employees. From marketing to management, the applications of software to your business are endless. Leverage these opportunities to make your business processes more effective and to grow your business.
Constructive feedback from your consumers, your employees and other stakeholders helps your business improve as it scales. There are various tools that can help you stay in touch with your customers to ensure that you are tailoring your product to their needs, including:
- feedback surveys;
- customer focus circles; and
- user suggestions.
This feedback is crucial as you develop your initial value proposition. Feedback from employees is vital to develop effective internal systems and processes. Alleviating pain points and roadblocks your employees face will help them remain motivated and productive, consequently aiding the growth of your business.
Once you have a product or service consumers are willing to pay for you should focus on delivering your value proposition on a large scale. Scaling your startup effectively is key to ensure you can keep up with increased demand for your product. When planning for the growth of your startup:
- set your next milestones;
- consider who you will need to hire;
- think about how much money you will need; and
- leverage technology to serve a broader consumer base.
If you have any questions, contact LegalVision’s startup lawyers on 1300 544 755 or fill out the form on this page.
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