If you’ve come up with an innovative product that fills a need and occupies its own unique market niche, you’ll eventually need to scale up your business. After all, that’s the process by which your vision will be translated into a lucrative reality.
The series of decisions you have to make when scaling up are actually rather subtle, however, and going about them carelessly can do long-term damage to your bottom line. Here are five all-too-common mistakes that even savvy entrepreneurs sometimes make:
1. Naive Hiring PracticesAdding extra people to the company is the most visible way of scaling up, but hiring impulsively can create chronic operational problems for your business. Melody McCloskey, CEO of StyleSeat, points out that compromising on a new candidate because you’re in a hurry to fill a position is always a poor decision. Even if they seem well-qualified, new hires have to also be a good cultural fit or they’ll end up draining time and energy away from the rest of your team.
2. Too Much Focus on Marketing and Selling
It’s easy to put too much early emphasis on short-term marketing and sales because new customers can feel like success. Entrepreneur Sujan Patel points out that it’s actually more important in the early phases of a business to focus on building demand and “working out the kinks” of your product–market fit. Just remember: there will be plenty of time in the future to ramp up your sales efforts.
3. Not Listening to Your Early UsersThis one will kill off your business with deadly effectiveness. The first set of customers you need to listen to are the early users. These beta-testers may have gotten the product for free, and they’ll give you feedback on what you can improve while also spreading the word to people who will become your actual customers. The next set of feedback comes from the early adopters, who are looking to solve a specific pain point and are lining up quickly to pay full price for your product. Only after hearing back from this second group and incorporating their suggestions and feedback should you roll out your product to the general pool of potential customers.
4. Picking the Wrong Balance Between Gross Revenue and ProfitWhich of these should you focus on? There’s no one-size-fits-all answer to this question because it depends on your funding structure and the nature of your product. The rate of revenue growth is one important figure that investors focus on and that can be further analyzed in terms of concentration (how many customers are responsible for the revenue). Too often companies drive up short-term profits by not investing in longer-term growth, causing them to weaken and fail a few years later.
5. Compromising Your Business Plan for Short-Term Growth
Creating a set of goals for your business with action plans showing how you’ll achieve each one is a good way to protect yourself from trying to grow too quickly. Your overhead rate and operating expenses are two figures that you need to keep a close watch on, even if it means postponing the acquisition of an expensive dedicated office space. Work Better provides an appealing alternative by offering three-, six- and 12-month leases on private office spaces. You can lock in a great rate for any of these leases while also maintaining the flexibility to easily move into bigger (or smaller) offices. With Work Better, you’re also protected from the need to hire your own secretaries or other miscellaneous office staff before your company is ready to employ them on a full-time basis.
Agility is key as you guide your business through its early funding rounds and help it grow at the optimal rate. Work Better can be of great use during this period, providing delightful work spaces without locking you into expensive premature commitments.