With the passage of time, entrepreneurs will want their startups to grow and become larger companies. However, they may not know how to make this happen. Randall Castillo Ortega is the founder of Central American SME lender RACO Investment and offers the steps you should follow, as well as five growth strategies to scale a startup.
The first thing most young entrepreneurs will think about is that they know they want their startup to grow, but they don’t know what it means for the business to be scalable. Scalable means that the business has the potential to multiply its revenue with a low investment. They have to plan long, but also have to think and act in the short term. “Trying to scale your company at an unsuitable time or with a product not suitable for the market can lead you to die of success or non-success,” explains Castillo. “Planning a growth strategy can be even more complicated than launching the company.”
Scaling a startup is not an easy path, nor does it take little time; however, it definitely requires planning. Entrepreneurs will have to put all their effort into doing it correctly and need to follow several key points. The first is to validate any changes. Any small changes you make to the product or business must be validated based on the expected results of sales after the change is applied, the contribution that the change makes to business objectives and how it is reflected in the KPIs, and the opinions of the users or the expected improvement in customer satisfaction and in the customer journey (the journey that the user makes about the needs, points of contact with the brand and forms of influence throughout the purchase process).
Next, it’s important to automate processes and create efficiencies. Says Castillo, “In the startup, there will be many processes that you can automate to save time in aspects such as marketing, human resources or accounting. However, efficiency isn’t just automation; it’s often organization. It is worth investing time and money in hiring a business advisor or external person to analyze our operations and advise us points of efficiency improvement. It is a highly recommended exercise for any company, but much more for those who want to grow.”
Where possible, outsource what is not essential. You’re still not a big company with designers and in-house lawyers. Outsource these types of services and contract them when you need them. The management of variable costs for those tasks that are not your core business allows you to grow and decrease quickly and without workloads. Do not hesitate; in growth, the variability of costs can be the key.
Boost your marketing. Giving a boost to marketing and attract customers progressively can be accomplished through cheap and effective marketing strategies. The investment in business is always profitable; it has to be not only in personnel, but in sales tools such as HubSpot and Marketo.
Every startup is different and its strategy to grow will have to adapt to the business it does, and there are five strategies that are essential. The first is to find investors. Determine how much money you need to grow and look for investors through investment rounds, loans to entrepreneurs, business angels or crowdfunding.
Next, put yourself in the hands of a startup accelerator. Look for an accelerator that can help you give the ultimate boost to your company’s growth. They will provide you with mentoring, tools to grow and potential investors. You can also internationalize your startup. Check if your business can be viable in another country. You will have to validate the idea in the new market and launch it with few resources.
Commitment to new sources of income is another strategy. Sources of income can be diversified over time. Here are some possibilities: creation of new products or services, subscription business or online store. Lastly, create strategic alliances. “An alliance with another company can give you competitive advantages that make you grow or that help you enter another market. Look for an agreement that is beneficial to both companies,” asserts Castillo.