The Risks of Scaling a Startup

Startup beginnings are the stuff of stories–a bunch of friends throwing around crazy ideas over beer, side projects that go viral unexpectedly, a rebellious lone ranger setting out to fix a long-ignored problem.

To be fair, it’s an exciting, fast-paced time. You’re fighting to survive, and you’re running almost purely on guts and adrenaline. Innovation is the focus rather than stability. It’s very hands-on–founders spend more time getting their hands dirty rather than barking orders.

If things go well, you’ll go on the rocky journey of transforming your startup into a full-blown company. But scaling poses its own risks as well. Like leveling up in a game, you have to face a whole new set of challenges–quite different from those you had to deal with before.

New employees

A lot of these risks will stem from having new people onboard. While Employee No. 1 to 5 might have gotten hired because you’d worked with them before or at least you had mutual connections, you’ll be taking in strangers eventually.

To hire right, you need to incorporate proper HR practices such as thorough interviews and assessing for culture fit. Don’t be sloppy or careless about it: who you hire matters.  

Delegation

If you’re among the first people in a startup, you’re probably going to rise to a leader role once you scale. Rather than doing everything yourself, you have to delegate and trust other people with their tasks–as well as learning how to manage.

Over the long run, this would mean adapting your managerial structure. A flat hierarchy might have been effective before when all of you fit into one room, but it’ll get messy and unruly when you’re at two hundred people.

Consistency

With delegation comes fragmentation–employees will be divided into different teams and departments, and you won’t be able to interact extensively with every single one of them anymore.

Company culture becomes an ever-major concern. If you can’t build a relationship with everyone personally, you can at least make sure that your company’s values are communicated clearly and everyone’s working well together.  

Paperwork

Ah, a dreaded consequence of scaling–piles of paperwork, from contracts to monthly government deductions. In the very first days, you could just casually split the money between yourselves.

But now you have to look into formal payroll and accounting and deal with taxes–and this will eat up your time exponentially as your company grows. The solution to this is automating rote processes as much as possible with tools such as human resource information systems or payroll software.

Direction

It’s tempting to get sidetracked when change is coming in on you from all sides and there are so many variables to keep track off. Keep coming back to the original reason–the guiding vision–for your startup.

Strive not to lose the big picture in the face of day-to-day problems: where are you going, and what should you reach for? To use a metaphor: while before you were walking by yourself, now you have to steer a huge ship.

Stability

Timing is scarily crucial. Scale too soon or too late, and your startup will crash. A key consideration is that your foundation needs to be stable. Before you can add more people, build more products, reach a wider audience, your startup should be doing well as is.

Once you scale up, existing issues will only multiply–with far larger consequences–so eliminate them ruthlessly while you’re still small.

Conclusion

Well, nobody said it was easy. The hardest test arguably lies at the start, when you’re trying to gain traction in the first place, but you still can’t rest afterwards. No matter how established you might be, you can fail quickly if you become complacent and don’t strive for relentless improvement.

All of these risks, though, are necessary growing pains. Cheers to you–because if they’re on your path, that means you’re moving forward.

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