How to go from a start-up to a scale-up?
Johan Bernal N.
5 min read.
In times which more and more people are taking the risk of entrepreneurship and creating businesses based on innovative ideas, the term start-up arises to define those projects that, even though they are young, have great possibilities of evolving rapidly.
A start-up is known for being a scalable business with a tendency to grow exponentially and efficiently. Compared to traditional SMEs. The difference, in essence, is that small and medium-sized companies enter the market after investing a certain amount of money. While start-ups do the opposite: they enter the market with an idea in search of capital and use digital technologies to grow and find funding.
These start-ups are also recognized because they have a unique business model that is highly effective and disruptive to traditional models. Once the start-up manages to consolidate itself in the market, it starts to grow and decentralize; At this moment, its natural evolution arises, which is called scale-up.
This new model refers to a project that contemplates different stages for the development of its business, seeking to achieve higher revenues and have a higher number of employees in the medium term, which is the basis for the company's desire to expand.
But, how to go from a start-up to a scale-up? Axiacore tells you:
Differences between a start-up and a scale-up project
A start-up arises when one or several entrepreneurs have a new concept to be validated (MVP) and begin to test it in the market. Whether it's a product or a service, those responsible for this new business idea are dedicated to planning and developing the entire project. And then seek an injection of funds that will allow them to start production work and thus go to market.
On the other hand, a Scale-up arises when these entrepreneurs have ideas or products positioned in the market and seek to expand by developing more or better products/services.
Stages of Change
However, one of the main characteristics of scale-ups is that they consist of different stages that make it possible to validate whether they are effectively evolving from a start-up to a scale-up. But what are the stages that a project must go through to achieve this?
1) Stage of agility and adaptation to change:
During this first period, we see teams of a few people forming a small company. Novelty continues to characterize this project, which we still call "start-up.
2) "Management" stage:
During this phase, the team grows, which allows it to divide into areas with more specific tasks, and it is here when leaders and juniors begin to be designated, in charge of the company's processes. At this point, we are already talking about a medium-sized company.
3) Leaders' specialty stage:
During this third step, the work team is better distributed, and consolidated, with independent areas and more specific functions. At this point, we can already speak of large companies.
4) Stage of specialized and personalized teams:
In this fourth stage, there are much more structured processes and efficient teams. These are guided by management systems and distribution of functions, which allows them to enjoy better labor guarantees. And also to be evaluated through quality management processes. In this phase, we can find multinational companies.
In this last stage, the leaders who started with the process since phase one, have already gone from being 80% operative with a 10% effort in management to 99% management and 2% strategy, where they are dedicated to delegate functions.
Leadership specialization: Vital for business growth
One of the most relevant issues to keep in mind when scaling a start-up has to do with so-called cross-functional teams. Although these may sound promising because they can "perform in several business areas", they do not tend to be sustainable over time.
From this point of view, it is better to have specialized professional teams with specific roles and responsibilities. In any case, the leaders in charge of each area should be part of management teams with more general functions that have to develop more as a whole.
In this model, it is not advisable to saturate professionals with tasks that do not belong to their profile. Leaders have to think about the person behind the position because it will "burn out" due to they don't be able to handle all the responsibilities that it does not have the experience to manage.
In addition, having "transversal leaders" companies will only manage to have fragmented professionals without specialties and won't grow in any specific area.
On the other hand, if professionals are specialized, it will be easier to train them and help them grow. In addition, their day-to-day work will end up being more manageable, which translates into higher quality and productivity.
Train with processes, not tools!
Often, companies think that to evolve, they must just implement new technologies to meet needs that workers cannot. However, these innovations alone are not the solution.
To achieve significant optimization, it is necessary to technify processes and not just implement random tools. Because these tools may not be suitable for the specific needs of a company.
However, you cannot forget that to achieve business growth, an essential starting point is a strategy and the planning of a roadmap that allows them to act in an increasingly prospective manner.
This roadmap allows leaders to move from "reacting" to "acting" in the face of market developments and thus to plan, execute and evaluate each of their processes.
Technology and processes
Usually, changes in companies are specific by areas. However, when they are focused on technology, they tend to be more general and impact the entire organization (such as using data to optimize different points in a business).
The great advantage of scale-ups is that their businesses are generally digital natives, which allows them to better adapt to the pace of the market.
The secret to the success of today's large companies lies in their agility to prioritize initiatives, ideas and strategically define the impact they will have on their core business.
The pain rate!
In addition to acting in a more forward-looking manner, the willingness to innovate allows them to be receptive to listen to users and understand their pains or needs. Monitoring internal and external processes will help you optimize the service provided to your customers and increase their satisfaction. At the same time, it will allow you to grow more and more, and thus to finally turn your start-up into a high-quality scale-up.
Currently, developing innovative and cutting-edge business ideas has become one of the most promising possibilities in this new technology-driven market.
Today, these innovative and scalable business ideas have been labeled as start-ups, which, when subsequently validated in the market, their exponential growth allows them to become scale-ups.
The latter refers to business ideas that go through a series of stages, manage to decentralize, and have a higher number of workers to achieve their operation.
In the future, these companies will be the basis of the world economy, giving the technology its rightful place among the foundations of the society of the future.