After toiling and overcoming insurmountable odds, you’ll have finally passed through the startup gates of hell. The business has its product established and determined its target market. Scaling customers and revenues is now possible. You should have a talented and passionate team already assembled. However, it now dawns on you that you have to work much harder if you wish to build a big, successful company.
Any moves you make during the transition into the growth-stage will be very important. Different challenges will start emerging as the stakes grow higher than ever before. Below is a detailed view on how a startup evolves into a growth-stage company and how you can make this transition a success.
Finding the Hidden Gems
The hugely successful firms usually have a few employees who stand out amongst the rest. This lot is usually not made up of executives or directors, but rather individual contributors who have a range of special gifts. Often, it is not easy to spot them during interviews. These individuals are highly important given that they represent a highly disproportionate value.
Identifying your hidden gems is essential when moving from startup to the growth stage. You’ll have to find ways through which you can leverage their talents as much as possible. Once you’ve identified them, you should try to get the most out of them by keeping them focused on whatever they do best. You may be tempted to promote your great performers, but be mindful that these promotions can take them away from their core competency.
Finding the Flywheel
Your absolute growth targets will get larger as you transition from startup to the growth stage. It might become increasingly difficult to scale at rapid rates, considering that the law of larger numbers will take over. A flywheel gathers energy with time, and finally delivers it at rapid, yet increasing rates. Similarly, you’ll have to cultivate and nurture various sources of potential rapid growth. You can then unleash them when needed to enable you propel expansion.
Having the right partners can help you do this. It is ultimately important that you cultivate the most appropriate set of independent board members, investors, and advisors. Growth will certainly get much easier if you’re able to get the flywheel going.
Focusing on the Main Goal
Once you begin to note areas of success in your business as it grows, you’ll most likely start presuming that you’ve already nailed it. It will then become tempting to begin looking for additional expansion opportunities. At this transition stage, it’s very easy for you to mistake early success for ability to succeed elsewhere. Unfortunately, this is usually fatal.
Instead of capitalizing on the opportunity you’ve already created in your business, you risk failing in today’s world of limited resources. And yes, continual reevaluation of the marketplace, as it shifts, is important, as you consider various options for future growth. At this stage, you can consider placing small bets in adjacent areas, alternate distribution forms and product extensions. However, these bets should serve to help avoid distraction from the core business. They should be made with limited resources and also killed quickly if they prove not to work.
Once your firm has moved into the growth-stage, its success will be measured on aspects such as revenue growth, market share gains, operating margin expansion and the total size of your available market opportunity. Your success isn’t going to be weighed by how fast you get the product out, whether you’re hitting cash burn targets or even whether you’ve hired key executives.
You’ll thus have to invest in professionalizing how your firm is being run. You can develop a set of metrics that will help you assess the long-term health of your business. Such metrics will serve as early indicators of where you’re heading. Although devising a robust budgeting process may seem not appealing, it can help your company in serving customers better and faster.
Companies do evolve over time. We all have to accept the fact building a highly successful business is not an easy task. However, this success can be broken up into several stages. Transitioning from a startup to a growth-stage firm is certainly one sign of success, and is a major milestone along the journey to lasting success.