Jan 18, 2019

The Biggest Challenges of Scaling For Startups and How to Tackle Them

Startup founders always strive to scale up their businesses as fast as they can. According to GEM national report, more than 100 million business ventures are launched every year. That makes global entrepreneurship too competitive.

Moreover, new business founders want to scale up as fast as they can because they don’t just aim to survive but to thrive before other similar ventures take the lead.

Scaling up a newly-backed company is not all rainbows and unicorns, it is even more daunting and tougher than launching a startup in the first place.

You need to know the lifecycle of web and mobile app development, difference between growth and scaling and several other concepts that will help you understand the depth of the river that “Startup Scaling” is.

In this article, we will provide some tips and information that may be useful if you want to scale a tech company. So, without scaling up this intro (pun intended) let’s get to the good stuff:

Growth vs. scaling

Firstly, you need to have a clear sense of what scaling is. Most of the entrepreneurs confuse it with growth, but there is a thin line between these two.

Scaling up a startup implies increasing the overall revenue without any significant increase in spending (not adding more resources). But when we are talking about growth, we need to spend more money to make more money.

For instance, a software development company doesn’t have to spend more to get their product to more people as they have already paid for the initial development of the software. This way, by reaching to more people without significant spending, they are scaling their software.

If that software company decides to physically enter a new market segment and opens an office and hires new employees, then it is working on its growth as it will be spending money on office and employees.

When is it the high time to scale up a startup?

There is no simple answer to when you should start working on scaling your startup. However, there are four self-assessing questions that will help you decide if it is the right time to scale or not:

Do you see future demand?

This first question is about assessing if your product or service has the potential to keep getting sold in future as well. Your business may be booming right now, but it can get into recession if your product doesn’t have future demand.

Do you have positive cash flow?

Have you cleared all your payments, and have you recovered all your pending payments? Are you in any kind of serious debt? You need to have these things taken care of before thinking of scaling.

Do you have the right technology?

Nowadays many businesses rely on several new solutions like cloud storage, voice over IP or simply robust network of servers. Do you have that level of technology that will be adequate if you scale up and the workload increases?

Do you have the right team?

It’s one of the most crucial questions as you will also be scaling a startup team. You should know if your team has the potential to handle more working hours, more workload, and the startup challenges that will come with the scaling.

Scaling in startup’s lifecycle

In business lifecycle, scaling is the fourth of the five phases.

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Scaling is the phase when you are ready to open new horizons for your business. By this time, you know the channels/methods that work for you and the ones that don’t. It is the time when you hire specialists with deep knowledge and expertise in the channels that are working for you. And you also note down these channels/methods that worked for your scaling.

Scaling phases

Seek: This is when you are doing everything by yourself as the workload is manageable. However, you are actively seeking for a few employees.
Recruit: This is when your business is starting to get off the ground. You have recruited bare-bones staff like an assistant, accountant, and marketing coordinator to help you.
Lead: Your business has now taken its roots and is scaling rapidly. You have built a lean team of the most talented employees from your startup, and now you are leading them to further scale your business.
Automate: Now you realize that your startup is beginning to get stability. You need to start trusting others for some of the things you manage. You put your best staff members to lead different divisions of your startup, and you remove yourself from those responsibilities.
Envision: Your startup has gotten stable. You have excellent leaders in place, and you need to pay attention to their ideas to seek possibilities of further scalability.

Biggest challenges of scaling for startups and why scaling can be dangerous

There are several challenges that startups face when scaling up, but the three most common challenges are:

Premature scaling: Most of the entrepreneurs fall into the trap of scaling up too soon. If you scale up too early, it can be disastrous for your startup because the additional workload and somewhat increase in expenses can eat you up.
Moving to specific departments: When you are at the early stages of your startup, you have a very few people in your team, or you may be alone. Managing your startup at that time is easy, but when you reach the 4th phase of scaling, you have several employees to manage with different divisions, it can get difficult to have everyone share the same enthusiasm and values as you.
Developing new processes without slowing down: When the startup has scaled up a bit, you will be making changes to the processes and designing new processes to handle the workload. Also, you will have to create a communication process to keep everyone, ranging from your team to your shareholders, in the communication loop regarding everyday changes and progress. These things can slow you down.

According to Small Biz Trends, 90% of startups fail every year. Virtually all of them collapse because they are not able to overcome the above-given challenges. That is why, if you do not take care of these challenges, your startup may fail before even seeing any scaling up.

How to handle challenges of scaling a startup?

There are at least three things you can do:

Before you think about scaling up, you need to work on the robustness of your infrastructure. Optimize your core business functions to be able to handle the workload when you scale up. Once you are sure that your startup has the potential to handle the future workload, only then move towards scaling. Simply put, don’t rush into scaling.
Regarding the second challenge, it is completely understandable that not everyone will be able to share the same values and enthusiasm regarding scaling up as you. You need to make sure that the people you hire are experienced with scaling up the business. So, even if their enthusiasm is not as high as yours, their previous experience and expertise will help you scale up.
Set up the processes that maximize your work efficiency and communication in advance. Create a system to exchange information within and outside the organization quickly to avoid any delays in tasks’ completion.

How to effectively scale your web application or web site?

Scaling up web application

Here are some tips to follow to make sure your web application becomes highly scalable and gives you a less tough time when you scale up:

Having a clean code is imperative: We cannot emphasize this enough. Though it is an obvious thing, many developers often don’t pay much attention to writing clean code as it looks like pretty manageable at the initial stage. As you progress forward with your web app’s coding, you will start to notice it becoming a big ball of mud that will be full of spaghetti code. Only then you will realize how hard it will be to maintain and scale it. So always make sure to keep your code as clean as you can.
Leverage the 12factor: No matter how great you are at web application development, everyone needs a bit of guidance. This is where 12factor comes in. It has best practices that you can follow to make sure your app can effectively scale up when it is time. As someone once said: “it won’t scale if it’s not designed to scale.” So, keep this in mind and make sure to implement these 12 practices if you want to develop a scalable web application.
Carefully handle your database: As you scale up, more and more transactions per seconds will be done as more clients will use your web application. This is the time when you need to make sure that your database is big enough to store and retrieve information for everyone who uses it. Just choose a proper DB engine, design the best possible schema and you will be good to go.
Choose scalability supportive hosting: You don’t want your web application to go down when the traffic of users increases. To make sure your web application keeps thriving even at the most rush hours, you need to select a proper server configuration and infrastructure that supports scalability. For instance, Amazon EC2 has the auto-scaling feature that developers can leverage when scaling.
Relieve your backend: Move some of the code to front-end if you get a chance. This will make your backend less overloaded when the users do more and more computations as you are scaling up.
Test, monitor and optimize: You need to constantly monitor your codebase and identify the problems as soon as they arise, so you don’t have to go under hours or days of maintenance that can deprive your users of using your web application. Furthermore, you need to utilize some optimization tools to not only solve the problems in the code but also optimize it for minimal bottlenecks in your web app.

Scaling up a website

Scaling up a website is somewhat different from scaling up a web application. This is because websites do not provide users with services that web applications do. For instance, a simple blog will only provide content while a web application like an online spreadsheet provides a service to users and saves their data for them. Therefore, it is easier to scale a website. Just keep the following things in mind for efficient scaling of your website:

Find problems and solve them: Why do you scale a website? To receive more traffic, right? Well, many problems can occur with huge traffic spikes. Your website can go down due to the load, it may start to show glitches due to thousands of users loading and closing your website’s pages at the same time, and many other issues can take place as well. Therefore, you need to review your website and find things that can cause problems when the traffic increases. You can replicate your website into a dummy website and start testing on it. You can perform load testing by stimulating higher levels of traffic and seeing what problems occur.
Use CDN (Content Delivery Network): Simply put, CDN refers to a group of servers that are geographically dispersed to provide faster delivery of the internet content. For instance, if your main server is in Canada and someone loads your website from Germany, they may face some speed issues due to the distance to the server. But if you have a server in Germany or nearby area through CDN, the website will load much faster. When you are scaling up your website, you need to leverage CDN as people from around the world will be visiting it.
Take care of broken links: Nothing frustrates a customer more than a broken link after slow loading speeds. If you want to make sure that customers stay on your website for longer time, as it will reduce your bounce rate, then you should fix all the broken links of your website. You can use any broken link checking tool for that purpose.
Make it mobile-friendly: One of the most important parts of scaling your website is making it mobile-friendly. According to statista.com, in 2018, 52.2 percent of global web traffic originates from mobile devices. So, if your website is not mobile-optimized, you will not be able to scale up as half of the user base may be opening your website from their mobiles.

These are some of the major tips to implement if you want to ensure your website scaling goes effectively.

Over to you

Now that you know what scalability is, what main challenges you can face and how you can tackle them, you will be able to make a better and well-informed decision. The main thing is to be realistic about your current situation and spare your time and resources accordingly.