When is the right time to be scalable?

Actualizado: 21 jun 2021

You've identified your product/market fit, created a business model and you’re reaping revenue from your first customers. Congratulations! Do you think you are ready to conquer the world now? Think again about it...

74% of high growth internet startups fail because of premature expansion

Why do they expand too early then? Because they face increasing pressure to do so from investors and markets. The former demand high growth rates in order to receive high ROI as soon as possible. The latter, due to increasingly shorter product life cycle times for IT vendors, require new companies to maximise the small window of opportunity quickly before the technology or market becomes obsolete. As a result, it is easy to see why startups are often tempted to give in and expand too soon.

How can you avoid falling in this trap?

The only way to be ready for complete expansion is to become scalable, which needs time. Of course, if you wait too long, you will miss the market, but if you rush into expanding without preparation you will lose as well.Just like an eagle mother pushing her child off the nest when it doesn't have the wing power yet to fly, expanding when you are not ready will end badly as well.

Thus, the key is to find the right balance. This means, you should invest time in preparing for scaling, but once you are about 60% ready you have to start going to the market at full speed. Additionally, the upside of this approach is that as investors see you have a proper and scalable business model, their risk of investment and expected ROI will improve and your company will become more attractive for receiving external funds.

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How can you actually achieve scalability?

To this purpose,you need to create repeatable, consistent and predictable processes in every aspect of your business ranging from accounting over HR to IT.

Of course, all aspects of business are important, but the most crucial scalable business field lies in sales, as this is where the money will come from to pay your loans, investors, team and yourself. Just as you wouldn't bite the hand that feeds you, you can’t ignore the stream that keeps you alive. Thus, the key, when focusing on vending, is to establish a scalable sales team and sales model simultaneously, as one does not work without the other.

In order to create a scalable sales team there are two essentials:

  1. Hire succesful people

  2. Train the resources in a consistent and measureable way

Merely hiring the best prospects is not enough if you can’t get them up to speed in an efficient, effective and consistent way. For that you need to form a standardised on-boarding process consisting of theoretical and practical training that can be monitored by numbers and tested objectively. Additionally, this process needs to not only be focused on sales skills and techniques but it also has to put emphasis on new recruits to understand the benefits of collaborating with the team and to buy-in and believe in the sales model. Otherwise you might have the best sales reps and model but nobody who is taking advantage of that.

In sales it is fundamental to identify a repeatable process to get paying customers efficiently and in a profitable manner and to make your team use the process. You have to continue working on and refining your marketing and sales operations to discover the most scalable and profitable channels. This can be easily done by taking advantage of CRM as this will allow you to objectively measure and analyse the success rate of different approaches and channels. In particular, you would be looking for methods that show high customer life value return on client acquisition expenses, as these processes would indicate very high scalability for expanding your sales operations.

After discovering the best methods, the focus shifts to applying them in your team through standardised processes in your marketing and sales operations. Thus, by having clear rules and designed processes for activities such as feeding the database with unified terminology, utilising a structured marketing inbound process, and closing leads, you are beginning to create consistent and predictable sales operations. This in turn, together with scalable teams, makes you ready for conquering the world.

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