Premature Scaling – why you should not mix it up with real scaling

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When talking in startup environments about premature scaling, any random person may think it is just another step taken by entrepreneurs in flourishing their business.

if it turns out to be a backfired plan then it’s easy to fix the mistake but it isn’t the case at all! Fixing the errors of premature scaling in your startup business is almost equal to the “death trap” of the entrepreneurs eyeing for heavy growth in their respective endeavors.

It is not always that people understand the difference between premature scaling and the normal scale that must be implemented upon a business to make it grow more. The mistakes in the scale startup is mostly made by mixing up these two and ending up into unwanted losses which affect the startup growth immensely, almost leading to dying down of the companies at the worst cases. 

A big and first impact on inconsistent dimensions regarding growth of startups have been shown in the startup genome report, later shown in Forbes articles as well. 

Premature Scale: understand the difference to real scale

Before we move on to the comparison between scaling and premature scaling and how both of these decisions affect the startups, let us understand in brief about the premature scale and scale definition.

Obviously, by the very term ‘scale’ it means that taking the ‘business growth’ to such levels where it sees more profits and better customer base. When it comes to growth, any business looks up to the various aspects associated with it. And with smart and knowledgeable moves, it is possible to make a business grow with the help of scale strategies.

Overall, scaling is associated with positive growth of businesses or products in their startup days (and even in the running period as well.) But when it comes to premature scaling, a business suffers the most out of it. Premature scaling can be best defined by the phrase “too much and too soon”. Every startup wants to proliferate in the business and they want to do it faster. While doing so, they forget that making the right moves and taking the correct decisions also matters and that cannot be done in a haste always!

Therefore, they end up mixing the premature scaling of business with the idea of actually scaling a business; the primary reason for so many startup companies dying down even before making it count in the industry. According to some reports, the main cause of startup deaths today is the implementation of premature scaling while attention to implementing scaling for the business growth. 

How do you distinguish scaling from premature scaling?

Well, the primary sign of the difference between the two is, of course, positive and negative growth in the business. But knowing them precisely may take some time for the beginners in the business, basically the startups. It is that whenever any scalable business model or feature is progressing too far than the normal, it can be subjected as the sign of premature scaling. Business financing has always been the main source of investment in any business, and when too much money is associated with the financing of the business, it can be considered to be a sign of premature scaling.

Taking decisions too quickly and in haste which has monetary involvements to make grow the startup business proves to be the reason for downfall most of the times. Also, gaining more profits than you expect from your business at the beginning might prove to be a sign of premature scaling as well. It is because, with more profits, the desire to expand the business more is always there with the entrepreneurs and thereby, taking risks and making hasty decisions regarding the same always prevails.

That is why maintaining a balance in both the investment strategies and gaining desired profits is advised for the long-time runners who eye for a broader vision and takes baby steps towards it. Other signs of premature scaling involve taking the ‘hiring’ game too seriously. It means, there comes a time when a company needs to go for the hiring process. And for the startups, it starts mostly in the beginning phase as there aren’t always many trusted employees already, to begin with, the work.

So, it is advised that you keep the hiring process within your preferable limitations of being able to pay the employees. When you keep n hiring more employees at the beginning itself, without having many clients to fulfill your business needs, it is a foolish decision and sign of premature scaling to hire so many employees. Only hire those who are actually needed for the benefit of the company and don’t promise extraordinary salaries and compensations; keep it growing with time but not at the very beginning.

So basically, being able to distinguish between scaling and premature scaling, you need to keep checking the rate with which it is done; if you find that the growth rate is normal then it is likely to be a positive growth but when it is scaling way too higher than your expectations and running fast as well, you need to be cautious.

Dimensions of Inconsistency that lead to premature scaling

Startups who manage to scale in the right speed are the ones who align the customer dimension as the most important indicator of progress with the product, the team, the financials, and the business model.

Although, regarding the startup genome report, where the authors brought together several case studies of ventures and founders, there are signals and dimensions of inconsistency leading to premature scaling.

  • Customer: you spend too much budget on customer acquisition before you reach product/market fit and a repeatable business model
  • Product: you invest in scalability of the product before validating the product-market fit
  • Team: you hire specialists before they are critical
  • Financials: you raise either too little or too much money
  • Business Model: you fail to focus and so you find out you can’t reduce costs lower than revenue at scale

How to avoid the possibilities of premature scaling in your venture?

It is actually a tough task for today’s millennial entrepreneurs who are on good terms with technology and trends that help them way too much in scaling their business. You can easily get connected to both the customers and employees, you can finalize deals without having to visit any office physically, and you can make use of social platforms in making publicity for your business and what not!

Being clear on the most important dimension, a consistent understanding of the customer leads to an extremely reduced danger of startup failure. You avoid problems very early with applying the lean startup methodology, gathering feedback from early adopters and thus gain traction for later capital fundraising and venture capital. Therefore, keeping a check on how fast the scale definition math is going is a tough task. But it can still be avoided if you are a wise thinker and you know how to avoid the temptation of being a successful entrepreneur without proper planning and hard work. Basically, you must remember that “shortcut to success, cut short the success” and so, taking the long path, even if it takes time to achieve success is always appreciated rather than taking a shortcut pathway of success which may be lived for a short while as well.

The one thing, as the genome for success, that the budding entrepreneurs can do to avoid premature scaling is that they should at first forget about scaling at all. Whenever they focus on making food client relationships, hiring better employees, providing good quality of services and products to the customers, give away timely completion of projects and other such things that bring about a positive growth in the business, it will automatically scale up and therefore, focusing on particularly scaling the business is not required.

And when a company scales up automatically, the question of premature does not even arise to increase the chances of any risk associated with it. Also, making good customer relations actually opens up the door to newer and better opportunities which prove to be profitable for the startup business, both in terms of finances and branding. Hence, focus on the positive aspects in dealing with a business, and it will automatically scale up to more.

Don’t hurry

Making good career choices isn’t always an easy decision; you have to very cautious while taking the decisions. And as far as starting a business is concerned, it is indeed a risky decision to take when you don’t have planned strategies for the same.

According to reports besides the startup genome report, almost 70% of startups fail to get themselves established as a running business and one of the most crucial reasons behind such failures is mixing up the scaling with premature scaling. When you are in a hurry to make profitable growths in your business, you are more likely to lose out on the race of being a successful entrepreneur. But when you take your decisions wisely and with time, making plans and strategies along the way of your abilities and capabilities in making the business work, chances are more, that you will proliferate in the respective endeavor. Never ever approach premature scaling, instead, look out for a better scale startup strategy which will bring you not only monetary fortune but also a position in the industry. 

Bottom line

Every entrepreneur must remember that there is “no shortcut to success” if you actually want to be successful in your business. For being an “overnight successful person”, it still takes years of planning, hard work and patience to bring that “night” which can make your business a successful one. And following the rules of scaling while differentiating it from premature scaling must be one strong strategy that every entrepreneur must look forward to, for being a successful one in the long run.

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