Wrong Business Strategies: You have succeeded in starting your business. Those early customers flooded in you have assembled a workforce with skills and means to address demand you can even secure funding to secure your short-term future and give you some options on where to go next.
Your next step is to measure your business. Start expanding and growing to capitalize on your early successes. The process of scaling up is the key for any business and business owner.
Before you start trying to scale up, it’s a good idea to take a short step back. You need to take time to think about exactly how you will take your scale-up to the next level. A good place to start is to learn some of the wrong business strategies while starting a business. Let’s begin with it.
Wrong Business Strategies While Starting a Business
Failing to define a strategic direction
- Are you looking to scale up your business? It’s a given, but it’s not enough. What you need before starting the process of scaling up is to define a clear strategic direction for your company. In fact, it is ideal to think about and decide on a strategic aspect before starting a business if you can.
- Creating a strategic direction is about identifying an end goal for your company. You need to think about what you want your firm to achieve. You can frame it as a mission statement or a vision of what you want the future version of your company to look like.
- From there, it is possible to work backward. By defining an end goal, you can create a business structure that will help you achieve it. You can define the duties and responsibilities of each of your departments. You can even drill down to each employee’s ID. You can also set incremental goals to aim for, which will move you toward your overall objective.
- Without a clear strategic direction, it’s easy to lose focus of your business. Staggering day by day and failing to grow. It’s a case of scale-up that makes this mistake. Sections stop pulling in the same direction. Morale falls and desired development does not occur.
Prioritizing or failing to focus on the wrong things
- Along with setting a practical strategic direction, it is also important for a firm to have a well-defined culture. It is a set of standards to which the business and its employees must all adhere. Having that set of values makes it easier for owners to motivate their broad teams and keep them motivated.
- As a company looks to grow, it’s crucial not to forget these core principles. It’s easy for a scale-up’s management team to get caught up in the excitement of trying to grow their firm. In doing so, they may lose sight of the qualities that helped get their business off the ground in the first place.
- For example, a business may achieve an appreciably low level of complaints in its early days. It can be tempting for firms to accept an increase in their complaint rate as an inevitable sign of growth. That, however, would take them away from the source of their initial success; Providing high-level customer service.
- Such problems often stem from problems of focus or skewed priorities. Decision makers get too caught up in the strategy and the process behind scaling up. Instead, what they should do is keep their customers and the value they provide as the primary focus. That way, they can be sure that any growth efforts don’t come at the expense of customer retention.
- Constantly listening to customers can help you stay on the straight and narrow in a different way. This prevents a business from losing its identity and its initial raison d’être. Ensuring that you continue to deliver for your customers ensures that you don’t start believing your own hype. This will stop you from pursuing dreams of a more ‘corporate’ version of your firm, based on an ill-defined concept that you are expected to move in that direction.
Errors in funding and financing
- A business needs capital to grow. In some cases, deciding to start up during a period of sustained growth can plunge a business owner into the world of fundraising for the first time. With little experience falling back, it’s no surprise that scale-ups can often go wrong in this area.
- A common error stems from a misunderstanding of what a business plan is and what it stands for. Decision makers inexperienced in scale-up often make their business plans a function of fundraising. Rather the other way around.
- They create their business plan as if it is merely a document to entice investors. This should be a well-rounded roadmap for the company’s growth. That roadmap can then determine what financing is needed to achieve growth.
- There are more practical pitfalls in financing that scale-ups often create. What can be very damaging is a flaw that will only reveal itself down the road. It’s a mistake to close an investment round at more than your company’s valuation.
- If you fail to meet the milestones associated with that assessment, it causes problems. This makes it impossible to justify a high valuation down the road and ensures that future investments will be most difficult.
Refusal to change the order of growth
- When owners or boards think about business growth, they often look outward. They think about expanding and growing their company. This can be in terms of workforce, product range, or assets. What is important is to recognize the utility of looking inward.
- An incremental scale-up is an ever-evolving entity. The same processes and management that have brought success will not always be effective. The same workforce that served you so well in the early days may also have to shake off at some point.
- Owners of boards or scale-ups often struggle with this. The ‘we’ve always done it this way’ attitude, often proves difficult to shake off. Decision makers see certain things as ‘sacred cows. To ensure successful growth, you need to get away from it. You should regularly take an unbiased and critical look at your own firm. The result will be difficult but helpful choices that can aid growth.
- There is one situation where scale-ups find it particularly difficult. This is if they have sunk a significant amount of investment into a particular process, piece of equipment, or something similar. In that case, it is easier to allow past investments to influence future decision-making. This should be avoided as much as possible to ensure clear and unencumbered decision-making.
Not knowing when to get help or delegate
- Entrepreneurs and those who found start-ups are highly skilled. They are great at developing ideas. They master the big-picture thinking that is critical to getting new businesses off the ground. That doesn’t mean they are the right person to lead a scaling-up process either.
- Scaling a business requires an entirely different skill set. This often requires careful study of the data. Business strategies require small, iterative tweaks to be made over time. This ensures that a scale-up stays on track to meet long-term goals.
- It is wise for a business founder to ask for or even delegate help with the scale-up process. This doesn’t always happen, however. Many business owners struggle to relinquish control to their children. This can lead to problems and even eventual failure to grow the business.
Failure to communicate
- To begin with, businesses often have a majority of employees. Many will only have one or two in the early days. At that stage of development, things can be quite informal. Plans can be made and tweaked in one’s head. Processes can be implemented with nothing more than a quick chat.
- As a business grows, things need to become more formal. Staff and decision-makers need to be well informed to stay on the same page. Regular meetings or conference calls become an important part of operations.
- These types of meetings don’t have to be long or difficult. They just need to pull every member of your team in the same direction. This is what helps ensure sustainable and successful growth.