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What is the most overlooked variable when companies are scaling?

Five industry experts share their advice on scaling your tech business.

Woman contemplating

You’ve invested time, resources, and finances into your tech business, and now your aim is to scale increasing your revenue while keeping your costs down. There are a number of important factors to consider when in pursuit of that goal, from finding the right team of people to continuously establishing what makes your business valuable. 

We spoke with mentors and partners involved in ventureLAB’s Tech Undivided program — industry experts that offer each cohort of entrepreneurs strategic and tactical support, helping them refine their product-market-fit, amplify their sales, hone their pitch, and navigate funding. Here’s what five advisors had to say in answer to the question: “What is the most overlooked variable when companies are scaling?”

Customers need to be able to easily understand what you're selling, why it’s special, and why it matters to them.

Pouneh Hanafi

Pouneh Hanafi

VP, Marketing and Partnership, Tulip

First, it’s important to clarify the difference between growth and scaling. Growth is increasing revenue and resources in a linear way. To scale is increasing revenue without a significant increase in resources. Therefore, scaling a business successfully requires getting the most out of what is currently available to you, like your financial and human capital, but more importantly, your product or services.

One of the most overlooked variables in scaling a business is solidifying your positioning. While it may sound simple, businesses need to demonstrate their unique value proposition to potential customers if they’re looking to scale. Customers need to be able to easily understand what your product/service is, why it’s special, and why it matters to them.

It’s very common for founders to get stuck on the idea of “what they intended to build” and not realize that, over time, their product has changed with possibly a different use case. Many entrepreneurs fail to look at their product through the eyes of their customers and, as a result, they build a distorted self-perception based on their own definition of their product positioning. 

Entrepreneurs looking to scale their company need to develop a clear articulation of their positioning and competitive strength in the eyes of the customers. That is why it’s important to take the time to listen to your customers — especially the early adopters. Your early adopters will not only give you feedback on product improvements, but they will also help you understand where your product or service fits in the market. 

By solidifying their unique positioning in the market, businesses can establish themselves as the go-to resource and lure customers from competitors — both factors are key elements to scale. It’s important to note that while it’s essential to solidify your positioning, you shouldn’t be afraid to fine-tune it as your company grows.

The type of people and skills needed as a startup are not necessarily the same when you’re scaling.

Heather Crosbie

Heather Crosbie

Senior Advisor, ventureLAB

Founders often don’t realize that the type of people and skills needed as a startup are not necessarily the same when you’re scaling. The Founder may not be the right leader to take the organization the next step of the way. The first employees may no longer share the vision or bring the depth or type of skills that you need. 

Vision, smarts, and grit got you this far. However, as a CEO of a scaling company, you need to have knowledge and depth in the leadership of a complex organization. You need to be more strategic in your thinking, not always in the weeds, putting out fires. You need to develop people strategies to ensure you can manage the growth, with the right people. Working on governance issues –– like policies and procedures and building a Board of Directors –– is also critically important. And much more.

What is it you’re good at? What is it you enjoy doing? Do you love the chaotic, start-up phase of your company, but not so much management in the scale-up phase? It is understandably difficult to accept the reality that the company needs new types of people as you grow, but to do so will ensure the sustainability of your company.

Put thought, time, and investment into building your revenue generating team.

Jan Frolic

SVP, Global Engagement, Women of Influence

When you are ready to scale your business make sure you have put careful thought into the team who is doing this alongside you. Specifically, put thought, time, and investment into your revenue generating team. Define and potentially redefine how you value the sales people in your company.  

Very often salespeople are the last to be hired, and the hiring is done quickly and sloppily. More often than not they are considered the disposable income earners, and job security is based directly on unrealistic sales goals. This insecurity and undervaluing creates high turnover rates, an overall poor work environment, and a much, much longer revenue generation cycle.  

As you scale, keep in mind that a committed team of compassionate networkers who know your company, who are a reflection of your core values, and who believe in your mission could be your single most valuable asset. Compassionate people create connections, and connection is your silver bullet to mutually beneficial working relationships, revenue building, and long term client retention. Empower your teams with the luxury of time to build these relationships as you grow. Do the upfront work to value your salespeople, so you know you have the right people as the face of your company and its messaging. Then trust them to do their jobs without fear of sales quotas, commission penalties, and weekly sales updates taking up all of the extra emotional space that could be used to actually build your company.

Have finances and human capital in place  so you can attack opportunities when they arise.

Douglas (DJ) Saxon

Douglas (DJ) Saxon

CFA, Venture Partner, OKR Financial

Growing and scaling, although very much alike, have a key distinction that makes all the difference between being successful and just surviving. Growth involves the addition of resources (capital, people, technology) to increase revenue, whereas figuring out how to scale involves increasing revenue while being able to keep costs at a minimum.

In my personal experience, working with multiple companies across all stages, one of the most overlooked variables when companies are trying to scale is the team. Now, this doesn’t mean adding bodies to the equation is the secret weapon to scale faster; the fundamental analysis here lies more on the kind of person you are hiring. Do you have the right people with the right skill sets and experience to tackle the growth problems and opportunities that lay ahead? Some founders are hesitant to give up control or tend to micromanage their way towards slow growth. Hire smart people and trust them to do the work. 

There’s a second variable that also remains overlooked by founders, which is capital: the best time to start thinking about raising capital is before you actually need it. But it’s not just any capital we are talking about, it’s actually non-dilutive financing. Seeking out every dollar of government funding available to your particular company is the smartest way to keep going, and by getting creative in your consideration of capital sources you can really extend your runway. Getting a loan against those receivables might not sound that attractive at first glance, but when you do the math, it can help you scale without giving away equity. 

Having the resources (economic capital or human capital) in place allows you to attack opportunities when they arise and not have to wait on diligence, term sheets and negotiations while your opportunity passes you by. Additionally, it’s not uncommon for VCs to leverage a lack of runway a company has to grind down valuations by stalling you out. Having the capital to stand strong and wait for the right deal is something missed by first time entrepreneurs.

Scale is the sum of critical achievements and you need targets and assigned ownership for each.

Jolie McMillian

Jolie McMillian

Tech Sales and Operations Leader

Do you have a clear and defined understanding of what “scale” means for your business? As important, is everyone involved — from your funders to your employees — aligned to that? Once you have clear alignment on scale definition, work your way backwards from there, creating key milestones. 

Scale is not one number. Depending on your model it can/should be: Revenue, growth, acquisition, churn, hiring/retention, profit, and NPS goals. Why? Because all of these play a foundational role to scale. “Scale” will be the sum of these critical achievements, and you need targets and assigned ownership for each. 

How do you move those numbers in the right direction? Start by defining your value, your differentiation, and your vision. This will become your mantra that gets repeated in every single interaction. Everyone is drowning in messages and content, so aim for creative simplicity.  

You can look to your competitors to inform your differentiation and solutions. What do they do well (or not)? Who are they targeting? How have they scaled? Plot this info on a visual matrix, and patterns and gaps will emerge that you can use to build your strategic roadmap.

You can also look for patterns among complimentary solutions — brands you can emulate who share target customer attributes. Reach out and ask well thought out questions on how they scaled, the mistakes they made, and their past, present and future plans. Remember to deliver value nuggets in return.

Your prospects and existing customers will also be invaluable as to sharing strategic plays to scale, so don’t be afraid to share your targets and plans with the ones you trust, and ask them to support and guide you. You will be surprised as to who will appear on your Hero’s Journey to manifest doors that were once walls.

Looking for dedicated advisory to scale your tech business? ventureLAB is a leading technology hub in York Region that has enabled thousands of tech companies to scale through growth-oriented programs. We've partnered with Women of Influence to bring you Level Up, a deep dive for leaders looking to scale their tech business, featuring inspiring stories and expert advice from some of the entrepreneurs and partners we work with.