13 Mistakes Entrepreneurs Make When They Try to Scale Too Quickly
What is one mistake young companies make when trying to scale too quickly?
The following answers are provided by members of Young Entrepreneur Council (YEC), an invite-only organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, YEC recently launched BusinessCollective, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses.
1. Hiring for Skills Instead of Passion
When we were trying to scale, we had two choices in a hire. One lacked hard skills but loved our mission. The other cared less about the mission but had a stacked resume. We chose the one with the resume. They lasted eight months. A year later, here we are repeating the hiring process for that same position. Learn from us. Hire for passion first, skillset last — hard skills can be developed.
2. Not Being Scrappy
No matter how much funding or income your company suddenly gets, it’s not going to last forever. I’ve seen countless entrepreneurs spend every dollar of new income when they should be slowly and resourcefully expanding. Whether your business just opened or is celebrating its 10th anniversary, scrappiness is the key to long-lasting sustainability.
3. Chasing Shiny Objects
If you have a great business model and want to scale it, you need to make sure you’re focused on that initiative only. We are constantly surrounded by new opportunities (shiny objects) and many times having just a small distraction can drastically get a core project off track. Stay focused.
4. Not Sticking to Job Descriptions
A huge mistake that young companies can make when trying to scale quickly is neglecting the job descriptions that are presented to the candidates they really need to hire. Since they may be trying to grow rapidly to get more work done, they may think it’s okay to keep descriptions and company bios short and simple, but this really could put a dent in building a strong, cohesive team.
5. Hiring Before You’re Ready
There are quite a few alternate solutions to hiring employees. Since a W-2 employee will require you to pay benefits, you might want to consider intermediary solutions before you bring on more staff, such as contractors or online freelance platforms. This also prevents you from the frustrating push and pull of training only to realize you weren’t ready for a full- or part-timer after all.
6. Ignoring Your People and Culture
If you’re scaling successfully, you’ve probably got great people working for you. Losing them at this stage is very easy if you’re not paying attention. Sometimes it’s just that responsibilities grow too fast, but I’ve also seen teams fail because the earlier members didn’t get along with all the new people who came aboard and didn’t understand/couldn’t maintain the culture that got you here.
7. Forgetting to Document Your Processes
Document and process everything you do. When you are scaling, you are likely adding people underneath you. If you and your other team members have to teach them everything, no one will have time for actual work. However, if you have been building guides along the way… well, now everyone can support the new team members while getting their own work done too.
8. Running Out of Resources
As a young company, it’s easy to get excited by all the business that is flowing in, but if you run out of resources to fill those orders, you will be shooting yourself in the foot, losing those orders, and never regaining those customers. You need to have a plan in place to quickly tap into additional funding to accommodate the growth, or simply slow it down and scale in line with resources.
9. Forgetting that Scaling Is an Organic Process
Companies should never “try” to scale. Scaling is something that should happen organically. If you’re forcing scale, then you’ve already made your biggest mistake. If you make changes to operations, sales and technology as they’re needed, you’ll generally make the right choices and not suffer the dreaded problem of scaling before it’s required; you’ll also be in a much better place to succeed.
10. Broken Customer Experience
Scaling a business too quickly brings a great deal of challenges for a young company and a lot of time hiring, culture, financials, processes, and other shiny objects that distract founders and leadership teams away from customers. It brings broken experience for customers, as too many and too new people join the team who are not properly trained or experienced to delight the customer.
11. Founders Geting in the Way
The biggest obstacle to sustainable growth are founders who can’t change at the same speed as the business. The skills needed to grow a business are dramatically different than those used to start it. Founders who successfully scale give up control, communicate effectively, and learn to manage employees and managers. If you don’t learn these skills, the blessings of growth may become curses.
12. Focusing on Too Many Goals
Entrepreneurs get excited about new things and try to quickly scale horizontally into too many adjacent fields at once. Horizontally scale where you are doing more of the same thing seems less exciting but is usually a much more profitable and sustainable business strategy.
13. Internal Growth First
A big mistake we made was focusing on and making sales before growing internally. It was an absolute mess trying to get operations sorted after making the sales, and we scrambled to satisfy everyone. We adjusted by slowing down sales and getting all ducks in row in-house. Grow internally first and be able to meet the demand before you grow externally. It’s about delayed gratification.
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