The Hidden Costs of Scaling Fast
Three certainties that will impact you greatly in the long term unless you deal with them pre-scaling.
Rapidly growing a business is inherently stressful, even if you have an exceptional team, great mentors, or are seasoned founders. There is always a new set of challenges to navigate and overcome, and regular fires to put out.
While you can’t plan for everything – in our experience, we believe there are three certainties that will impact you greatly in the long term unless you deal with them pre-scaling.
These truths are:
Lack of structure will breed inconsistency
The early stages of any new organisation are full of collaboration and constant communication between leaders. When there’s only a handful of you, responsibilities are clear and everybody pulls together. Your founding team is used to you, as CEO, talking through ideas and strategies. This inevitably changes as you grow.
While this linear structure is effective in the early stages, it doesn’t scale well. When you’re small, you're one team. You know your people, roles and responsibilities, and have frequent touchpoints. Rapid growth creates the perfect storm where a once clear vision and strategy can often dissipate.
With growth comes an increase in the number of teams. Yet, breaking into different teams while maintaining the same quality of output when you have never established clear reporting lines and processes is, quite simply, a mess. This lack of structure manifests itself in slow or inconsistent decision-making, teams doing the same work but in different ways, or making sales concessions as there’s no review board.
Organisational structure is not just about drawing an organisational chart, it's about formulating a structure that is fit for purpose and is dynamic enough to foster collaborative working that will scale with your business.
Lack of people process will create a flight risk of high-performing talent
A good people process is imperative. It promotes a positive work environment, collaboration, and an overall “can-do” attitude. In the early days of a startup or approaching scaling up, it’s easy to confuse camaraderie and a desire to secure funding as evidence of a great culture. Similar to organisational design, as you grow and demands change, a lack of people process will lead to problems.
It’s a tale as old as time, someone who has been with you since the beginning leaves after a deal. Everyone’s shocked, and no one saw it coming. Yet, how can you expect to know your teams’ honest feedback if you haven’t established culture surveys, peer-to-peer reviews, or have structured performance management? The bringing in of new talent without a proper onboarding process or updating remuneration and benefits in line with market rates for current team members can create flight risk and frustration.
Frustrated that they are absorbing more roles and responsibilities to correct for a dysfunctional team. Frustrated because their job has changed but their title or compensation doesn’t match peers or competitors. Frustrated that culture has changed to the point they don’t recognise the company they joined.
A people process is an anchor through organisational changes. A through line that monitors employee satisfaction and catches potential issues early, before they result in the resignation of star performers.
Costly down the road to rectify poor leadership
It’s natural to want to reward company loyalty, but some of the team members you hired as a startup are not always the right people to lead in the scale-up. It’s tempting to promote instead of making a strategic hire. However, this can often create uncomfortable and costly problems further down the line.
For example, your finance team will need to grow as the business scales. Following a funding round, the financial structure becomes more complex, and there is a need to manage banking and investors' reporting requirements. Systems and processes are often no longer fit for purpose and need to be replaced.
This can be a real stretch, particularly for a finance leader who does not have adequate experience and is unable to recognise this.
Bringing in support from seasoned professionals who have navigated through this journey is vital. This stops you from immediately overpromoting due to pressure and allows your current team to gain valuable guidance and experience.
We know that going through change quickly only adds pressure to cracks in the foundations. While organisational structure, people process, and choosing the right leaders may seem like small details on the surface (which is why they’re hidden costs), they are key to your success.
It’s crucial to invest in solving these issues ahead of scaling. If you don’t, it will cost you more, slow down your progress, and can have a serious impact on your business.