What would you do if your startup idea starts taking the concrete form of a business? We can bet that a maximum percentage of you guys will favour exploiting opportunities to upscale under such circumstances. Makes sense, right?
The year 2016 was a reality check for the Indian startup ecosystem. An eye opener which kinda gave Indian entrepreneurs a sore black eye! And it wasn’t the lack of funding or not getting the proper traction that was the problem.
Take a look at Hyper-funded startup like PepperTap whose colossal fall down was a lesson for others. And they weren’t the only ones! Nearly 212 startups went to dust last year before they could even step into the year 2017. It is almost a 50% rise in the number of startups who had to roll up their sleeves and call it quits!
In such a market scenario if you are actually churning out positive numbers, then thinking about an upscale model for your startup won’t be the worst thing to do. But what if it turns out to be one?
Problem! Right? Well, we’ve got 5 reasons for you which can help you make better decisions
What exactly is ‘Upscale’?
Upscaling means that you can systematically accelerate your startup’s growth rate with confidence that the resources you put in will yield great and measurable results. Upscalability enables a startup to grow. It helps you in putting in more precise efforts into your business. In order to adapt to a larger workload without compromising performance or losing revenue, upscaling is crucial.
So let’s say, you have 10 person team working with you and you want a bigger team so that you can manage larger operations. You start the hiring drive, consolidate the required resources which a new asset will require, chalk-in the working capital, etc. Does that mean your decision to upscale is correct? Because that’s essentially what we want you to think.
2. Are you really ready to Upscale?
When a company is ready to scale, it typically starts utilising many more resources. Money, people and systems start flowing more than usual to aggressively grab market share. Maybe you have found a perfect Product-Market fit or perhaps you are searching for repeatable sales or customer acquisition model. As a result of that, you might have amassed a significant amount of ‘scaling capital’ as well.
While all these aspects paint a positive picture for you, it may drive a false perception of succeeding in your venture at the right time. Having the ‘scaling capital’ won’t hurt you for sure, but it can influence your judgment and possibly lead you to attempt to scale too early.
So finding out that you have established a truly repeatable process and you are not misreading the market readiness is very important before you decide that you are ready.
3. Have you hit the sweet spot yet?
The balance between working capital & fixed capital is very pivotal for the growth of any company. We mean nobody likes it when the things you want to be even & balanced, go even a little bit adrift, right?
If you haven’t hit the sweet spot yet, then the issues of cash burn and working capital requirement will be amplified. If you cannot balance out the number well then your working capital requirements will kill you.
In order to raise an appropriate amount of capital to support the generally inevitable cash-flow need that an aggressive scaling strategy requires, demands a certain level expertise.
To Upscale or not is more of a matter of performance & the stature of your startup. Do not confuse it with the amount of time you have invested in building your venture.
We will soon be back with more tips on how you can lead your new startup idea towards a more sustainable growth. Stay tuned!
Latest posts by Sumit Mishra (see all)
- 3 Things you need to know before you Upscale your Startup! - July 20, 2017
- Do you have a mentor? Well, look for one. Here’s why! - July 13, 2017
- Dhinchak Pooja + Startups + Content Marketing = Awesome Branding - June 27, 2017