Friday, August 19, 2011

Balancing growth in a startup

This article was originally posted to Nett.

How does a startup balance the trade off between being prepared to scale without over engineering too early?

It's a difficult issue to balance. On the one hand you need to be prepared for fast spurts of growth, if your business can't cope with growth you'll potentially lose customers and an opportunity to grow quickly. On the other hand if all you focus on is scaling, you won't have time to spend on marketing and sales and attracting customers to your product.

Getting this balance right is something we're constantly focused on at Shoes of Prey. We currently have 5 software engineers working in our business and we split their time between back end process/scaling improvements and front end website design/sales and marketing improvements. We've recently improved our order tracking processes and automated tasks that previously required a lot of manual data entry. The next process we plan to improve is automating the accounting of our gift certificates, however we'll hold that project off for a few months while we focus on some additional website improvements we want to make.

In an ideal world a startup would scale up their processes in line with a growth in sales optimising the time spent on both areas of the business.

How do you get this balance right in your business?

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2 comments:

  1. Great article Foxy. I read something related to this issue in one of the blogs at hbr.org. The crux of the writer's argument was that startups often over-focus on growth. The example they gave was groupon who posted a loss of 108 million last financial year and the author put this down to them over-emphasising growth at the expense of profitability. Pretty simple stuff...but surprising how many people get it wrong!

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  2. Interesting, thanks Cam. That's a good point about the need to balance growth and profitability at the same time.

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