7 Strategies to Successfully and Ethically Scale Your Start-up

Most entrepreneurs know that 90 percent of start-ups fail. So why do they still hemorrhage billions every year, despite a wealth of knowledge, lessons learned and available support?

Is it context or character? The answer lies in both. Context matters but character also counts whether you’re in Silicon Valley or River Valley.  

The good news is it’s possible to scale effectively and ethically.Drawing on my 30-year career of scaling small investment businesses, I outline seven strategies for the ambitious start-up:

1. Mitigate human error

Smart start-ups factor human risk into the decision-making process like emotion, impulse and miscalculation. One way to prevent human error is strategic automation. E-commerce platform Shopify automated its inventory, order processing and marketing to help businesses scale.

Richard Branson understands fear and uncertainty. “We’ve never been 100 percent sure … but over 45 years, we’ve always stood by our motto: ‘Screw it, let’s do it’.” He urges leaders not to be embarrassed by failures and to start again, maintaining ambition. “Start small, think big.” The best manage the herding impulse and steer clear of fads to avoid jeopardizing cash flow. Sometimes, this is ego-based.

2. Contain your ego

We know inexperienced leaders fall prey to poor decision-making. It happens a lot. A mismatch between vision and ability exacerbates the probability of failure. It’s understandable. Entrepreneurs are optimists who are prone to overconfidence. It’s the “I won’t fail” syndrome. While confidence is essential in the growth phase, overconfidence derails judgment. 

Don’t let pride and ego kill your company. When you get things wrong, admit it and move on. In a social media world, the social shaming that follows error is immediate and painful. Even venture capitalists can be swayed in the rush to glory, especially by entrepreneurial charisma. Think WeWork CEO Adam Neumann who secured billions in funding and later saw his empire crumble.

3. Seek advice

Launching a start-up is riddled with uncertainty so learn from others and heed their advice. “Stay hungry, stay foolish,” Steve Jobs famously urged in a graduation speech. Seeking advice isn’t a sign of weakness but a display of maturity and humility. Investors, customers and employees not only expect it but respect it.  

Different leadership styles will influence likelihood. For instance, democratic leaders tend to be more open than autocrats. In this hi-tech era, some turn to generative AI  for prompt advice. In turn, this can turbocharge growth.

4. Avoid the slippery slope

It’s tempting to take shortcuts or circumvent systems to achieve growth or funding. It’s harder to be patient in a world of instant rewards, especially if dreaming of awards and magazine covers. That’s when the ethical trade-off begins. Unsurprisingly, studies show businesses led by ethical leaders tend to perform better. Few are perfect but winners at least try.

For instance, the outdoor clothing company Patagonia is a vocal advocate for environmental sustainability. Truthful advertising will always engender trust. Dove’s “Real Beauty” campaign earned praise for challenging stereotypes. In contrast, clothing brand Abercrombie & Fitch recently came under scrutiny for sexually exploiting its male models.

5. Collaborate with kings

As an excellence-hungry leader, you can see it makes sense to outsource what you’re not good at or don’t enjoy. It’s common practice to collaborate with bigger organizations, even though some see it as a dilution of power. In previous roles when I expanded my company’s footprint from Europe to Asia and the U.S., the key was strategic partnerships with distribution firms, the cornerstone of growth.

Similarly, McDonald’s scaled rapidly through franchising, allowing local entrepreneurs to operate. Tesla partnered with automotive companies to share electric vehicle technology, enabling market growth. Cultural fit cannot be assumed and requires extensive research.

6. Do deep research

Data research alone is useless without behavioral research. Airbnb’s global expansion and personalization, Netflix’s customer retention strategies, and Amazon’s diversification into various sectors are evidence of this. But remember, not all endeavors succeed.

Survivorship bias makes it easier to remember the successes rather than failures. But substance matters.Ill-chosen partners can ruin a great idea or business. Ill-chosen third-party providers can contravene human rights and crater reputation. 

7. Know when to move on

There’s never enough decision latitude for ambitious employees. As startups evolve, they require different skill sets to scale up. When experiencing growth, avoid the temptation to promote favorites. It always backfires.

Have enough humility to know your limitations. Don’t be like the fictional Logan Roy, unable to execute succession. Sometimes, moving on is best for clients and the business.

Mark Cuban advises that entrepreneurs “solve a problem you’re passionate about.” It’s a great foundation. There is no magic bullet. Leaders are human–impulsive, impatient and egotistical. Knowing that is priceless and predictable.

Understanding the pitfalls of human behavior and side-stepping proven errors is a sure way to fast-track start-up success.

Source: Incafrica