Business May 8, 2021 Last updated May 8th, 2021 359 Reads share

The Key Characteristics of a Scalable Startup

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Starting your own business is both exciting and terrifying. After all, when it comes to entrepreneurship, there are no guarantees—but limitless potential. The truth is that some business concepts won’t be able to get traction, while others will thrive and grow. 

If you want to grow your business eventually, you have to think about scalability. There are many challenges involved with scaling up a business that you need to be prepared for, including attracting investors, hiring the right employees, and building flexibility into your business plan. 

As an entrepreneur, you’re in charge of the organizational vision. It’s up to you to build a team that shares your vision and has the skills to help you create a scalable startup you can be proud of. Here are the characteristics you’ll need to grow your small business. 

 

They Have a Low Customer Acquisition Cost (CAC)

You have to spend money to make money, but the goal should be to spend as little as possible in acquiring customers. After all, the lower your customer acquisition cost (CAC), the higher your profits! 

To achieve a low CAC, you need to have a good product-market fit. This means that your product must match up with demand in the market. Product market fit drives word-of-mouth and other organic marketing techniques that are low cost. 

Unless you’re creating a whole new market, your product needs to be able to “sell itself” and keep your marketing costs low. That will help your business to stay lean and grow more quickly. 

 

They Have a Strong and Inclusive Company Culture

You can’t create a scalable startup on your own. You need the best people to help you and share your vision. With that in mind, it’s important to start your organization off from the beginning with awesome company culture. Usually, people quit due to poor management and culture, which prevents growth and reduces morale on the team. 

Company culture isn’t about providing your employees with benefits like free food. It’s about your team’s shared beliefs and values. Great culture doesn’t just “happen,” it’s built thoughtfully and purposefully. Strong company cultures include people of different backgrounds and perspectives, and hold people to high standards of behavior and empathy. 

Don’t make the mistake of only focusing on your product and the daily goals of the organization. Culture matters for creating a strong, productive, and happy team. Great company culture will help you attract the best talent (and keep them), improve your reputation, and allow you the flexibility to scale successfully. 

 

Their Product Distribution is Simple and Inexpensive

Simplicity is key for scalability. If your product or service is clunky or logistically difficult to deliver, it will be difficult, if not impossible, to scale. A company needs to be able to deliver its product quickly, conveniently, and cheaply, even if it’s a physical product. 

Now that we have more options than ever for logistics, startups need to consider all the options and be brutally honest about the scalability of any given product. If your product distribution is complex, you might want to rethink your offerings and/or business model. 

 

They Have a High Customer Retention Rate (Low Churn)

Losing some of your customers is inevitable, but if you want to create a scalable startup, you need to pay attention to your “churn rate.” If it’s high, ask yourself why. Are you offering a product or service that people only need once? Are they unhappy with the product or your company’s customer service? 

Highly scalable businesses offer “sticky” services that keep people coming back for more. Your company also needs to focus on customer retention and reduce the revenue that comes from losing customers. It should go without saying—you don’t have a business without loyal customers! 

 

They Have A Vision

Today, we know that the most successful companies have a vision beyond making money. They have a larger vision they’re working toward that the entire organization can engage with. This provides motivation for employees and creates storytelling opportunities for scaling. 

Engaged employees are happy employees. Those who are working for companies with a meaningful vision are 18% more engaged than employees who don’t. People don’t work hard because they want to make money. They work hard when they believe in something. 

 

Scalability is About Simplicity and Values 

When you look at all these factors together, it’s easy to see some common threads. The most scalable startups prioritize simplicity and values. They don’t allow themselves to get bogged down or distracted. They have a simple, powerful, values-based vision, and they work toward it every single day.

Ryan Ayers

Ryan Ayers

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