The early stages of a digital business are without a doubt the most vulnerable time in their existence. The majority of tech company owners are eager for this phase to conclude since trying to just hang on until the next round of funding may be an ulcer-inducing experience. Sadly, a lot of them are so relieved to be out of the woods that they neglect the next crucial phase, which is scaling up and beginning the process of turning their startup into a viable business that will expand its clientele and create a steady flow of income.
Put differently, they overlook and fail to see the countless pitfalls associated with growing a digital firm. Which are they, therefore, and how can one avoid them?
Excessive optimism is a natural human trait, regardless of one’s self-perception. This is particularly true for those that are able to survive the first upheaval and uncertainty and continue to grow their firm. This is the ideal moment for entrepreneurs to get overconfident, which might cause issues if they are running a firm.
Under such circumstances, successful business models are abandoned in favor of even more ambitious ones, and amid the intense enthusiasm that permeates the atmosphere, objectives and ambitions are exaggerated to the verge of impossibility.
This may not seem like a big deal at first, but later on it becomes clear that a number of poor choices were made as a result of these arrogant new objectives. Ultimately, investors begin to withdraw, consumers get dissatisfied, and deadlines are missed.
Ignoring the infrastructure
There is considerably more to scaling a tech firm than simply changing the company’s appetite. More labor, more people, more tasks—more of everything, really—are involved. Relying on the current, little infrastructure in such a scenario is like playing with fire.
Maybe worse than that is the situation.
All of your SaaS solutions will probably need to be upgraded as your firm expands in terms of personnel. For example, you will need to update your project management software from a very inexpensive or trial version to a more expensive one. If you utilize accounting and HR software, this also applies to it.
More significantly, you should make sure your internet connection is strong enough to handle the additional work and improve your PCs. Reviewing local internet providers and making sure you are receiving the greatest offers could be a smart idea at this time.
When you encounter a roadblock—which you will—you will lose precious time if you neglect the infrastructure. It might be a good idea to choose someone in your startup and give them the duty of upgrading if you are unsure of the best time or method.
Selecting the incorrect candidates
You had a relatively small workforce until the time came for your software firm to grow. You and maybe six other individuals were there. Anything beyond that amounted to wishful thinking.
Suddenly, you find yourself with more work to do and projects to finish, and it’s clear you’ll need to hire more staff.
Attempting to tackle this with the belief that you can improvise will lead to complete catastrophe.
Specifically, making the incorrect hiring decisions might end up costing your expanding firm a fortune. The expense of excessive employee turnover, or workers quitting or being let go, which happens when the incorrect people are hired, has been the subject of several studies and investigations. The real expenses in each of these situations turned out to be far more than anticipated.
We are discussing businesses that are positively losing money.
Making the incorrect hiring can be even more expensive for a developing firm as they might upset the company’s current equilibrium and lead to a host of other human problems.
If our hiring and HR expertise is lacking, now would be a good opportunity to review it or consult with an outside company that can handle this for you.
Never undervalue the disastrous consequences of poor hiring decisions and HR practices.
Allure of extravagance
Getting a tech startup over its initial obstacles is a challenging task. We comprehend. You’ve put in two years of 18-hour workdays, your coworkers are exhausted, and you’re sick of the 20-year-old couch that’s the only piece of furniture you own that isn’t a chair or a desk.
It appears that you have drawn in a sizable amount of money for this current round of funding, and the focus is on non-essentials. It makes sense. It’s biological.
Unfortunately, this type of biology may quickly spiral out of control, and one might begin to take luxury for granted without realizing it.
“Well, given how much time we spend in them, we really ought to get those ergonomic chairs.”
“Perhaps that Star Trek: TNG pinball we used to play so much as children?”
“It’s time for The Couch to retire.” Yesterday, I spotted an amazing $8,000 Italian one.
Thus, it begins.
You find yourself spending $20,000 on an espresso machine before you realize it.
Your money is being wasted.
It takes place. Never believe that you are above it. You can never be really certain that you are above it until the money starts flowing in.
Final Word: Be wary of the allure of luxury.
Be astute. Inhale deeply. Examine your new venture. Consider carefully where you want to travel and the most efficient route there.
Give it some time.
Don’t jump into anything.
