Transitioning from startup to scaleup is no mean feat, but to reach the next level of potential for your business, embracing these challenges is essential.

Expansion invites a whole host of newfound issues to overcome; from people management to balancing the books. But, being aware of these obstacles can arm you with the right tools to prepare for them. So what are the most common challenges of scaling up? For a Scale Up Month special, we’ve come up with five problems founders face time and time again when becoming a scale up and advice on how to tackle them.

1. Building a team ‍♀️

You may have heard the phrase “Employees are the most important asset of a company”. As trivial as it might sound, having the right people is necessary for a company to grow.

It does not matter how innovative a product or how efficient and well-thought a business model is, a company that fails to build a strong team that offers a collaborative environment for its employees, will stunt its own growth.

Building a successful team and hiring the right people is perhaps one of the most challenging tasks founders will face. For small and medium sized companies, hiring can be a very time-consuming process. Although outsourcing recruitment can be expensive in the short-term, it is important to consider the long-term impact that hiring people with the right skills will have on the business’ performance. The good news is that growing companies attract more candidates, therefore, hiring will eventually become easier the more a business grows.

2. Consistency

And once you’ve recruited the right team, maintaining a healthy company culture is just as essential. Once a company gets over a certain number it can be very hard to achieve this. Cliques are formed and teams can get competitive. For example, 8-10 people you can effectively line manage, as it gets above 30 there will naturally be more distance between team members.

It can also get difficult to communicate across the business, which often leads to duplicate work being done, as welll as vastly differing workloads across the board. You need to be careful to prevent this from leading to demotivation by putting systems in place to ensure everyone is working towards a common goal which they feel involved in. This could come in the shape of weekly standups, regular socials, inter-team events and games or regular communication from the leadership team about successes and challenges of the business.

New hires will also require time to reach full efficiency and adapt to their new workplace. Equally, existing teams will also need time to get used to a higher workload. Only companies that succeed at building a strong and collaborative team that is able to adapt to new circumstances in a flexible manner will achieve the consistency required in order to scale up.

3. Leadership skills

Companies will go as far as their leader can take them.

Most of the time, founders are the people who invented, developed, and built the business from scratch, therefore, it is understandable that a founder feels attached to a business considering the hard work that goes into nuturing it. However, as knowledgeable as a founder might be, that does not necessarily mean that they are the right person to run the business. Occasionally, it is worth considering recruiting a CEO to handle the monetary, business side of things to enable the founder to focus on the technical or creative elements. 

It is crucial for a founder to demonstrate leadership skills and to realise when they are not suitable to run the business, put their ego aside, and make the decisions that are best for the future of the business.

On the flip side, it can also be an issue if the new CEO has differering goals/ ideas than original founder. This can lead to major clashes and company identity crisis, so ensuring continuity and maintaining clear communication is essential.

4. Raising finance

It’s no secret that businesses need to invest money in order to grow. For small and medium sized companies, getting the funds required to develop the business can often be a very long and time-consuming process.

Gaining trust from investors is no easy task and will often become a full-time job and will require the founder to invest a significant amount of time which could be better spent on developing the business. At times, experienced hiring advisors can help taking the pressure off the founder and will often deliver greater results.

Most of the support being offered locally is aimed at early-stage companies that are looking for Seed and Series A investments. Companies looking for Series B investments (£5m+) are harder to come by 

5. Finding the right space and infrastructure

Having enough physical space to scale up in can be very difficult, especially in big cities.

Most of the time, the space required will not be immediately available, slowing down growth. Even in cases where office space is available, moving places can often slow down growth since not all companies are agile and flexible enough to maintain their productivity after changing environment. It’s uncertain how companies will operate after the pandemic. It’s very possible that some companies will adapt a hybrid model where some of their teams work from home.

In addition to office space, companies will also need to purchase equipment and improve their infrastructure in order to grow, some of which could take a very long time to receive and set up.

Generally, as a company starts up there are few controls over what software different aspects of the business need and are signing up for, and sometimes this is barely recorded. As they grow more expensive tools are needed, meaning the team need to change, adapt to and learn these new tools.

This can lead to a messy infrastructure as different teams use different tools, which again comes back to inconsistent culture. Moreover, this can lead to security issues with different and often weak passwords used in different areas of business.

In order to scale, businesses need more cloud based technologies, project collaboration tools and processes to see who’s working when.

Pedro Ferrandez Anton

Pedro is a first-year Accounting and Finance student at the University of Bristol interning at our IAP division. Aspires to have his future company featured on our website.