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4 Ways to Smoothly Transition From the Startup to the Scale-Up Phase

4 Ways to Smoothly Transition From the Startup to the Scale-Up Phase
Image credit: REUTERS | Carlos Barria

After numerous pivots, sleepless nights and fights with founders, you’ve survived the chaos and crushing ambiguity of startup life. Your idea is now a growing business, and you’re finally getting money for what you’re selling after toiling for months or even years. Now you have to worry about getting your company to scale, and what you’ve relied on until this point -- hustle -- doesn’t seem to work as well anymore.

In Marshall Goldsmith’s words, “what got you here, won’t get you there.”

The analogy I like to use at Galvanize is that our initial startup phase was like playing toddler soccer. Toddlers are great hustlers. If you put two teams of 4 year olds on a field and let them loose, you’ll see 12 energetic people tripping over and kicking each other, chasing the ball en masse all over the field. It’s frustrating to watch, and if you’re an employee, it’s frustrating to play.

Despite the chaos, you might find success because everyone on your team is willing to do what it takes. These traits are extremely valuable and likely an important part of your early team’s culture. But as you scale -- adding offerings, more teammates, business functions and new leaders -- it’s no longer just about getting stuff done, and your hustle culture can start to work against you.

Related: 5 Entrepreneurial Roadblocks You Never See Coming

As your organization becomes a more complex organism, you’ll find that your team can no longer fit at one table. At this point, you need to play a more sophisticated game. If team members are chaotically chasing each business challenge, or even worse, you, the CEO, are kicking the ball into the goal and making every decision, you’re still playing toddler soccer. This is bad for your team, and your business will suffer.

As CEO, it's your job to get off the field and start coaching your team on how to play a less chaotic version of the game: U10 is a good start. My 10-year-old daughter plays in a pretty elite league, and you’d be surprised by some of the strategy you see on the field. They play positions, work as a team to get the ball down the field and have a backfield ready to defend their goal if a player up front is beat. Soccer is a team sport, and when played well, a beautiful metaphor for building a functional team and scaling your business.

During the first quarter this year, I took inspiration from my daughter and decided it was time for us to stop playing toddler soccer. Here are a few things we’ve implemented to transition from startup mode to scale-up mode:

1. Start functionalizing roles.

Your early-stage team was likely comprised of people who like to do “a little bit of everything,” which means they probably won’t enjoy giving up responsibilities. But if you don’t start asking employees to narrow their focus, scaling will become pretty much impossible. Whether it’s turning your “marketing person” into an entire team with specialized roles, or restructuring your organization so employees can divvy up responsibilities in a more effective way, functionalizing roles can be a painful process. You might even have a few employees leave because of the changes you make.

But this is a crucial part of building a big, well-oiled scale-up. And keep in mind, this doesn’t mean that employees can’t be creative or take on big, ambitious projects. You should still encourage big risks and creativity -- just make sure they keep spending a majority of time on functional priorities.

2. Find amazing coaches to guide your team.

Hiring good managers is one the best things you do for your business as you scale. I know many founders and startup employees think  “management” is a bad word, but look at it this way: managers are the people who take care of the dirty work -- metrics, quotas, reports, systems, processes -- and empower your team to take on the big, interesting challenges. With effective managers in place, your engineers, marketers, and other employees can spend more time doing cool stuff, and less time worried about all the little things that have to get done to keep your business running.

Related: 7 Ways to Work Fewer Hours But Get More Business Traction

After hitting around 25 employees, I suggest moving toward an 80/20 workforce: 80 percent doers and 20 percent coaches. You probably won't have a tough time finding great doers (hopefully you’ve already hired a lot of them), but finding great coaches can be a challenge. At minimum, great coaches need to lead, inspire and be above the minor quabbles and BS that can happen as your company grows.

3. Prepare your new players for success.

You can’t expect people to “hit the ground running” and just “get it done” if you don’t have a clear onboarding process. Most startups neglect onboarding for far too long, but all eventually hit a point where new employees don’t just “get it.” The time has come to make a concerted effort to set your new hires up for success.

You should invest a few days (or even a full week) getting people acquainted with all the different aspects of your business. At Galvanize, we give people a crash course in web development, data science and entrepreneurship, because this is what we teach. Everyone on your team should, at minimum, understand what your business is doing, who you’re up against and why you think you’ll win. Every single person on your team should be able to give an effective elevator pitch.

4. Take care of your team, both on and off the field.

Do you have systems in place to support the health and well-being of your employees? I’m talking a 401(k), generous paternity and maternity leave and other perks that companies should provide once they’ve left scrappy startup territory. Making this a priority will keep morale high, encourage vital employees to stick with you and make it easier to bring in critical, high-level hires in the future. It’s just the right thing to do.

This is a general overview of some of the things to keep in mind as you transition into scale-up mode, but there are tons of other tough issues that will pop up as you grow: Do you need a CFO? How should you set up your team? What are the appropriate compensation plans for the sales team, engineering team, etc.? When should you get involved in what’s happening across the company? Seek support from other entrepreneurs and your advisors to help answer the big questions that pop up.

Going from a startup to a scale-up means big and sometimes uncomfortable changes, but these growing pains are all part of the fun of taking your business to the next level. Good luck.

Related: 5 Tips for Inspiring Your Most Talented Employees