Most CEOs Miss These 3 Things When Scaling Their Businesses

Scaling doesn't come with guarantees. But leaders willing to change direction and delegate will find themselves with a learning curve that isn't as steep.

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By Peter Daisyme


Opinions expressed by Entrepreneur contributors are their own.

For 70 percent of startups, the scaling struggle is real, according to the seed accelerator Techstars. It's one thing to come up with a great idea and execute on it; it's another to anticipate the next market need and shift to meet it while expanding internal processes and capabilities. Maintaining a steep trajectory -- along with employees and customers -- is a lot to ask a company in its early stages.

Related: How to Avoid the Premature Scaling Death Trap

But growing companies have to meet the demand and find a way to prosper -- or perish. The Small Business Administration's figures prove that scaling is well worth the effort: As businesses age, their average survival rate improves. While the first three years or so prove to be volatile for most fledgling companies, their failure rates flatten out as they get past that hump.

After that hump, however, is where danger lurks -- though portunity awaits there, too. I've been an accountant for more than 30 years. I've seen the financials of countless entrepreneurs. I've seen so many promising founders fail along the way.

And most of them didn't need to fail, had they made a few simple decisions. I find most entrepreneurs fixate on the finish line, failing to reverse-engineer a path to get there. That path is often littered with bad habits and shortsighted thinking that prevent scaling efforts from gaining the momentum they need. Don't make their same mistakes. You can sidestep those bad habits and build momentum with these three techniques:

1. Be willing to pivot quickly -- even if the move doesn't match your original vision.

When an entrepreneur's original idea is successful, his or her natural impulse is to chase that thread. But pulling that thread may result in a short string or a more complicated tangle. Stock prices, influenced by supply and demand, can change dramatically in a single day, losing or gaining massive sums. Apply this same supply-and-demand tug to a business, and it's easy to see how a failure to pivot to meet demand could result in a company carrying a supply no one wants.

Trailblaze Growth Advisors, which acts as a fractional CMO for small- and mid-size organizations needing executive-level marketing expertise, encourages founders to avoid getting so attached to their ideas that they miss crucial opportunities to revise their strategies. "We once had a client come to us with Google-sized aspirations, but the company had been hemorrhaging cash for the past several quarters," Trailblaze wrote on its blog. "Unfortunately, it was far too late to make the crucial changes in the product strategy."

If you've been hemorrhaging money for multiple quarters, it's too late to implement the necessary changes to your product strategy to reach your dreams. Avoid getting so attached to an idea that you miss crucial opportunities to revise your strategies.

Related: 3 Lessons for Entrepreneurs to Overcome Scaling Issues

2. Redefine the CEO role so your company doesn't rely on it.

The biggest struggle CEOs face is the feeling that their companies rely solely upon them. They start their companies acting as salespeople, product developers, customer service reps and accountants all at once. Then, as the company grows, they're unsure how to hand off these tasks without losing institutional knowledge or relinquishing control.

But that lack of assurance can cripple a company's growth: Gallup found that the executives it looked at who were strong delegators generated 33 percent more revenue than those who weren't, and experienced a three-year growth rate of 1,751 percent on average.

Virgin founder Richard Branson says delegation is the advice that entrepreneurs most often thank him for. "Early on in your career, find someone better than yourself to run the business on a day-to-day basis," Branson told Inc. "Remove yourself, maybe even from the building and from the nitty-gritty. That way, you're going to be able to see the bigger picture and think of new areas to go into."

3. Outsource high-impact, low-cost areas.

Like everything else, HR, legal and financial issues often get lumped into the "I'll get it done" bucket. While these concerns can have massive implications, from sexual harassment claims to inaccurate tax returns, many early-stage startups simply can't afford to pay an expert to help. But once they begin their scaling trajectory, leaving these areas to amateurs can stop speedy growth in its tracks with one mistake. While the cost of a full-time employee can be high, outsourcing these areas can be well worth the cost -- both in terms of paying wages and preventing long-term risk.

Refusing to outsource these tasks can actually distract business owners from the main event. "Most entrepreneurs have great talents, but many times they think they can do it all. That can really stall the growth of the business," Laura Lee Sparks, the owner of law firm outsourcing business Legal Marketing Maven, wrote in Entrepreneur. "By outsourcing the day-to-day back-office tasks, the business owner has more time to focus on generating income."

Related: The Shocking Reality of Scaling an Online Business

Scaling doesn't come with guarantees. But leaders who are willing to change direction, delegate tasks and outsource functions that require special expertise will find themselves with a learning curve that isn't quite so steep. By removing distractions and focusing on scaling up, entrepreneurs can make clear-headed decisions -- and see stronger growth.

Peter Daisyme

Entrepreneur Leadership Network Contributor

Co-founder of Hostt

Peter Daisyme is the co-founder of Hostt, specializing in helping businesses host their website for free for life. Previously, he was co-founder of Pixloo, a company that helped people sell their homes online, which was acquired in 2012.

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