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Top three characteristics that make startups truly scalable.

I have been writing and delivering lectures on entrepreneurship from last five years. It has been a great experience interacting with number of people who dedicated themselves to make their startups a unicorn venture. Successful startups are those, which can be scalable. A local egg selling shop might be profitable but might not be scalable to become a unicorn venture, even more! Hey Dream Big! Let me share the characteristics to cross- check that might fit to your startup, to check whether it can be scaled up:

  1. Viable, when small: Check if your venture is viable, even when it is small. Aim successful Pilot run. The ideal startup is the one which has potential to grow organically. Rather than taking third party money, the venture has been initially bootstrapped or sustained with its own revenues. Aim for a venture which do not go out of the way, when you are left with no investor's money. Think sensible, Investor's money should be used even with more care than the own money. If your venture has such a characteristic, it can genuinely be scaled up.

  1. Process oriented: Processes should be the backbone of the startup. The startups should focus on documenting and inculcating processes in such a way, that even the attrition rate of human resource rises, the business should never effect. Loosing a resource should not give a big jerk and result into loosing business. One way of achieving it is, Giving preference to the technology to manage your company operations processes rather than hiring much staff. Startups should invest in technology along, because data and deadlines to meet are forever important. Technology, say having a integrated departmental integration via an enterprise management system will keep all ends of business in sync. Your staff might come and go, your customers will never be effected. Technical department in all the companies is as important today as much the sales department is. Come out of excels buddy :) Low dependency on people is sure sign of scalability. Example: Mc Donald does not depend on Top Chefs to run their business. The defined process, products, low dependency on special human resource and technology backed up well makes its scalable.

  1. Increase in sales should drop operating cost: You made an app with an investment of 5lacs and now it is saleable. After covering its cost through number of subscriptions, costing equivalent to 5lacs. Later, with each additional subscription you are going to make almost pure profit. If startups focus on products and services whose marginal costs drop over time and they keep on selling themselves with up-gradations, the business is scalable. *Another example is Amazon's kindle business is scalable because, after the cost to Amazon of selling the first digital copy is taken into account, each additional copy is almost pure profit. In contrast of you want to expand your barber shop, the second shop will cost you exactly as much as the first one (rent, equipment, salaries). So if with increase in sales the operating costs gets lowered down, your venture is scalable.

What might seems interesting may not be scalable, so you can direct your startups to the characteristics proposed. There must be many other characteristics, I would love to check those in response from you below the article.

My Honest Writings

Mandeep Kaur Tangra

(Article inspired from the book "The startup checklist" and my personal experiences)

(Amazon's Kindle example marked in (*) is quoted from page 23 of the book The startup checklist by David S. Rose)



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