3 Biggest Challenges of Scaling Companies and How to Tackle Them

Once a company hits the ground running, the hurdles don’t disappear. When your company anticipates accelerated growth, you’ll find yourself having to scale up in order to meet higher demands. For many organizations, it’s the hardest part when they want to maintain the work culture and efficiency while maturing.

Three-time startup CEO Richard Tworek has found that as an organization matures, the CEO has to keep things flowing, keep people involved and drive to the same vision. In a presentation to the Software Leaders Group in Dallas, he highlights challenges lying in growing engineering without the CEO involved on a day-to-day basis and better defining roles.

First, decide: Do you want to sell or not ?

When it comes to scaling, the first thing Chris Fedde, president of Hexis Cyber Solutions, Inc., says should be considered is whether you’re looking to build a sustainable company or to get bought. There are good examples of both in the security field, according to Fedde, who says  that over 200 new security startups have popped up in the last year.

“You know very few [of those companies] are going to succeed,” says Fedde. “Some are going to fail, some are going to be bought and a few are going to be sustainable companies.”

Fedde, who has previously led the growth of several companies like SafeNet and Harris Corporation, started working at Hexis when it launched in December of last year with 40 employees, most of whom were product developers. As of July, Hexis has about 135 employees who are scattered across the nation in various disciplines. He looks for Blue Chip customers who also look for companies who will be around for the long haul.

These are some of the biggest challenges to anticipate when scaling and how to tackle them:

1. Overcoming your fear of failure

While it’s not hard to find people who are excited to join startups with evidence that their product is successful, it’s scary being at the top. The hard part is hiring people from all the different disciplines required to build a company, while making sure employees have ownership.

“People need to set aside their fear of failure because you can’t have that fear," Fedde says. "You have to be able to say this is going to work."

To remove this fear, Fedde only hires people he has had firsthand experience with and asks his employees to do the same.

“It’s really exciting to find the right people," Fedde says. "People who love the idea and new challenge. When the idea grows with the company, compensation grows with the company and everyone feels like they own the victory. Meanwhile, other people will be screaming into the night at the thought of that.”

Martin Macmillan, CEO and co-founder of Pollen, explains that a company’s goals should be written down and properly defined to reduce fear.

“It’s fine to have a theory or idea, but you ought to articulate it properly,” Macmillan says.

2. Not outspending your competitors

“In the commercial business, especially the security business, it’s a very noisy world…you’ve got a few very large companies who, of course, are there to protect their turf, and they’re going to spend a lot of money to protect their turf,” Fedde says. “You’ve got to figure out how you get known to the target market and target customer base.”

Macmillan says you have to make sure you are using whatever cash you have very efficiently.

Pollen expedites the growth of digital businesses by giving app developers faster access to revenues they’ve earned than the time frame (as determined by the app store) they normally would for earlier deployment.

3. Lack of foresight

The pivot point for startups is when things take off, but companies don’t know if they’ll take off in six months or six years.

Fedde says it’s important to start building a pipeline based on trends, especially since startups get caught up in profitability and margins when they are valued for their future potential.

“Trendlines is what it’s all about. It sounds weird, but these things come together,” Fedde says. “A critical factor is understanding the influence of analysts and researchers. They are so influential. You really need to get people who’ve done this before because there’s just no substitute for experience.”

For CEOs with aspirations of growing a big company, Macmillan emphasizes being ahead of the curve without micromanaging.

“Try and pull yourself from day-to-day things to try to focus on growth because you need to drive the focus yourself. No one’s going to grow it for you,” Macmillan says.