Startups to scaleups, whatever the stage of growth a business is at, navigating a scaling business, funding and managing expectations in an everchanging growing tech market means businesses must ensure they are ready for when challenges arise as well as ensuring they keep adapting as digital transformation evolves.

The same also applies to mid-size scaling businesses which fall in between, finding themselves in the world of SME. Making up one-third of private-sector GDP and jobs, mid-sized businesses are the stable driving force behind the world economy. 

When people think about the startup to scaleup transition, they often think of changes in risk tolerance, business maturity levels, building repeatable sales processes, and evolving systems and tools. Businesses are also at the stage where plans are in the horizon for substantial growth and expansion, however finding the balance between scalability and sustainability is not a simple task.

For this reason, mid-scaling businesses must ensure they are prepared to navigate common challenges. Below we highlight 5 challenges of a mid-scaling business. 

Maintaining company culture as you scale 

Everything starts and ends with values. A company culture is the heart of the business, the shared values, attitudes and standards that make up the work environment. The culture is the essence of what creates the day-to-day experience at a company and is built from day one. But how do you maintain this culture as a business scales?

The first hires in a business reflect how your company’s culture will evolve as you scale. For example, a company is scaling rapidly and suddenly, you go from a close-knit team where everyone knows everyone, to a team too big to know everyone’s names. Maintaining or evolving company culture can be a lot harder than it sounds, but it’s essential to ensure that all employees stay on-mission, are working towards the same goals, and feel valued and excited to come to work every day. The same applies to an outsourced tech team, with the goal being to integrate both teams as one unit which shared the same goals and values. 

It’s important to seek constant feedback from your teams and preserve the values and mission that sets the company apart, while onboarding new employees and expanding geographically.

Scaling too early 

All businesses have the long term ambition to scale, but as cost effectively as possible. We hear time and time again that premature scaling is one of the main challenges for businesses looking to take their operations to the next level. A key indication of premature scaling is when you have lower profit compared to operational costs. 

You’ve spent the time to ‘scale sensibly’, but the more you scale, the more exciting the opportunities become, and this could result in loosing track of your goals. It’s a big mistake to think that you don’t need to test the market before venturing into new territories, failure to do this can result in catastrophic losses and cash flow issues. 

It’s important to keep your goals at the forefront of every decision you make and creating a technology roadmap ensures short and long term goals can be kept to and achieved. It also gives a clear understanding of IT infrastructure capabilities and addresses current IT issues to try and prevent future system failures. 

Mistaking growth for scaling 

Mistaking growth for scaling is a common misconception that many businesses encounter, which can lead to various challenges. Whilst growth and scaling are related, they are distinct concepts with different implications. 

There’s a huge difference between growing and scaling. Most companies automatically think the two mean the same thing. Scaling a business is about maximising profits, but the demand for resources increases at a much slower pace. Growth can be defined as adding resources, such as staff, at the same rate as revenue increases. 

Businesses should be mindful of the distinction between growth and scaling and create a clear strategy that includes both short-term growth objectives and long-term scalability considerations, striking a balance between immediate revenue growth and investing.  

A business solely focused on growth might lose sight of the competitive landscape and fail to develop a sustainable competitive advantage, making it vulnerable to competitors in the long run. “Leadership shouldn’t be thinking about 10% improvement, but instead should consider a Tenfold improvement”. This is the difference between growth and scale. 

Going Global 

Most homegrown tech companies with big ambitions will be considering international markets from the outset, as their plans are bigger than the UK market alone can cater for. The first international step is an important one, and a key challenge is understanding where your market is once you know what your market is.  

Once you know where you’re going, you might want to consider whether you need to open an office in your new location, if so, in which city, and what are the local considerations such as culture and tax? 

Not having the product-market fit 

Not having a product-market fit can be a significant challenge for any business, regardless of its stage of development. Product-market fit is about streamlining the product or service and the needs and preferences of its target market. 

A survey found that 42% of startup businesses fail because there isn’t a market need for their services or products and if your company does not have the product market fit your business cannot grow. 

Product-market fit is when the product finds a market with a strong demand for it.  It’s important to understand this concept before even thinking about scaling, or before selling a product. If your company is scaling, it may be difficult to find the time to put the research into where your product fits in the market. But a lack of research could mean your company or product will fail due to not being in the correct product market. 

Driving digital transformation is key 

Successfully navigating these challenges during mid-scaling requires careful planning, adaptability, and strategic decision-making. It’s essential to regularly reassess the business’s goals, update strategies, and be open to innovation and continuous improvement. It’s crucial for the company to stay agile, open to feedback, and willing to make necessary adjustments to achieve product-market fit and set the foundation for sustainable growth. It’s also vital to drive a scalable IT solution.

As well as this, businesses are dealing with digital transformation on a rapid scale, so having the tools in place such as cloud computing, automation and self-service portals can help drive a business in scaling and delivering new products to market, both efficiently and cost effectively.