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Lead Your Team Strategy

3 Steps to Successfully Scaling a Startup

3 Steps to Successfully Scaling a Startup
Credit: Nivens/Shutterstock

A growing business' success depends not just on the quality of a product or service, but also its employees, one entrepreneur and Northwestern University lecturer argues.

To successfully take a business from its initial startup phase to its scaling stage, it is critical to bring in the right people to steer the direction of the business, said Daniel Weinfurter, an entrepreneur and adjunct lecturer of management and organizations at the Kellogg School of Management at Northwestern University.

"While the product or the service remains important, what ends up driving the ability to scale is not the product or the service per se, but the team of people that are put in place to serve the clients and build the product or service," Weinfurter said in a interview with Kellogg Insight, the school's online magazine.

The right people do everything necessary to get the business to grow, Weinfurter said. [Entrepreneurs Say Business Ownership Requires These 3 Sacrifices ]

"They get the product right; they get the service right; the culture is healthy; they get a motivated team behind them," he said. "If you don't have this right, the opposite happens." 

Weinfurter said that, to navigate the process of scaling successfully, founders and entrepreneurs need to take three crucial steps:

  • Take a step back. When an entrepreneur first starts out, it's likely that he or she will be involved in every piece of the business. However, at some point, this total-control style will stunt the startup's ability to grow, Weinfurter said. Entrepreneurs eventually must forgo making every decision within the company and hand over some of the reigns to others with more expertise in certain areas, he added.
  • Listen to trusted advisers. Oftentimes, when startups hit the scaling stage, funders or corporate boards are included in the process. Weinfurter said the key isn't just bringing them on board, but actually taking their advice to heart.

"Not many founders are objective enough to know what their limitations are," he said. "A good board will make a management team dramatically better because they force them to think about things they are blind to."

  • Make thoughtful hires. The problem many entrepreneurs run into when bringing new employees on board is that they don't typically have a background in human resources. "Entrepreneurs tend to come from marketing, product development, engineering, sales or finance," Weinfurter said. "Not many former human resources leaders are running new businesses."

Not having that expertise can lead to poor hiring decisions. Weinfurter pointed to his own experience in expanding his first business. He said he had minimal processes and recruitment tools in place, which eventually led to a 50-percent failure rate of the initial employees the business hired.

This experience led his company to institute specific competency-based role descriptions and to assess the entire team of current employees to determine what skills and experience were most needed for their future success. "We reduced the turnover rate from 50 percent to 5 percent in one year," Weinfurter said.

Weinfurter believes it's necessary to put the right people in place at the right time in order to build a team of employees that's fully prepared to take the company to the next level. "Getting the people part of it right is critical," Weinfurter said.

Chad Brooks

Chad Brooks is a Chicago-based writer and editor with nearly 20 years in media. A 1998 journalism graduate of Indiana University, Chad began his career with Business News Daily in 2011 as a freelance writer. In 2014, he joined the staff full time as a senior writer. Before Business News Daily, Chad spent nearly a decade as a staff reporter for the Daily Herald in suburban Chicago, covering a wide array of topics including local and state government, crime, the legal system and education. Chad has also worked on the other side of the media industry, promoting small businesses throughout the United States for two years in a public relations role. His first book, How to Start a Home-Based App Development Business, was published in 2014. He lives with his wife and daughter in the Chicago suburbs.