According to Steve Blank (n.d.), entrepreneur and Silicon Valley reference, within the tech and/or digital industry, start-up should be an abbreviation for “scalable start-up”, as business models must prove their potential to fast growth and to impact the market significantly.

Resorting to a pitch description, a company that has already validated its product and/or service within the marketplace and proven its economic viability it is a scale-up company.

But what defines a digital scale-up? Its revenue? Its estimated value? Its profitability? As a matter of fact, all these elements combined are key to digital scale-up processes. When a company has validated its services or products, its market coverage progresses at a steady pace, has respectable financial track records, and a sizeable number of employees, its chance to be become a scale-up increases considerably.

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So, a scale-up is basically a high-growth company. According to the Audretsch (2012), on behalf of the OECD (Organisation for Economic Co-operation and Development), high-growth companies are enterprises that experience an average growth that exceeds 20% per year, over the course of three years, and that have 10 or more employees at the beginning of the observation period.

The difference between growing and scaling

To fully understand the concept digital scale-up is required to differentiate between growing and scaling.

Growing is about adding resources, while at the same rate adding revenue. This is usual in services business models. New clients result in hiring more staff, which at once increases revenues and costs. Whilst technically there is “growth”, scale is absent.

On the other hand, when a company exponentially increases its revenue, while its resources expand gradually, we are talking about scaling. Big companies, like Google, have clearly demonstrated the validity of this concept, by expanding the number of clients at a quick pace, but adding very few additional resources to service those clients; hence, being able to increase its margin rampantly.

Scaling reduces the amount of time required for a small company to become big. On the other hand, without scale most companies’ growth will stagnate. When a company service offer increases exponentially, the company gets advantage over competition and its growth is not restricted by the limitations that affect its rivals.

It follows that not scaling and cling on incremental growth is not an option. In case competitors find a way to scale their business, the company will suffer a severe setback. In other words, scaling is key to stay ahead as much as it is a question of survival.

How to scale a business?

Scalability is about capacity and capability. Does the business have capacity to grow? Will the business system, infrastructure and team be able to accommodate growth?

Scaling requires setting the proper stage to enable and support growth in a start-up company. It is about having the capability to grow smoothly. Planning is vital, along with funding, a suitable management system, hiring, technology, processes and, of course, partners.

The following steps are critical for scaling your business successfully:

Evaluate and plan. Envision a strategy to increase sales. For effective planning, structure detailed growth forecasts based upon the number of new costumers, orders and required revenue. Note down all the data in a spreadsheet organised by months. Then prepare an expense forecast as well: investment with staff, technology, management systems, and adequate infrastructures to deal with the sales growth. Estimate costs accurately requires hard work, research and reflection, but it is key to devise a good plan.

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Finding the money. The growth plan may have to be adjusted. You might have to hire staff, invest in state-of-the-art technology, new equipment, and facilities, as well as in an efficient reporting measuring and managing system. But where to find the money to pay for all of that? Small business awards, business angels and/or bank loans are options to consider when the goal is to hasten the business growth.

Secure sales. Scaling a company depends upon the assumption that the business is selling more. Thus, a sales structure analysis is required in order to understand if the business has:

• the desired number of leads generated by an adequate lead flow,
• a marketing/sales system to track and manage leads,
• a complete sales team to follow up and keep the company’s lead,
• a robust system to manage sales and orders,
• a billing system to an accurate follow up to ensure invoices are collected timely.

Invest in technology. Scaling a business is easier and less expensive with technology. A wise investment in technology and automation processes, warrant huge economies of scale and savings with staff. In most businesses’ striving for systems integration remains critical, as in nowadays companies tend work with multiple legacy systems to manage different business areas. Therefore, there is room for further improvement.

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Hire staff or strategically resort to outsourcing. Technology provides huge leverage, but at the end of the day the business still needs people. Look at industry benchmark to determine a basic rule for how many clients one service representative can be expected to handle. So, recruiting and hiring systems are important, as are benefits and payroll. And the management team should grow with the business. As we known, company founders will not be able to oversee everything, sometimes is better to look out for partners or outsourcing services, rather than have internal solutions.

Beyond the size

Due to scale-ups impressive levels of success and increased exposure, it is common to think they do not need expert advice. By the same token, we tend to consider that start-ups require a lot of support and guidance. However, scale-ups rely on solid partnerships and expert advice to continue their growth path.

A digital scale-up resorts to its proven success to scale and grow the company significantly. The scale-up phase is typically the quickest and most important stage of the business growth, but the one that can be most challenging.

The bigger the structure, the bigger are the challenges and concerns, namely:

• employees’ wellbeing and satisfaction,
• finding and retaining talent,
• standing out from the competition,
• maintaining customer service standards.

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New challenges bring new opportunities though. Whether we are looking to trade abroad, to launch a new service and/or product line or to update the payment technology to meet client demands.

Examples of companies that scaled-up to meet related challenges are:

• Alibaba, in the international trade
  
• Meero, artificial Intelligence applied in imaging services
  
• Bankable, which provides payment solutions drawing upon the “Banking as a Service” model