Almost 90% of startups fail. Of the remaining 10%, only 1 in 10 survive the first year of operations, and a further 70% dropoff rate is common within 2-5 years. However, if there is a statistic that shows the unwavering spirit of entrepreneurship, it’s this: despite these incredibly slim chances of success, over 305 million startups are created globally each year. Startups fail for many reasons, from naivety to insufficient market need – and everything in between. But a major culprit is founders falling into the trap of scaling too quickly. Let’s take a look at the factors which contribute to a startup’s rapid growth and how to avoid falling into the ‘fast and furious’ scale spiral. How fast growth occurs Growth speed for startups is pivotal – too slow and you lose market.
Signs you’re scaling too quickly
But for all their excitement and fever to be the next unicorn. Startup founders are commonly responsible for why their businesses scale too quickly. Founders often experience a ‘sugar growth’ phase. Similar to the effects of a sugar high where the peak comes quickly Elementary and Secondary School Email List and is followed by a crash. Fast failures – how scaling prematurely can kill your company. The excitement peak from initial success makes founders impatient for more impressive results, creating a peddle-to-the-floor mentality in the hopes of quick scaling. Sometimes this approach pays off, but this is an exception rather than the norm.
Dangers of the growth spiral
Premature market or product expansion Finance related: False projections based on early adopters Imbalance between profit margins and expenditure No path to a positive gross margin from your primary product Lack of reserve liquid capital Loss of Aero Leads focus on profitability Luckily, if you can be honest with yourself to see that you are experiencing any of these signs then you still have time to make necessary adjustments. Finding scalable solutions that prohibit these issues from standing in the way of your growth is key. Unsurprisingly, most of them can be thwarted simply by slowing down. Fast failures – how scaling prematurely can kill your company.
