10 Reasons Not To Grow Your Startup

There’s an unquestioned assumption in startup-land:

Grow your startup, or die.

It seems you don’t even qualify as a startup unless you aspire to grow as big and as fast as possible. If you’re not trying to be a unicorn then you’re merely a limp-wristed amateur.

Here are 10 reasons not to grow your startup:

1) You do not yet have a single customer. Better to focus on developing your value proposition. Starting with… deepening your understanding of your potential customers, their problems, how to solve them, how to reach them, and how to better communicate the value you offer.

2) You’re losing customers faster than you’re creating them. This is because your product is not living up to your value proposition, and so customers are getting fed-up and leaving. As James Altucher has found, the key is to over-promise and over-deliver.

3) Not enough customers love your product enough. As Sean Ellis says, you need to find product / market fit before you try to grow. Sean has a tried-and-tested yardstick for this which is that at least 40% of users say they would be “very disappointed” if you were to withdraw your product from them.

4) You don’t have a scalable system to acquire more customers profitably. If it costs you more to acquire a new customer than they’ll generate in profit over the average lifetime of that customer, then the more customers you acquire, the more money you’ll lose.

5) You’ll ruin your carefully nurtured culture by hiring too many new people, too quickly. Hiring more people in itself isn’t growing your startup. It’s adding to your costs. Best not to rush the hiring. Try before you buy with freelancers to test the ROI and for maximum flexibility.

6) You’ll be competing with bigger, better financed, more efficient competitors. What are your strengths? Agility? Innovation? What? Stay in touch with why customers love you (and only you), iterate and re-apply your value proposition.

7) Your company will become more complex, more bureaucratic and … gulp … more corporate. This doesn’t have to happen. Just look at Amazon, Google and Facebook. Experiment and learn from the best.

8) You’ll lose touch with the people doing the real work and instead have to rely on indirect reports from layers of middle managers who’ll spend all day fighting spreadsheets and (each other) in meetings. See (7)

9) Your company will slow down and lose it’s entrepreneurial spirit. See (7)

10) You’ll lose ownership and control of your baby to impatient, interfering investors who won’t think twice about replacing you if you don’t keep growing fast enough. Only bring in investors when you don’t need them. Don’t even talk to investors except from a position of strength. You’re strong when you have profitable customers. Investment money is cheapest and should be only used to scale up an already profitable business.

10.5) Maybe, it’s better to organically build an old-fashioned profitable business where you retain ownership and control. There’s much to be said for having a larger slice of a smaller pie. Just ask Jason and David at Basecamp.

*****

Not so much “grow or die” then as “grow and die”.

Better I think to:

Improve or die

Most of all, improve your value proposition. Keep doing it. Keep widening the gap between yours and that of your competitors.

The better your value proposition, the more irresistible you & what you have to offer become to ever more loyal customers.

Growth then becomes a by-product rather than the object itself.

There’s nothing wrong with wanting to grow your startup – and the right investors, at the right time can make all the difference. It just might be better to focus on the value proposition, set your expectations, and prepare accordingly.