The startup journey - exciting, exhilarating, and often terrifying. It’s a path not for the faint-hearted.
While social media loves to glamorise the #hustlelife, the reality of building a business is far more challenging, which is why so many start-ups don’t make it to their first anniversary. Yet, for those who push through, the rewards are immense. Founders often discover as much about themselves as individuals as they do about becoming business leaders.
In the world of start-ups - grit, determination, good people, and a solid idea are the essential ingredients. If you’ve got that formula right, whether you’ve raised capital or bootstrapped, you’re already ahead of the curve. These elements can get you through the initial phase of building a business. But what happens when you reach the end of the start-up phase? And how do you know when you’ve reached it?
For founders who manage to navigate the turbulent early years, growth often follows - until they hit "the mud."
What’s the mud, you ask? It’s a near-universal sticking point, usually around the $10 million revenue mark or when the team grows to about 25 people.
Some founders encounter it later, others earlier, but the mud catches almost everyone. Businesses often stall, stuck at this stage for years or even decades, unable to grow past these milestones. You see the same frustrating patterns: a team expands to 30, then shrinks back to 20, up to 30 again, down to 18, and so on. The same can happen with revenue. It’s a cycle that leaves founders stuck, often making drastic changes in desperation, often to the detriment of the business.
So why do founders get stuck? It’s the classic case of "what got you here won’t get you there." Good people, good work, and a good product will often get you to that $10 million or 25-person threshold, but they won’t be enough to move you into the scaleup phase. I always think of it in terms of building a house (my dad was a builder). Scaleup is like building a one-storey house with plywood and corrugated iron - it works for now, but try adding a second or third storey, and the whole structure can/will collapse because its lacking strong internal framing, level foundations, a watertight roof and a detailed set of plans to work from.
Scaling up requires the same approach. You need solid systems, strong processes, a defined brand, an efficient and effective operating rhythm, capable leadership, and a robust strategic plan. Just as a builder wouldn’t construct a multi-storey building without detailed blueprints, you shouldn’t try to scale your business without a clear plan and the right support structures in place.
The challenge for many founders is that the skills needed to grow beyond this point are very different from those that got them through the start-up phase.
This is when founders should consider bringing in external advisors - not business coaches, but experienced advisors or an advisory board who can guide them and their leadership teams through the transition. Navigating this shift is key to getting unstuck and returning to a phase of growth.
Once you’re out of the mud, the road ahead opens up. Make no mistake - scaleup comes with its own challenges, but it’s also when you’ll truly begin to see the rewards of your hard work. It’s often the point where a business starts to feel “real,” even though you’ve already achieved what many entrepreneurs only dream of.
A version of this article first appeared in Startup Daily in 2024
