If there is one factor that most contributes to a startup’s success, it’s knowing when to nail it and when to scale it.  Nail the business model first, and then scale the business.  Don’t try to do both at once.  Invariably, winning startups figure out a profitable, repeatable business model before they ramp up their overhead.  It might be months (or years) before you create a business model that works, so by prematurely ramping your overhead, you sign your own death warrant.  Not only does it increase the monthly cash burn rate, but more employees and divisions create a lot of unnecessary complexity.

As tempting as it may be to start hiring, anything that increases your overhead also shortens your runway.  It’s hard to take off from short runways.  Wait to scale until you’ve nailed it.  Wait until you have a few highly profitable customers clamoring for your product.  Wait until you know exactly how your customers think, what they need, and how to give it to them.  Low overhead is the key to helping your startup live a long, fruitful life.

Matt Sand

Author Matt Sand

Passionate about making a difference through innovation and entrepreneurship.

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