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Scale or Fail: The top 5 things a digital health company needs in place to scale

By: Morgan Lee

Digital health is a rapidly growing industry with more startups than ever coming to the rescue with healthcare and technology solutions. It is important to note though that startups are not smaller versions of large companies.

Startups are not smaller versions of large companies. Startups are defined as newly established businesses. One industry, in particular, that is bursting at the seams with startups surfacing left and right: digital health. Where healthcare and technology are at crossroads, there are new ventures out there to develop the next best insulin pump, genome collection database, and the list goes on. Granted, not all these companies make it through the early stages-- many of us already know that most startups end up failing. But for the startups that have a viable product, business model, and revenue, what is the next step? Scale up.

Scaling, when executed properly, can bring your business to new heights, but if you and your business are not prepared, scaling could be detrimental to a company. Here are the top 5 things a digital health company needs in place to scale.

1. Evaluate and plan.

Take a hard and honest look at the business and assess if it is ready for growth. Determining how ready your company is to grow and what areas of the business need support are crucial first steps for scaling. Do you have enough customer, manufacturing, and logistics staff? And enough managers to handle bigger teams? These are just some basic questions to get you started on evaluating your company’s position.

Establishing a plan to build the business up in the right directions is another preemptive step towards a successful scale. Hiring employees and qualified ones at that, especially at a fast pace, is incredibly challenging and puts you at risk of making bad hiring decisions. Depending on the pace of scale, a company could find employees through recruiters or hiring systems. Taking on a bigger workforce may require you, as the employer, to offer different benefits and payrolls. Sometimes hiring does not always have to be internal. Consider outsourcing work or finding partners in the industry to fill in the hiring gaps. Differentiating core business activities from simply pure business activities can help determine what activities should remain internal and which should be outsourced. Lean startups, especially in today’s age, look for affordable and efficient options. Automation with software and tools can drastically drive costs down, efficiency up, and a viable alternative to traditional hiring our outsourcing methods.

2.Find the money.

Scaling is not cheap. Instinctively, people think that a business undergoing growth will see growth in profits and sales, and a major key player in how scaling plays out for a business is ignored. Some heavy costs to consider are hiring staff, researching and developing new technology, adding equipment and facilities, and improving infrastructure (i.e. software).

The high costs of scaling though, should not be seen as a downside to scaling or discouraging if your company is ready. Strong and promising companies actually pose as great investments for entrepreneurs and venture capital firms, and certainly one route a startup can take to get funding. Additionally, bootstrapping and bank loans are methods of securing investment cash. Some methods of procurement are riskier than others, but at the end of the day, if a firm, business associate, or bank is not willing to back your startup, that could be a red flag that the business is not ready. Or that there are issues with the scale-up plan that need to be resolved.

3. Secure sales.

The sound of “scaling” has a nice ring to it, and it is easy to get carried away with the details and grandeur benefits, but if the startup cannot secure the sales, it cannot scale. Scaling means you are adding more staff and infrastructure within the business to support more sales. The core of scaling is selling more. Securing the sales may very well be the most important part of scaling because without sales, what is the point? Be sure to ask yourself if the market demand is there and your company has the sales structure in place to secure sales upon scaling.

Scaling, especially in sales, is different than other parts of the business because it is labor intensive, especially in digital health. The salespeople in digital health are heavily trained, making them knowledgeable about technical product details. Securing sales is not just about having a market for a product, but enough sales representatives to follow up and close leads. Scaling becomes useless if every salesperson is at maximum capacity and no new hires are brought on. Furthermore, the sales team need to generate a sufficient flow of leads that can convert into paying customers at a rate on par with scaling activities.

And depending on how big the scale is and whether the systems in place prior can handle the growth, replacing and sourcing new resources might be in order. This includes marketing systems to track and manage leads, and systems to manage sales orders billing. The backend of sales is just as critical as the customer-facing side.

4. Invest in efficiency.

Efficiency is key when a startup starts to scale. After a company exits the developmental phase, the priority is not getting off the ground. The organization is now geared towards becoming an industry leader. Investing in technology makes scaling a business cheaper and easier through automation and streamlining.

Integrating technology into a business can drive efficiency and cost savings, especially when economies of scale kick in. Perhaps there was a piece of machinery that was unaffordable at the early stages of the startup because of low sales and margins. As you scale, more investment opportunities surface and efficiency rises in priority.

Technology has made advancements over the years to provide businesses with seamless system integration. Expect that operations will become more complicated as the startup scales, and costs will rise significantly if a company does not innovate its daily business procedures. Researching platforms that can cut down time spent on activities that can alternatively be automated or streamlined could be worthwhile.

Investing not only money but also time into increasing workplace efficiency is incredibly important. Because scaling can be a hectic process with a lot of moving parts, basic but quintessential attributes of the business can get diluted. Create a firm and standard baseline for standard operating procedures. Always keep the customers and quality of your product or service in mind as you expand. By keeping the focus on what was important from the very start, delivering value to the customer, the key drivers of the business will carry over through the scale rather than lost in it.

5.Subtract as you add.

Scaling heavily emphasizes what business should add to prepare, but let it be known that you should subtract as you add. A startup in different stages, as mentioned before, have different priorities at different times. When your business is ready to scale, there will be some slow processes within the organization that have already begun to slow down. Always stay keen to necessary subtractions, especially if there is a heavy focus on adding. A good “subtraction” can be an ineffective process or negative behavior at the workplace. For example, Twitter used to have a problem with rampant cell phone use at work. One could only imagine that if nothing was done to stop behavior like this when the company was small, it would have only gotten worse after growing. Identifying and purging bad behavior is much easier within a small company, and as a founder, make your job to remove hurdles that can stunt company growth.

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