Linda Rottenberg on Overcoming Fears When Scaling Up

When your dream of owning a successful business becomes a reality, the next step is to consider how to scale up. However, it may not be finances or production that may be your biggest obstacle to growing your business – it may be your own fear. A top entrepreneurial expert provides tips on how you can scale up your business and overcome your own psychological and emotional roadblocks.

Linda Rottenberg says she loves “Shark Tank,” the ABC television reality show featuring aspiring entrepreneurs pitching their ideas to a panel of potential investors.

Rottenberg, considered one of America’s top experts on entrepreneurship and leadership, says that she‘s a fan of the show because “it’s not just about boys in hoodies – it’s not just about techie ideas,” as demonstrated recently when investor Mark Cuban put up $1 million for one-third of a small company that makes neon-colored fruit wine sold in a box.

But it’s at this point that Rottenberg confesses she has a problem with the show. Once an investor like Cuban throws in his financial support, some may believe the product and company will now “go big” without any problems.

Not so fast, Rottenberg says.

“I have found that at the go-big phase, so many of the problems are human, are psychological,” she says.

Such problems include the sometimes messy things that go along with scaling up a business, such as firing unproductive relatives and giving up a day job to finally go all in on a new venture, she says.

Which is why she has included those important topics in her new book, “Crazy is a Compliment: The Power of Zigging When Everyone Else Zags.”

Rottenberg, named a 100 “innovators for the 21st Century” by Time magazine, says that through her work with hundreds of entrepreneurs reaching the “crucial” stage of growing their business, she has developed a list of the most common fears and how to tackle them.

They are:

  1. Closing doors.  “People will cling to their old life out of fear,” she says. “We’re told to keep our doors open, but you have to give yourself permission to go big and that can mean closing doors.” For example, Sara Blakely, founder of Spanx, a multi-million dollar undergarment company, kept selling fax machines until she was booked on Oprah’s show. When you’re ready to scale big, it’s better to “cut the umbilical cord” because you’re clinging to your old job out of fear, not necessity, she says.
  2. Overlapping personal and professional interests.  Rottenberg, co-founder and CEO of Endeavor, says her company’s research found that three-fourths of entrepreneurs in the organization’s network had launched a business with a partner. Of those partners, 70% were best friends, family members, spouses or in-laws.  The study found that the worst-performing entrepreneurs did not have a shareholder agreement among partners, which can mean trouble when interests begin to differ. “That’s why you need a startup prenup,” she says. “When emotions are low, talking about what will happen in different scenarios. Talk about rights and responsibilities.”
  3. The small idea.  The problem with stories that show how Facebook or Apple started small and became huge breakouts is that such over-the-top successes often discouraged others from scaling up their ideas because they think they have to have the same results, she says. “Most entrepreneurs don’t have big ideas at all; they have lots of small ones,” she says. She advises entrepreneurs to “stop trying to shoot the moon all the time” and instead embrace the idea that the smarter move is to make incremental adjustments, becaue what she calls “minnovation” captures more markets.
  4. Maintaining focus. Research on start-ups shows that those entrepreneurs who make one or two changes raised two and a half times more money, had almost four times more user growth – and were 50% more likely to scale prematurely than start-ups that pivoted either more than twice or not at all. Rottenberg says such results suggest that you have to be open to change, but not too open. “Don’t muddy up your brand with too many peripheral products or services,” Rottenberg advises. “Focus on what you do well, and exploit it fully.” While you want to experiment and explore, sometimes the best thing is turning away from the shiny new things and avoid getting distracted. As Steve Jobs said: “Deciding what not to do is as important as deciding what to do. That’s true for companies, and it’s true for products.”
  5. Executing correctly.  When scaling up, make sure you don’t get ahead of yourself.  Research on startups finds that most start-ups fail not because of competition, but because they self-destruct when they try to go too big too early.  It’s OK to dream big, but you don’t want to scale up so quickly that you can’t execute well.
  6. Keeping calm.  Reid Hoffman, co-founder of LinkedIn, says that while lots of gurus on entrepreneurship compare launching a business to running a marathon or riding a roller coaster, he compares it to settling the American West. “In charting the new frontier, they didn’t scale the plains every day. They broke up the trip into many legs. Step by step, day by day, they got closer to their dream,” he says.  Rottenberg says that going big doesn’t always mean going fast. “Surviving the onslaught of tests during the scale-up phase often requires slowing down at points,” she says.

What do you see as human issues that interfere with a business scaling up?

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