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Signs that your startup is ready to scale

Once upon a time, in a closeby land, a charming Portuguese founder called Tiago developed a gaming app during his college days and decided to embark on the journey of creating a startup: BigAR. Some eight years later, he continues to expand his business.

Tiago was (and is) an entrepreneur with a plan: optimize his product according to market needs, build a team, learn how to pitch his business idea, convince investors and go through the initial stages of getting his company off the ground until the ideal time to scale it.

Where is he now? He got his exit, and continues to do what he loves. And he will live happily ever after.

You see, this is not just a story. It's actually a modern day fairy tale about scaling a business that happened to one of our alumni and might somehow inspire you to do the same. But first you'll need to figure out if your startup is ready to scale.

Hand pointing to 2023

​​Knowing when to scale is just as relevant as knowing how to do it, as premature scaling was found to be one of the reasons that startups fail.

We can define premature scaling as spending money beyond the essentials on growing the business.

Many founders fall into this premature scaling trap because of what Nathan Furr calls the Entrepreneur's Paradox. If entrepreneurs didn't believe in their businesses, they would never risk their effort and money to make them grow. But it’s also because they believe too much in their businesses that they try to scale them too soon, ignoring the need to first guarantee some important points:

1. Validated Product/Market Fit

Before scaling your business, you should already have an MVP (Minimum Viable Product), a well-defined target audience and an effective strategy to enter the market. Without a good Product/Market Fit validation, it’s risky to invest more in your business, as you don't know if there will be enough demand for your product/service.

2. The Right Core Team

No matter how ambitious your vision is, without the right people on your side, you will struggle to even get your startup off the ground. Your startup is only as strong as the team behind it, and this is a factor that investors pay attention to. Before scaling your business, make sure you have a strong, multidisciplinary team committed to the same goals as you.

3. Positive Cash Flow

You don't just need to make a profit, you need to have a positive cash flow. Having a positive cash flow means that the money coming into your business is greater than the money going out.

Growing your business naturally will increase your expenses, many times before you can get additional income. However, you can use your current cash flow situation to project future revenues and expenses and prevent your growth efforts from compromising the company's success.

4. Consistent Profitability

If you notice that your sta