How Do the Challenges Faced by Scaled, Non-Scaled Companies Differ?

A recent study dove deeper into the challenges experienced by both large and small companies. 

Launching and scaling a business comes with its fair share of challenges, but do scaled businesses (businesses with more than 50 employees) face the exact same ones as those that are non-scaled (businesses with less than 50 employees)? 

This is the question that Endeavor Philippines and Endeavor Insight looked into in a recent study that focuses on the entrepreneurship ecosystem for tech companies in the country. 

The study, called Mapping the Philippine Tech Sector: An Analysis of the
Entrepreneurship Community, features findings that are based on more than 80 interviews with tech entrepreneurs, as well as data on more than 300 companies and their founders.

Scaled Companies List Capital, Access to Talent as Top Challenges 

According to the study, founders of scaled companies list access to capital as the top challenge that they deal with. In fact, 63% of founders of scaled companies who were interviewed for the survey chose it. In contrast, only 50% of founders of non-scaled companies cite access to capital as a major barrier to growth.

Another main challenge for founders of scaled companies is the lack of available technical talent. 59% of founders cited this as a challenge, highlighting the lack of specialized engineers and the high cost of hiring tech talent in the Philippines specifically. 

This number is 7% higher than the 52% who said the lack of qualified managerial talent is a challenge that they face. In particular, founders struggle to hire sales staff as well as C-suite positions. 

Non-Scaled Companies Find Government Policies and Regulations the Most Challenging

As for founders of non-scaled companies, 67% of founders interviewed for the study said that government policies and regulations are the most challenging aspect of scaling that they deal with. Founders have enumerated the following that make it difficult for them to grow their business:

• Complicated processes in order to both open and close a business
• Laborious compliance rules
• Lack of legal frameworks for fast-growing companies

Similar to scaled companies, 52% of founders of non-scaled companies also list the lack of qualified managerial talent as another major challenge for them.

Providing the Right Solution to a Specific Problem

Not all businesses deal with the same challenges, which underscores the need for more than just cookie-cutter solutions. In order to help a business scale, provided solutions should be able to address the specific challenges that it is facing. 

For example, the government can help address the challenges faced most especially by non-scaled companies by making government processes more efficient or by providing legislation that will help foster the growth of businesses in the country. 

In order to address the lack of talent without resorting to outsourcing abroad, companies, support organizations, and even the government can help workers in the country upskill through training and other opportunities to further their education. 

Key Takeaways 

The findings of the Endeavor study highlight that businesses face challenges at varying degrees. What may be a major challenge for one business may not be as big of a hindrance for another. 

A one-size-fits-all approach cannot adequately address the barriers businesses face in order to scale. This emphasizes the need to fully identify said challenges first in order to come up with solutions that are specific to them.

However, coming up with the appropriate solutions is not just the concern of a business or its founder alone. In order for businesses to thrive, a sense of community must be fostered among founders, investors, support organizations, and the government. All these must work hand-in-hand in order for businesses to achieve the growth that they are capable of.