January 2025

The startup world is often painted as a land of endless possibilities, where big dreams meet big checks. Entrepreneurs and investors alike revel in stories of unicorn valuations and rapid success. But there’s a side to startups that’s less celebrated — the graveyard of ambitious ventures that, despite raising significant capital, ultimately failed.

Raising millions, even billions, is no guarantee of success. While hefty funding may signal promise to outsiders, it can also serve as a double-edged sword, masking critical flaws such as poor product-market fit, weak leadership or unsustainable business models. In some cases, the very abundance of capital fuels reckless spending, bloated operations or overconfidence in unproven strategies. The result? A fast track to failure despite impressive financial backing.

Below, we delve into the hard truths of startup failures through the lens of ten companies that raised enormous capital only to crash and burn. Each story offers a unique and sobering lesson for aspiring entrepreneurs and investors alike — highlighting the importance of execution, adaptability and sustainable growth over mere monetary success. These cautionary tales reveal that the real measure of a startup isn’t how much it raises but how wisely it navigates the challenges of building and sustaining a business.

Related: How to Set Yourself Up for Success and Avoid the Mistakes That Cause Most Startups to Fail

Theranos

Capital raised: $700 million

Theranos promised a medical revolution with its blood-testing technology. The problem? The tech never worked. Fraudulent claims and lack of transparency brought down this high-flying company.

Lesson: Overselling and under-delivering can destroy credibility, no matter how charismatic the founder is.

WeWork

Capital raised: $22 billion

The coworking space giant imploded due to reckless spending, poor governance and an unsustainable growth strategy.

Lesson: Even the best branding can’t save a business with broken fundamentals.

Quibi

Capital raised: $1.75 billion

With a vision of revolutionizing streaming for mobile users, Quibi failed to read the room. Lack of demand, poor timing and misguided execution doomed it within six months of launch.

Lesson: Market research is essential before scaling.

Jawbone

Capital raised: $930 million

Jawbone failed to keep pace with competitors in the wearable tech market. Poor product quality and lack of differentiation led to its downfall.

Lesson: Innovation must evolve alongside consumer expectations.

MoviePass

Capital raised: $68 million

MoviePass’s unsustainable subscription model of unlimited movies for $9.95/month sounded great — too great. The company bled money and alienated its customer base with constant policy changes.

Lesson: Overgenerosity can backfire without a sustainable revenue strategy.

Fyre Festival

Capital raised: $26 million

Marketed as an exclusive luxury event, Fyre Festival delivered chaos instead. Mismanagement, overpromises and outright fraud turned it into a cultural punchline.

Lesson: Execution matters just as much as vision.

Related: Avoid Going from Riches to Rags: 6 Lessons for Startups

Beepi

Capital raised: $150 million

Beepi aimed to simplify car sales with an online marketplace but couldn’t scale operations effectively. High overhead costs and thin margins buried the company.

Lesson: Operational efficiency is as critical as market demand.

Pets.com

Capital raised: $300 million

One of the most infamous dot-com busts, Pets.com struggled with high shipping costs and poor profitability, despite heavy marketing.

Lesson: Growth without a viable financial model is unsustainable.

Homejoy

Capital raised: $40 million

A cleaning services platform, Homejoy crumbled under legal challenges related to worker classification and inability to retain customers.

Lesson: Ignoring legal risks can sink even the most promising ventures.

Better Place

Capital raised: $850 million

This electric vehicle startup bet big on battery-swapping stations but underestimated adoption challenges and infrastructure costs.

Lesson: Timing and ecosystem readiness are crucial for innovation-heavy industries.

Key takeaways for entrepreneurs

• Validate before scaling: No amount of capital can fix a product that doesn’t meet a real need.

• Spend wisely: Burn rate management is critical. Flashy spending might attract attention, but sustainability drives success.

• Prioritize governance: Strong leadership and clear accountability can prevent internal chaos.

• Adapt quickly: Markets change fast. Companies must evolve their strategies to stay relevant.

• Be transparent: Trust is the currency of long-term success. Overhyping or hiding flaws is a recipe for disaster.

Why startup failures matter

Failure isn’t just a footnote in the startup journey — it’s often the prelude to innovation. Many successful entrepreneurs have risen from the ashes of failed ventures. The trick is to learn from these stories, not repeat their mistakes.

In today’s venture capital-driven economy, it’s tempting to equate funding with validation — a mindset that often overshadows the core elements of sustainable business growth. Securing millions in funding can create a false sense of security, leading entrepreneurs to believe they’ve already achieved success.

Related: When My Startup Failed, I Was Hopeless and Left in Tears. Here Are the Lessons That Helped Me Restart and Launch Three Successful Companies.

However, as these ten cases reveal, money alone doesn’t make a business successful. Passion fuels the vision, strategy provides the roadmap, execution turns ideas into reality and adaptability ensures survival in the face of unforeseen challenges. Without these elements, even the most well-funded startups can falter.

This article serves as both a reality check and a call to action for entrepreneurs to rethink what success truly means. It challenges the prevailing narrative that financial backing is the ultimate indicator of potential. The unspoken truth? It’s not about how much you raise; it’s about how well you deliver value, create impact and sustain growth over time. Success is defined not by the headlines about funding rounds but by the ability to build a business that thrives, adapts and endures.

Chinese AI startup DeepSeek burst on the scene this week with its latest AI model, which the startup claims performs as well as leading AI from OpenAI, Meta, and Anthropic — but at a far lower cost to develop. DeepSeek said their total training costs amounted to just $5.576 million — much cheaper than the $100 million to $1 billion Anthropic CEO Dario Amodei says it costs U.S. startups to train AI today.

However, in earnings calls on Wednesday, leaders at Microsoft and Meta separately affirmed their plans to continue to spend heavily on AI, even though DeepSeek showed that it was possible to spend less and still develop a competitive AI model. Executives said spending on AI has already led to business gains and spending more on AI is necessary to stay competitive in the long term.

Related: OpenAI Says AI Industry Disruptor DeepSeek May Have Copied Its Work as Rivals Race to Catch Up

Microsoft says AI revenue is up

Microsoft CEO Satya Nadella said on the company’s earnings call that its AI business was up 175% in revenue year-over-year, for an annual revenue run rate of $13 billion. Overall revenue at the company was up 12% from the previous year, reaching $69.6 billion.

“As AI becomes more efficient and accessible, we will see exponentially more demand,” Nadella predicted.

Related: Microsoft Is on Track to Hit a Major Milestone, the ‘Fastest Business in Our History,’ According to Its CEO

He highlighted that Barclays, the University of Miami, and Pearson used Microsoft’s AI for 10,000 or more users for the quarter ending December 31.

^{Satya Nadella. Photographer: Dimas Ardian/Bloomberg via Getty Images}

Microsoft stated earlier this month that it would spend $80 billion on AI data centers in the fiscal year ending in June. Microsoft’s chief financial officer Amy Hood said on the call that more than half of the company’s AI-related spending was “on long-lived assets that will support monetization over the next 15 years and beyond.”

Meta says AI investments give it an advantage

On Meta’s earnings call on Wednesday, CEO Mark Zuckerberg defended plans to spend up to $65 billion on AI this year, stating that “investing very heavily” in AI infrastructure “is going to be a strategic advantage over time.”

“At this point, I would bet that the ability to build out that kind of infrastructure is going to be a major advantage for both the quality of the service and being able to serve the scale that we want to,” he said.

Meta’s chief AI scientist Yann LeCun stated in a Threads post on Saturday that DeepSeek was able to succeed because of open-source AI models, which allow developers to build on each other’s work. Meta famously made its AI open source in 2023 after spending millions developing it, and DeepSeek used parts of it to create its latest model.

Related: Meta Is Building AI That Can Write Code Like a Mid-Level Engineer, According to Mark Zuckerberg

Meta made $164.5 billion in the twelve months ending on December 31, a 22% increase from 2023.

Is the DeepSeek model the future of AI spending?

With DeepSeek topping U.S. app stores, even ahead of ChatGPT, the competition will be watching to see if massive spending is worth it.

DeepSeek’s popularity has already rattled tech stocks, causing AI chipmaker Nvidia to lose $590 billion in market value in one day on Monday.

“DeepSeek has shown that innovation doesn’t need a trillion-dollar price tag,” Lukman Otunuga, senior market analyst at global broker FXTM told Entrepreneur in an emailed statement. “If US tech leaders fail to convince investors of their edge, AI stocks could face further pressure this week.”

Six months ago, LinkedIn user Lauren Nicholas noticed that something was going on with the casual dining restaurant, Chili’s.

“Chili’s is having a moment,” she wrote, posting screenshots of viral TikToks and noting that “brand love” seemed to be at a “fever pitch.” She also said, “Gen Z is obsessed with the Triple Dipper.” (For example, one video of a mozzarella stick “cheese pull” from the platter has more than 16 million views.)

It looks like Nicholas was definitely right. In an earnings call on Wednesday, Chili’s parent company Brinker revealed that sales at restaurants open for at least a year increased by 31% last quarter—and double-digit sales growth has been steady for three straight quarters.

@edwards.kaylee THE CHEESE PULL ?? #chilis #trippledipper #yummy #foodtok #relatable #fyppppp #getmefamous @Chili’s Grill & Bar ♬ Big Back – The Original Parody – thecincomedy

“The investments we have been making over the last three years are working,” said Brinker’s President and CEO Kevin Hochman on the call with analysts. “Marketing is doing a great job of bringing guests in and putting Chili’s back in the culture again. Operations simplification investments in labor and facility improvements are working to get guests to return.”

The company said increased foot traffic—about 20% last quarter—helped fuel the growth. That, and some fancy new ovens.

Related: Popular Buffet Chain Golden Corral Has Racked Up Tens of Millions of Views on Social Media. Here’s How It Keeps Going Viral.

“We’ve been testing Turbo Chefs and restaurants and slowly expanding them for the past three years with very positive feedback from the operators,” Hochman said. “They cook the food much faster and much more evenly. They put out less heat, making the kitchen more comfortable for our team members. And they create superior-tasting products like crispier quesadillas and ribs with a delicious crust.”

On the call, one analyst said the company’s turnaround was “the best one of all time,” per CNN.

Nation’s Restaurant News reports that Chili’s also cut its menu down by 13 items and eliminated a dozen pantry-related SKUs. It also improved the quality of its chicken breasts and began making guacamole fresh, in-house.

Hochman told CNBC that Brinker is planning to redesign some older locations, around “200 of our 1200 restaurant estate that…need some love” as the company tries to become a “third place to come together.”

“We’re always going to be there with that $6 margarita,” Hochman told the outlet.

Amazon announced on Wednesday that it was laying off dozens of workers in its communications and sustainability departments, and earlier this month, the company let go of 200 employees from its North America stores team. It’s only the beginning.

In September, Amazon CEO Andy Jassy announced that the company would be eliminating excess layers of middle management by the end of March. Now, a leaked Amazon Web Services (AWS) sales team guidelines document, obtained by Business Insider on Thursday, sheds light on how those middle-manager cuts will happen.

The document tells AWS sales managers to increase their number of direct reports, pause hiring new managers, and demote some managers down a level to a non-managerial position of less pay. An Amazon spokesperson did not confirm the internal guidance to BI. AWS had about 115,000 employees out of Amazon’s total 1.55 million.

When it comes to direct reports, the leaked document requires managers to have at least eight team members, up from the six that Amazon founder Jeff Bezos required in 2017.

The AWS sales team guidelines also advised a pause on hiring new managers, stating that the team had hired more managers than entry-level employees in the past few years, driving costs up. Amazon’s structure had become more diamond-shaped than pyramid-shaped, the document stated, referring to the heavier middle management layer.

The final recommendation in the leaked documentation was to move managers down a level to individual contributors, which has a lower pay range. Two AWS employees told BI that this had already happened to several managers.

^{Andy Jassy. Photo by Noah Berger/Getty Images for Amazon Web Services}

These changes arrive in response to Jassy’s September note, which asked each senior leadership team to “increase the ratio of individual contributors to managers by at least 15% by the end of Q1 2025.”

Related: ‘Not a Cost Play’: Amazon CEO Clarifies Why Employees Have to Come Back to the Office

A Morgan Stanley note to investors in October estimated that Amazon could let go of 13,834 managers under Jassy’s guidelines, assuming that 7% of Amazon’s workforce is management. Amazon had 105,770 managers as of the second quarter of 2024 and would cut that number down to 91,936 managers by the first quarter of 2025, per the note.

Morgan Stanley estimated that if Amazon’s cost per manager ranged from $200,000 to $350,000 per year, Amazon would save between $2.1 billion and $3.6 billion by reducing its manager headcount.

At a November all-hands meeting, Jassy explained that changes to middle management were necessary to keep Amazon competitive. He had created a “Bureaucracy Mailbox” in September for Amazon employees to email him examples of excessive processes or rules that could be eliminated. As of November, that inbox had received more than 500 emails, with Amazon taking action on more than 150 employee suggestions.

“The reality is that the [senior leadership team] and I hate bureaucracy,” Jassy said. “One of the reasons I’m still at this company is because it’s not a political or bureaucratic place.”

Related: I Tried Buying a Car on Amazon. Here Are the Pros and Cons.

What if I told you that the number 385 was the answer to building a solid go-to-market strategy?

Stay with me. I’m Paul Sullivan, author of Go-To-Market Uncovered (GTMU) and an expert in building B2B go-to-market strategy. I also created the ARISE Go To Market Methodology® for background and credibility.

So, here’s the thing. The Arise GTM Methodology has five steps:

• Assess

• Research

• Ideate

• Strategize

• Execute

But to start solving your go-to-market strategy, you must answer the following three questions:

1. How do I convey the value of my product or service to my end user or customer?

2. How do I enable my buyer to buy from me?

3. How do I plan to onboard, retain and expand my buyer?

Related: How to Build a Solid Go-to-Market Strategy for 2025

To answer these questions, you must then understand these eight pillars of GTM strategy:

1. Discovery

2. Personas, Segmentation and Jobs to be done

3. Positioning, Messaging and Value Proposition

4. Pricing Strategy

5. Sales Enablement

6. Marketing Tactics

7. Onboarding

8. Product/Service Development

So, there you have it. Three questions, eight pillars and five steps. 385 is the magic number for go-to-market strategy. Let’s get into it.

When I wrote GTMU, I first divided the go-to-market process into three questions to simplify your understanding of what is required. Whenever I explain it this way, people always get it. No more “sales is go to market” or “marketing is go to market.” One founder told me it was the first time they had clarified what “go to market” meant. In that situation, I explained that go-to-market is how the organization executes the business strategy. That is an explanation I stand behind, but 385 is how it becomes easy to remember.

Related: 6 Key Things to Consider When Bringing a Product to Market

The three questions that matter

Question one: How do I convey the value of my product or service to my end user or customer?

When you approach this question, I want you to consider your current situation. It requires brutal honesty and a long, hard look in the mirror. You must review your situation thoroughly and understand the factors currently impeding your success.

To start, assess the business and perform reviews on your content, website performance, personas, strategy, social media, technology stack, the team’s skillset, a CRM review, KPIs and product performance, notably attrition and retention rates.

Your next job is to perform a competitive intelligence assessment, SWOT analysis and Porter’s five forces analysis. You will also interview at least 7-10 current and former clients and reevaluate the size of your available market. Understanding how you fit into today’s market will significantly affect your pivot with a new GTM.

Once you understand your current situation and place in the broader competitive landscape, you can generate new ideas for differentiating your communications strategy for your market segments. You do this by brainstorming, big-picture, blue-sky thinking, checking your positioning, value proposition, storytelling, messaging and rebuilding it all together.

Question two: How do I enable my buyer to buy from me?

Now, we get into the strategic element of your go-to-market strategy. Customer acquisition. This involves a series of processes, including content mapping, keyword analysis, segment hypothesis, customer content, SEO content, paid marketing strategy, sales and marketing asset requirements, sales enablement programs, website updates/redesign, goal and objective setting, KPIs, reporting requirements, lead scoring and the jobs to be done.

This activity will help you align marketing, sales and customer service, which all teams seek. It will also drive you into a revenue operations model as you consider the strategy and the technical requirements to help deliver it.

Sounds like a lot, right? It is — and if you want to win, you will do this comprehensively and not cut corners. Segmentation is critical at this juncture, and you’ll be thinking about how you position your product or service to the different buyers in the internal buyer committee. We widely accept that there are multiple decision-makers in today’s sales process, so your marketing team must adapt its strategy to incorporate content that engages them all.

Question three: How do I plan to onboard, retain and expand my buyer?

Your strategy needs to include an onboarding playbook or playbooks. You must map your complete customer journey through the business, from a stranger to an advocate. I first mapped this in an Excel spreadsheet back in 2023. My first row was about my brand marketing strategy. From there, I moved through my pre-launch initiatives into sales enablement, marketing strategy and customer onboarding, and then my upsell and cross-sell strategy into my referral program.

Again, it sounds like a lot, but it profoundly impacted our bottom line and many clients.

Here, at the execution stage, that is a primary objective. Additional requirements will include a segment audit to ensure your new segments have a customer journey lifecycle mapped out for each. They will also include new copywriting, execution of web design/development, new social media production, revamped ad campaigns, updating/consolidating/removing older and underperforming content, new reporting, consistent quarterly reviews, new digital asset development, including sales enablement materials, new sales and marketing emails, CRM workflow sequences, as well as other automation and new KPIs.

Related: 5 Lessons to Follow as You Take Your Product to Market

Where are the eight pillars? As you can see above, I have addressed the three questions and five stages of the ARISE GTM Methodology®, which is transparent. But if you carefully read the eight pillars and examine the actions and requirements of ARISE, they are all there, entwined perfectly for you and your team to adopt and build a winning go-to-market strategy.

So there it is: 385 is the winning number for a successful GTM strategy. It involves three questions, eight pillars and five steps.

China-based startup DeepSeek became an AI standout this week by creating an AI model believed to be on par with leading models from U.S. startups — at a fraction of the cost. In a research paper released last month, DeepSeek said it developed its AI for under $6 million in only two months, a far cry from the $100 million it takes U.S. startups to train AI — and that’s on the lower end of the spectrum, according to Anthropic CEO Dario Amodei.

It quickly rose to the top of the app store charts, challenging the U.S.’s position as the world’s leader in AI. The release set off a race for AI dominance and shook Big Tech stocks, causing AI chipmaker Nvidia to lose almost $600 billion in market value one day and new competitor claims — from having an even better model to allegations of theft.

According to White House AI and Crypto Czar David Sacks, DeepSeek’s arrival shows that Chinese companies are “hot on our heels” but that the U.S. maintains its leadership in AI. He says DeepSeek’s AI is on par with OpenAI’s o1 model, which came out about four months ago.

“We basically have somewhere between a three and six-month lead on them [Chinese companies],” Sacks said. “But they are catching up very, very fast.”

^{DeepSeek. Photo Illustration by Justin Sullivan/Getty Images}

ChatGPT-maker OpenAI says DeepSeek is copying it

OpenAI and Microsoft are investigating whether DeepSeek used large amounts of OpenAI training data without permission for its own AI. OpenAI told The Financial Times earlier this week that it had proof that DeepSeek used its large AI models to create its own through a process called distillation, in which one AI model learns from another like a student learning from a teacher.

Sacks backed up OpenAI’s claims in an interview with Fox Business on Tuesday.

“There’s substantial evidence that what DeepSeek did here is they distilled the knowledge out of OpenAI’s models,” Sacks said. “I think one of the things you’re going to see over the next few months is our leading AI companies taking steps to try and prevent distillation.”

Other industry leaders say DeepSeek’s success is due to the collaborative nature of open-source AI models.

DeepSeek “came up with new ideas and built them on top of other people’s work,” Meta’s chief AI scientist Yann LeCun stated in a Threads post on Saturday. “Because their work is published and open source, everyone can profit from it.”

Alibaba claims it has a better model

Chinese e-commerce company Alibaba is claiming that it has developed an even smarter model than DeepSeek’s.

Alibaba on Wednesday released a new AI model called Qwen 2.5 Max edition that the company says scored better than AI from Meta, OpenAI, and DeepSeek in leading benchmark tests, per Bloomberg.

“Qwen 2.5-Max outperforms … almost across the board [OpenAI’s] GPT-4o, DeepSeek-V3 and [Meta’s] Llama-3.1-405B,” Alibaba’s cloud division stated in an announcement on its official WeChat account, according to Reuters.

Related: What Is Stargate? OpenAI, Oracle, Softbank, and President Trump Team Up for $500B AI Infrastructure Initiative.

Fans of Sonic the Hedgehog know all about his love of chili dogs. So why shouldn’t the blue video game hero have his own restaurant? Kevin Seo, creator of the Sonic the Hedgehog Speed Cafe pop-ups, is the one who made it a reality.

Seo started in the corporate world but soon found his true calling outside of it. He now helps creators from many different arenas launch brands and events. Seo is a co-founder of companies such as Secret Sauce Society, a marketing agency, and Logistics Consulting.

Seo’s first viral sensation was a restaurant specializing in smash burgers — also the world’s first NFT-themed restaurant. He and his partners purchased a Bored Ape Yacht Club NFT to acquire the rights to the image. Their blockchain burger joint, Bored And Hungry, rapidly spread to global locations. The idea, which started in Long Beach, California, now has six locations in Asia.

Related: How These Entrepreneurs Turned a Seasonal Venue Into a Nightlife Powerhouse

Bored and Hungry’s viral success soon attracted the attention of bigger brands. Eventually, Seo talked to SEGA, the company behind one of his favorite nostalgic video games, Sonic the Hedgehog. The idea of turning the beloved video game character’s favorite food, chili dogs, into a real-world restaurant was too good to ignore.

Seo collaborated with up-and-coming creative designers on everything from streetwear to packaging to curate a truly immersive experience. Bringing the game to life required paying attention to every detail, down to the AstroTurf flooring in the restaurant. The team had a pop-up concept made to go viral.

The first location of the Sonic the Hedgehog Speed Cafe launched at ComicCon 2023 in San Diego. Game fans could enjoy chili dogs, cheese fries and more. Seo and his team made sure to prioritize the quality of ingredients to make the most of this food experience.

Seo’s philosophy regarding the Sonic the Hedgehog Speed Cafe was simple: He cared about the fans and wanted to bring them from the video game world to a totally new platform.

The company launched its current pop-up in Atlanta on January 18; the cafe will only be open for 60 days.

Related: This NYC Man Is Revitalizing the Famous Bar From ‘Goodfellas’ As It Approaches Its 200th Anniversary

Content state of mind

How do you maintain momentum in a creative endeavor like this? Seo sees everything as potential content for his personal brand or the brands he partners with. His state of mind is “always content.” You never know what will work or what will make an emotional impact in just the right way.

He embraced this idea by creating the Good Service podcast. He teamed up with his friend Ben Chung to share their spiritual lives with the world. Seo said their faith drives everything they do, both at work and at home.

They started this show for fun but soon committed to recording every Thursday. They always have good food on the table to showcase local restaurants. Their guests are broad, and the conversations are deep.

Seo’s best advice for anyone thinking of starting their own podcast or similar show comes from his own experiences. He believes that authenticity and vulnerability, though hard, are critical to making lasting connections with your listeners.

“It’s so easy to spot someone just faking it,” Seo says.

Related: Embracing Fear Fueled this Michelin-Rated Chef’s Comeback

About Restaurant Influencers

Restaurant Influencers is brought to you by Toast, the powerful restaurant point-of-sale and management system that helps restaurants improve operations, increase sales and create a better guest experience.

Toast — Powering Successful Restaurants. Learn more about Toast.

Related: The Army Was Tough, But Restaurants Made Her Cry — Lessons From the Drive-Thru From a Former KFC Exec

Real estate entrepreneur and long-time “Shark Tank” star Barbara Corcoran says she’s hired thousands of people during her career—including hiring (and firing) her own mother.

Now the 75-year-old investor and mentor is sharing her advice when it comes to what to look for when hiring. And if you think you need a strong resume to work with Corcoran, you’d be mistaken.

Related: This Is the Most Important Part of Starting a Business, According to Daymond John, an Entrepreneur Worth $350 Million

“I’ve hired thousands of people over the years and this is the No. 1 thing I’ve learned,” Corcoran says in a video posted to Instagram. “Always hire attitude over experience.”

“You have someone with the right attitude, you can teach them anything!” Corcoran continues. “Forget about the resume.”

“Think about their attitude and their willingness to learn,” she adds. “That’s what I’ve learned.”

Commenters mostly agreed with Corcoran’s thoughts, with one writing: “The best advice!!!! Agree 1000%; makes work and team environment so good too!”

Related: Barbara Corcoran Only Flies Coach. Here’s Why.

Others said they were applying her advice to their company’s hiring processes.

“Cheers to this. I just interviewed some people and this is what I pay close attention to!” a user added.

Though not everyone said it works in their field.

“I feel like it’s been the opposite recently within the design world,” one user wrote—before asking if Corcoran was hiring.

Related: Barbara Corcoran Says This Is the One Question to Ask Before Selling Your Home

We’ve all heard the tales about major companies that were once nothing more than a small side hustle in someone’s garage. This is an entrepreneur’s dream, but scaling a side hustle may be more challenging than you might imagine. As a business grows, it becomes more complex, requiring the business owner to take risks, hire new team members and expand into uncharted services or demographics.

It’s critical for entrepreneurs to know how to scale their business without losing focus on the business itself. After all, you have to keep servicing your customers while you are working toward expansion. Here are some easy ways to make sure you are well-positioned to scale your side hustle to the next level.

Related: 5 Keys to Turning Your Side Hustle Into a Successful Business

1. Develop a clear expansion strategy

Scaling a side hustle to a full-fledged business can be overwhelming and scary. The reality is that most entrepreneurs are overly ambitious and set their sights on big accomplishments. The challenge is that without a clear expansion plan, you could hinder your progress or leave your business stuck in side hustle mode.

Take the time to carefully examine what bottlenecks could be holding your business back from growing faster, what opportunities you have to add additional products and which demographics could offer a new customer segment. With a clear and concentrated effort, you’ll be more likely to benefit from each intentional action you take to scale your business.

2. Expand your team

In most cases, growing your side hustle will require additional help to service customers, process orders and manage other administrative tasks. This is probably the most intimidating thing about scaling a side hustle. The first step is to start getting tasks off your plate. Start by automating any recurring tasks that you have. This not only saves you time but means you don’t have to hire someone to do this activity. You can also outsource things like bookkeeping and social media management. By freeing up your schedule, you can spend more time capturing more sales and starting to work on things that will help you scale more efficiently.

Another challenge is that when you’re flying solo, everything falls on your shoulders. While it’s great to get additional employees to help, there may be a struggle to let go and trust others to provide the same quality of care that you put into your business. Strategic business coach Bruce Eckfeldt recommends implementing and documenting standard opening procedures. This ensures that new team members know how to do things to your standard and provide a consistent customer experience.

3. Prepare financially

Cash flow is essential for any business, but it’s especially important for scaling businesses. In fact, over 80% of businesses fail for this reason alone. As you grow your business, you’ll need additional cash reserves to pay for higher expenses, maintain a larger inventory and cover payroll costs. This is especially important when hiring employees, as this will likely be one of your largest expenses. It’s a good idea, as Jeff Sauer recommends, to have a clear understanding of the financial benefit the employee will return to the business before you hire them.

Spend time with your bookkeeper or accountant to better understand what you can do to strengthen your business’s cash flow. In some cases, it might be good to proactively secure a line of credit with your bank that you can use if needed.

Related: This Graduate Student Started a Side Hustle to Help Pay Tuition. It Earned Over $115,000 Last Year — More Than His Full-Time Job.

4. Invest in the right technology

In the beginning, most entrepreneurs focus on implementing cheap or free technology. This can be beneficial, especially when you have limited financial resources. As you grow your business, you’ll want to implement tools and technology that are scalable. Think about where you see your business in five or 10 years. You should be implementing tools that can handle that future anticipated volume — otherwise, you may be forced to change technology platforms, which can be disruptive for your growing business.

5. Establish KPIs

As your business grows, it’s important to understand if the business remains healthy. A great way to measure your success is by implementing key performance indicators (KPIs). These metrics can give you an early indication of something going wrong and help drive performance with your team. You can track metrics like average customer satisfaction rating, shipping lead times, customer conversion rates and total sales volume. To keep the team focused on what’s most important, try to limit the number of KPIs to five to seven key metrics.

6. Get outside support

While you might be an expert in your side hustle, you might not be an expert in running a full-scale version of your business. Don’t be afraid to reach out to others and ask for help, support and guidance. Connecting with other business owners is a good way to tap into their past experiences. If you don’t have those connections to leverage, you can also hire a professional business coach to provide feedback, recommendations and advice on how to make the most of your business expansion.

Related: How to Go From Side Hustle to 7-Figure Business and Beyond, According to 3 Women Who Did It

Scaling a side hustle can be overwhelming. It’s important to recognize that this is a journey and success may not happen overnight. Be patient with yourself. In addition, growing a business requires a lot of hard work. Don’t forget to prioritize your physical and mental health to avoid burnout. By keeping yourself motivated, you can keep moving the needle toward the business you want to have.

It pays to be TikTok famous—Meta is trying to lure popular TikTok content creators away from TikTok towards Instagram with high-paying deals for exclusive Reels.

Business Insider reported on Monday that Meta is offering some creators with more than one million TikTok followers compensation of up to $50,000 per month for exclusive short-form content posted to Instagram Reels, Meta’s version of TikTok.

According to the leaked contracts, the payouts range from $50,000 per month for six months, for a total of $300,000 at the higher end, to $2,500 per month over six months, for a total of $15,000 at the lower end. There are tiers in between offering $25,000, $15,000, and $5,000 per month.

Related: Meta Is Building AI That Can Write Code Like a Mid-Level Engineer, According to Mark Zuckerberg

But there is a catch: the contracts have exclusivity agreements that range from posting up to 10 Reels exclusively on Instagram every month to keeping videos exclusively on the platform for at least three months.

With the deals, Meta is hoping that the uptick in exclusive content on Instagram incentivizes a creator’s audience to migrate over from TikTok to watch their Reels.

On the creator side, the money is a draw — though it might not be a strong enough pull for everyone. According to ZipRecruiter, influencers in the U.S. make an average annual income of about $58,000 or $27.85 per hour. TikTok influencers have pay that varies widely, with top influencers receiving between two to four cents per 1,000 views through the TikTok Creator Fund.

“Some clients are taking [the deal] because the money is good for them, and I’ve seen some clients pass,” one talent manager told BI. They said that the exclusivity and requirements to post frequently made the deal “untenable” for some of their clients.

Exclusivity in influencer partnerships isn’t a new concept. Brands like luxury fashion marketplace Farfetch have asked creators to agree to a 48-hour competitor exclusivity window when creators promote their products.

Meta is working hard to sign creators up for these contracts and even launched an additional “Breakthrough Bonus” initiative last week to pay TikTok creators new to Facebook or Instagram up to $5,000 within three months for Reels content.

“Meta is being really bullish on locking these in,” another talent manager told BI.

Meta’s push into short-form content arrives as TikTok’s fate remains unclear. TikTok faced legislation forcing it to separate from its parent company ByteDance or face a ban in the U.S. by January 19. Though President Donald Trump granted it an extension to find a buyer, and anyone from Kevin O’Leary to Microsoft are reportedly in talks to buy it, TikTok has yet to sign a deal.

Inside the terms of a $50,000-per-month deal

According to BI, Meta has sent an offer totaling $300,000 over six months to several select content creators. It’s not certain when the deal starts and who received it.

As part of the deal, creators must post at least 10 new Instagram Reels per month and keep each one exclusively on Instagram for three months from the time of posting. Each video must be at least 15 seconds long but no longer than three minutes, and creators must share two of them per month as Instagram stories.

Related: YouTube Takes on TikTok With New Tools: ‘You Can Build a Business’

This contract says that the creator has to post twice a month on TikTok or YouTube promoting their Instagram Reels and asking their audience to follow them on Instagram, plus post 25% more on Reels than TikTok or any other short-form video platform. So five on Instagram for every one on TikTok.

Instagram could also advertise a creator’s Reels content on TikTok through paid ads, as part of the contract.

Inside the terms of a $15,000-per-month deal

According to BI, the $15,000-per-month offer has been sent to several creators. It requires them to post eight new Reels per month that are at least 15 seconds but no longer than three minutes.

The content has to be exclusive to Instagram for at least three months from the time of posting, just as with the $50,000-per-month contract.

Creators have to post more content to Instagram than they do to any other platform, including TikTok, X, and YouTube, though the exact percentage isn’t specified in this contract.

Related: Shorter Videos Are In Demand. Here’s How Different Social Media Platforms Are Reacting.