New study finds ‘scaling gap’ as primary reason businesses stall after early growth

A new study finds that most business leaders admit that they’ve mistaken being busy for making progress — especially in the early stages of growing their business.

The research from Utah-based Scaling.com, co-founded by the authors of The Science of Scaling, found that 59 percent admit they’ve made the mistake.

“Most businesses don’t fail because of lack of demand; they stall because they reach a critical but largely misunderstood phase where their current growth strategies no longer work,” the study concluded.

The authors define this phase as the “scaling gap” — the point where companies with early traction struggle to transition into sustained, exponential growth. Based on a survey of 1,000 U.S. business leaders at companies generating $1 million or more in annual revenue, the research finds the biggest barriers to scaling are internal, not external.

“Many leaders assume growth will continue if they just work harder or invest more,” said Benjamin Hardy, co-founder of Scaling.com, a performance-based platform and community of business founders. “What this study shows is that scaling is a fundamentally different phase — one that requires new systems, new thinking and often difficult structural changes.”

Business owners cite resource limitations (58 percent), economic conditions (54 percent) and internal operational constraints (48 percent) as the top drivers of stagnation. At the same time, nearly half (49 percent) point to financial risk and operational strain (44 percent) as the biggest reasons they hesitate to pursue aggressive growth.

Study respondents said scaling requires reinvention, not optimization. Seventy-eight percent said achieving 10-fold growth would require major changes to sales and marketing. Three-fourths of those surveyed said a change to business strategy would be required.

Most leaders admit to being the bottleneck in growing the business, with 61 percent saying they are a problem in sales and marketing, 54 percent in strategic focus and 53 percent in operations. The leader-caused stagnation can be a result of lack of delegation and structural inertia.

Sixty-seven percent of founders blame at least one employee while only half think their current staff can handle large growth.

“Scaling isn’t about adding more; it’s about removing what no longer works,” said co-founder Blake Erickson, “The businesses that break through are the ones willing to fundamentally change how they operate — not just optimize what they’ve already built.”