Every startup is a journey.
A journey from start to finish, with the finish line coming in the form of a valuation, funding and success. If you are new to this world, you should know that while the types of startups differ, the startup phases are quite the same in most of them.
The general lifespan of the “startup lifecycle” begins when you make the decision to set up a business, seeing your idea being formalized to a startup. If successful, this idea will drive growth and transcend your journey to its maturity.
Even though it is safe to say that the startup phases are always challenging, you can benefit from them in a better way if you fully understand (each of) them and know what every phase in a startup requires.
Below, we are listing the roadmap of the most important startup phases, developing a single idea to a success.
Startup Phase 1: Seed And Development
This is what many startup gurus see as the starting point of the business lifecycle, and the phase where your startup officially goes in existence. Here, it is important to have a business idea that aims to solve a particular problem – or a solution to it that was born in your head.
In order to confirm that you have what it takes for this phase, you should ask yourself the following questions:
- “What problem am I compelled to solve?”
- “Does my solution solve it effectively?”
If you have answered “Yes” to both of these questions, it is time to create your hypothesis and start pressure-testing your idea. You need to define your startup, have your financial foundation in place (how will you finance your launch) and know what’s needed for your startup to advance.
Startup Phase 2: Launch
Once you have canvassed and tested your business idea and you are satisfied that it is ready to go, it is time to officialize it. The second one of the vital startup phases is the point when you are launching your startup.
According to many, this may be the riskiest stage of the entire startup lifecycle – and one that truly makes an impact on your future landscape. Mistakes done here may result in years down the line – which is why 25% of startups struggle and cannot reach their fifth birthday.
What’s important to address here is the issue around adaptability. Moreover, you should know how to present your product/service to the public, tweak it based on the initial feedback from your customers and/or change it in order to power through the blurriness.
Startup Phase 3: Growth And Establishment
If you are at this stage of the startup phases, your business is probably doing good – generating a solid source of income and regularly taking on new customers.
The “product market fit” is what many see as a term that describes a startup’s potential.
Essentially, it revolves around the idea that customers are happy with purchasing your product/service, are using the product, realizing its promised benefits and ready to continue or expand their usage.
The goal is to obviously improve your cash flow and cover your ongoing expenses. With this, you should be looking forward to seeing your profits improve in a slow and steady way. The biggest challenge, however, comes in the form of new demands that may require your attention, mainly seen through the following:
- Managing your increasing levels of revenue
- Attending to your customers
- Dealing with the competition
- Accommodating to your expanding workforce
This is why many people hire smart people with complementary skill sets, as one of the decisions you must make in order to bring the full potential of your startup during this phase.
Startup Stage 4: Expansion
At this stage, many startup founders feel like there is a routine that is kicking in and taking place. If you are experiencing this, that is a good sign – but also a sign that you must expand your startup operations in order to thrive.
Since your business has (at this point) firmly established its presence and has regular and happy customers, you need to think about broadening your horizons by:
- Creating expanded offerings
- Solving another common problem/challenge in the industry
- Improving your product/service or updating it to provide a greater value
What’s important to note is the fact that there are two sides to this coin. While one of them is the good side which likely catapults growth to your startup, the other one (bad one) involves the risk of expanding too carelessly – and losing your existing customers.
So, the goal is to plan carefully, look at your resources, be realistic about your efforts and get the best return on your investment. You should never sacrifice your quality and always keep an eye on how your expansion might impact the quality and service that you are providing to your existing customers.
Startup Stage 5: Maturity (and Exit)
This is the point that every startup founder looks forward to. Having navigated through your expansion, at this point your startup lifecycle should be seeing stable profits year-on-year.
This is why at this (final) startup phase, there are two decisions that most entrepreneurs make:
- Push for further expansion, or
- Exit the business (by selling it)
If you push for further expansion, you should ask yourself if your startup can actually sustain it and create new opportunities for expansion. If you decide to exit your business, you should seek enough resources to “cash out” right away and make profits from your established startup. In both of the cases, the point is to maximize your chance of success, using the mix of gut instinct and practical business sense.
For a lot of startup entrepreneurs, the common startup phases are usually compared to the ‘early period’ of an artist or musician. Even though art is quite simpler and more ideological than ideas and startups, both artists and entrepreneurs are aiming to be unique, cater to the needs of the market and eventually dominate it over time.