Knowing the developmental stages involved in a new startup can help you gain a basic understanding of what to expect. Although timeframes and progress varies significantly for each startup, these basic stages outline the typical route to startup victory. If you’ve already begun, these stages will help you determine where you are developmentally, and what actions you can take to advance further.
We will break this down into 3 broad categories: pre-startup, startup, and post-startup. Of course, within these are a myriad of possibilities, but we’ll delve into the most common milestones achieved and challenges faced at each level.
Perhaps the most exciting, easy, and fun of all startup stages is the brainstorming stage – the first 6 months when your brain is full of ideas and none of the headaches have set in yet.
Purpose: Essentially, you are trying to pinpoint a creative and valuable solution to a legitimate problem that many people have. Many ideas may be considered, but ultimately, most will not be able to stand on their own in a particular market. Between this stage and the next, founders should conduct interviews and do research to determine the viability of their idea. Some may join startup accelerators or incubators during this initial stage.
Challenges: In the beginning, a startup’s team is likely to still be hazy or even nonexistent. There may only be one founder, or several founders with no clear leader. Ideas must be tested and qualified, logistics are not yet worked out, and the business model has yet to be defined.
2. Focusing In
This is the stage in which the decision is made to pursue a promising business idea. The target and direction become clearer, and founding members are identified (or at least they should be).
Purpose: There is plenty of work to be done at this time. Startups typically begin refining the primary features of their product or service, implementing methods for data and analysis, and hiring staff if necessary. Startups may obtain seed funding during this time as well. If you’re lucky, you may even see some of your first customers at this stage, which typically lasts several months. However, this may be shorter than the first stage, as many foundational issues have been worked out.
Challenges: Many startups will find themselves having to pivot at this point, or alter their original direction due to new insights and observations. While this may seem like a setback, it is often a necessary step and a catalyst for growth (if done correctly).
3. Team Building & Development
Perhaps the most crucial piece to success is to have a worthy team assembled. This includes skilled staff members, mentors, partners, developers, founders – everyone involved must have experience and a clearly defined role.
Purpose: This stage will require the refinement of your value proposition, as you discover new methods to convert customers, improve your sales process, and repair many of the bugs that were holding your product back.
Challenges: The most difficult part here is to achieve product-market fit, which will position you for further growth and expansion.
Scaling is the primary growth stage in which startups may form partnerships and implement new processes to reach customers that were previously inaccessible.
Purpose: The main objective here is clearly expansion. Founders may need to establish departments, hire executives, and put in extra hours to keep up with the rapid stream of new customers – all of which typically occurs in a span of 9 months.
Challenges: While more users is the dream for every startup, this sharp incline in traffic will inevitably means more problems – more technology glitches, more emailing, more expenses, more angry customers. Scaling means rapid change, but trying to make progress at this stage often feels like wading through honey. An influx of frustration and stress is common in the scaling phase, but for those who can ride it out, it will all be worth it.
Startups that have truly earned their stripes will experience unrestricted growth in their breakout stage. Unfortunately many startups never make it to this point, in which efforts can be relaxed and attention can be directed towards optimizing instead of just getting established. This is the first genuinely comfortable stage where founders are in a position of power and stability.
Purpose: At this stage, the main objective is maintaining the business and continuing to utilize the model that brought you success. Founders also have the option to sell the business at this stage, as it has reached a level of self-sufficiency and proven its value in the marketplace.
Challenges: Challenges at this point revolve around consistency, and the ability to reinvent the business and stay relevant – even in the face of competition and new industry developments.